Budget: Is Washington State Asking the Right Questions?

Updated June 28, 2010 1:30 p.m.

Bravo to Gov. Chris Gregoire for taking action. She’s putting together a group of 32 Washington business, labor, political, and think-tank folks to help her and the Office of Financial Management stage four public hearings to discuss the state budget.

That’s because the budget will again be mired in red ink in the next biennium – another $3 billion shortfall. In fact, the state admits to red ink for at least the next five years, which many of us analysts have been warning about for years.

It’s worth noting the state is reportedly behind in funding the state worker pension system by $4 billion. No one should logically argue that hardworking state employees are not entitled to pensions. But as I’ve reported before, public pensions are on average 74 percent higher than what is available in the private sector.

The governor is also looking for a new accountability system for state programs and input on whether state services should be privatized. So, she has a list of eight questions she wants answered about state government.

They include:

1. Is the activity an essential service?
2. Does state government have to perform the activity, or can it be provided by others?
3. Can the activity be eliminated or delayed in recessionary times?
4. Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
5. Are there federal funds or other fund sources available to support this activity?
6. Are there more cost-effective, efficient ways to do the activity? 
7. Can the activity be the subject of a performance contract? 
8. Can the activity be the subject of a performance incentive?

Upon the conclusion of this process, Governor Gregoire’s 2011-2013 budget will go to the Legislature in mid-December, 2010.

These are great questions. But are they the right questions to ask? Yes and no. Correctly stated, Washington state’s budget problem is not a revenue challenge. The state’s budget woes are the result of alleged government fraud, mismanagement, waste, and a lack of common sense.

Four examples:

• Countless viewers have been appalled by the multi-million dollar alleged corruption in the state ferry system thanks to excellent investigative reporting by KING 5. Astonishingly, Gov. Gregoire publicly supported the ferry system leadership. (Specific headline links for these reports are available at the end of this column.)
• The Seattle Times reported on what many believe is the scandalous behavior of administrators at Washington State University, the Washington State Patrol, and Green River Community College. Hundreds of managers have retired, but were then rehired. Recruitment advertisements were not posted, and this has boosted their pay by as much as 60 percent. They include Greg Royer who makes $304,000 salary as the vice president for business and finance at WSU, and who has also drawn about $700,000 in pension benefits; and Rich Rutkowski, the president at Green River Community College, who retired for a month at the age of 58 and was rehired with the approval of the college’s trustees. He gets a $64,000 retirement check in addition to his $179,000 pay. (The Seattle Times link is published at the end of this column.)
•  Professionally, as a management consultant, I’ve witnessed waste and mismanagement at three state agencies – the Department of Social and Health Services (DSHS), Washington State Department of Transportation (WSDOT) and Washington State Department of Personnel. DSHS managers refused to create benchmarks in a strategic planning session – even though it was a requirement by then-Gov. Gary Locke. WSDOT managers were impotent in managing unproductive employees.  The HR agency did not honor training contracts with my firm.
• The Legislature has a long history of disingenuous behavior preventing transparency in budget issues. Instead of focusing entirely on business-coaching columns, I’ve found it imperative to write about public policy when it adversely impacts the economic climate and businesses. That includes violation of transparency standards during every legislative session for the last 10 years. (Links to several examples for this year alone also follow this column.)

It’s admirable to reform the state government budgeting process. But other public-policy questions regarding this disingenuous entitlement-culture are sorely needed.

What’s going to be done about the cronyism? What about the legality of rehiring managers without advertising the jobs? When will the fraudulent double-dipping stop? What will be done with the state administrators who do not show any contrition? What about legislative transparency? What about putting the public pension system in line with the private sector?

Washington state government is damaging the financial and political freedoms of businesspeople and all other citizens. There is enough revenue to support core government services. But there’s not enough money for this disingenuous entitlement-culture.

Public policy in Washington state has been a longstanding issue. In July, 2009, I proposed these solutions: “Analysis: Steps for Economic Success in Washington State.” They were relevant then and are relevant now – until implemented.

From the Coach’s Corner, here are the resource links for this topic:

KING 5  –

• Investigators: Governor backs state ferry system leadership  
• Investigators: $10 million spent on extras for group of state employees
• Investigators: KING 5 investigation leads to freeze on ferry fare increases
• Investigators: Ferry system fails to hold cheating employee accountable  
• Investigators: Autopsy reveals overdose caused cosmetic surgery death  
• Investigators: Governor and DOT Chief call for reform of ferry system  
• Investigators: Captains’ union votes ‘no confidence’ in ferry management
• Investigators: Warnings of paycheck padding ignored by state ferries  
• Investigators: Audit finds state overpaid truckers to ship booze  
• Investigators: Broke ferry system paying huge salaries to fortunate few 
• Investigators: State missed opportunity to save thousands on perks for ferry workers  
• KING 5 investigation prompts end to multi-million dollar state expense  
• Investigators: ‘Special projects’ bring lucrative perks for ferry workers  
• Investigators: State overpays to ship booze  
• Investigators: Ferry workers boost pay by driving to work  

Seattle Times –

Retired, then rehired: How college workers use loophole to boost pay

Biz Coach public policy columns –                                                                                                                   

• I-1053: Critical to Washington State Businesses and Workers
• More Voters Say Washington State is Headed the Wrong Way
• EU, California’s Fiscal Demise: Red Flag for Washington
• Why Washington Wage Study Creates Brouhaha
• Why Proposed Washington Income Tax Will Kill Jobs
• Small Business Success Is Key for Washington’s Sustainability
• How Much of a Hit Will Business Take from WA Legislature?
• Why Not Transparency for Good, Open Government in Washington State?
• Transparency and Why WA Unemployment Rate Jumps to 9.5 Percent
• Idaho Governor Recruits Washington and Oregon Companies – Thanks to Legislatures
• Washington State Spending, Taxes – ‘Katy Bar the Door’
• How Enterprise Washington Helps State’s Businesses
• Washington State’s Last Chance for Good Government
• Washington Think Tank Says Reliance on Sin Taxes Won’t Work
• Government’s Reliance on Huge Tax Increases Reaches Absurdity
• Study: Tax Increases Threaten More Job Losses in Washington
• Washington State Senators Claim Income Tax Is ‘Fiscal Reform’
• Do Washington’s Budget Woes Warrant Government Reform?