As legislators convene in Olympia and begin to grapple with massive budget shortfalls we are sure to hear the old familiar refrain: “let's balance the budget by cutting waste in government.” Some will point to the recent King 5 series on the Washington State Ferry system cleverly entitled “Waste on the Water.”
Unfortunately the narrative of wasteful government is a fairy tale, told by people who either should know better or who are simply playing to the cheap seats. Don’t get me wrong, waste and fraud are real problems. It’s just that the provenance of waste isn’t solely found in government. What’s needed is a more realistic assessment of waste in government, not stories of excessive waste that fan people’s frustration at the economy.
And these tales from the land of government waste aren’t just told by Republicans and their attendants but are oft repeated by Democrats as well. The truth of how to fix the budget is simple math. Almost every organizational budget from a hot dog stand to Microsoft is salaries and benefits.
The obsession with trying to find wasteful spending in government actually leads to more waste and inefficiency, leading to more calls to reduce government. The best way to show how this works is through a parable.
I will call it the parable of the rental car. The story is true but I've blurred the details to protect the innocent and the guilty. An employee of a large local government has to do some travel to Denver for a work related meeting. Once he arrives he realizes that he has two transportation options to get to his hotel: a cab or a rental car. The cab fare — one way — is about $60 or $120 round trip. Renting a car for a couple days would run more like $60 total plus gas. He chooses to rent the car, figuring it is more convenient than the cab and cheaper. He just saved the local government a few bucks.
When he returns and submits his receipts there is a problem. You see he didn’t get specific approval to rent a car. Someone in contracts has a problem approving his reimbursement request. Technically, in order to be reimbursed, the expense has to be pre-approved and for liability reasons rental cars have to have approval in advance too. He didn’t follow the right procedure and his reimbursement was denied.
But since this one time was a mistake, the powers that be, after a lot of discussion and back and forth by several managers and administrators, decide that they will grudgingly reimburse the employee’s expenses. In order to do this, an exception memo has to be drafted and signed off by his manager, that manager’s manager, and finally, the head of the entire department. Not only that, the employee gets an official scolding put in his file for not following procedure.
Now, remember that all the process and procedure was put in place to prevent wasteful spending by government employees and to protect the local government from liability if the employee cracked up the car on a drunken spree. But what the employee did was think on his feet, make a decision using his brain, and actually save the local government money. But because he didn’t follow the rules he got in trouble. And think about how much management time and energy was spent discussing, e-mailing, and processing the employees travel paperwork and reimbursement request. What is more wasteful, the process to prevent the waste, or some actual future waste that hasn’t happened?
All of this waste talk has produced a system of tracking expenses in local government that has become burdensome. Full disclosure, I was that employee’s direct manager in the story. And I can give other examples of how processing travel requests or contracts are completely outlandish in their complexity. But here’s the worst part. The system assumes that government employees are by their nature wasteful and, that if given any discretion, they will waste money. So systems and checks are put into place that assume an employee is stupid at best and an outright fraud at worst. Furthermore, the systems become so ossified and rigid that nobody wants to be the first to challenge them. It becomes easier and less of a hassle to fill out all the paperwork. After all, employees get paid whether they are doing actual work or whether they are preventively processing paperwork.
And the epilogue to my little story? Less than a month before this employee ran into his hassle over travel I took the same trip and made the same decision to rent a car. The expense was approved. When I asked why, I was told that when I turned in my travel reimbursement request the person that usually processes them was out of town, so someone else handled the paperwork; so much for a foolproof systems to prevent waste.
The point is that government is not any rifer with waste than any other sector of our economy. Government, in general, is like every other organization: most of its expenses are human resources, not office supplies or even capital expenditures. Trying to balance the budget by imposing more restrictions on the day-to-day operation of government only makes government more inefficient, which is part of a self-fulfilling policy spiral that doesn’t help us make government work better.
What’s true for the private sector is true for government: Fewer rules and more innovation can unleash more creativity and efficiency. Saddling government workers with lots of red tape won’t save us money in the long run. In fact it makes the problem much, much worse.
