There is a constant drumbeat in Olympia–one that I admit I’ve occasionally pandered to myself–that government should attempt to operate more like a well-run business. The refrain is driven by an occasional frustration of the monopolistic lethargy of government. At a systems level where there is no competition, I would argue, we see a propensity for the institutional infrastructure of the status quo to grind change to a crawl. This is so for any large institution and not only the public sector.

Monopoly thinking is the real enemy.

Too often innovation, creativity and a willinessness to risk the failure of new approaches are left to task force reports that collect generous layers of dust. Of course government is not like any traditional business but the point is oriented around the idea that while the private sector generally faces constant pressure to improve, streamline and evolve market pressure on government is less pronounced. Business pressure is not inherently healthy, of course, as evidenced by so many of the excesses in housing, finance, investment bubbles and more but it does maintain an element of pressure for efficiency.

Reflecting upon countless hours of Ways & Means Committee hearings on the recent budget crisis, I find myself considering an element of this dialogue that is totally and completely inconsistent with the central philosophical idea of efficiency: Many of those who argue for efficiencies, reform and streamlining of government’s operational work are joltingly uninterested in exploring those same efficiencies on the other side of the balance sheet: Revenues.

Revenues and expenditures are the two sides of the ledger in every business, government and institution in the world.

Real private sector businesspeople in our state–from early stage entrepreneurs to senior executives at Boeing, Microsoft, Starbucks, Costco, Paccar, Weyerhauser, Real Networks, Virginia Mason, Amazon, Phillips Electronics and more–know that you cannot focus exclusively on finding efficiencies in spending in order to survive. Companies that are ‘built to last‘ have no option but explore constantly and strategically ways to increase revenues, profit margins and sales.

In Olympia today we require task force studies, reports and commissions in order to assess the efficacy of tiny $2 million programs. We demand staff reports as to whether a program returns value to taxpayers. We write the state budget every two years and, by its very nature, spending must be reauthorized for renewal.

On the revenue side, however, we often find deafening silence as to whether a tax exemption, preferential rate or other revenue policy is producing results. I don’t mean this from a ‘raise taxes’ perspective or to join the clarion call for lower taxes. I mean it from a business perspective. Does the damn thing work? “Figuring out if a tax break is working is not a partisan question, it’s an analyitical one,” is how I phrased it to Publicola.

Still, I am attempting to make a modest point: There is a lack of intellectual and political interest in determining whether our current tax policy is actually working for taxpayers.

Why, simply, don’t we have a group of legislators who are as equally passionate about using objective financial and policy metrics and measurements to determine the return on investment, financial efficacy and value of our tax policies as they are about spending? Why is it that the legislators who are often most vocal about spending oversight are least vocal about the question of whether tax policy is financially efficient and effective?

Many on the right are particularly focused on reforming government spending and calling for new efficiencies regardless of a program’s scale. A large social program like Medicaid might receive the same degree of analysis as a small scholarship program for foster youth. Yet many–who fancy themselves friends of business– are distressingly silent in asking difficult, objective financial questions–as a business leader would– about whether our 567 tax exemptions are achieving the policy goals intended. I truly don’t mean the politics of this, I mean the purely financial ROI and effectiveness of whether a policy is actually working. Candidly, many are often silent on the question of whether our tax system is economically well designed and supporting market-oriented efficiency–from a purely objective business and financial perspective– and instead focus simply on the level of taxation.

As a business person, I would like to respectfully suggest that no ‘real’ business person would consider this thorough analysis or assessment of the full ledger. “Real” business people demand proof that things work. They demand the facts.

Many on the left are speaking out about the inefficiencies and inequities in our tax policies. At the same time some occasionally display a distressing lack of intellectual interest and pressure to improve the operational efficiency of governmental functions. There is on occasion a certain willingness to bypass rigorous, objective financial oversight of some programs in the desire to maintain the peace of current funding levels. The lack of desire to place a red dot target on a program’s back by rigorously examining the financial efficacy of a treasured social program seems to surface in Olympia more frequently than many might admit.

I am, as you might tell, philosophically distressed as a business person by the too frequent lack of intellectual vigor in analyzing the effectiveness, efficiency and financial ROI of both sides of the ledger.

We are 29th in the nation in the ‘burden’ of state and local taxes. The right seems frozen in time by the aging battle of how to lower that number regardless of efficacy, quality of life it enables, efficiency or investments. I don’t know quantitatively if that is ‘too high’ or ‘too low’ but I do know qualitatively that we are near the bottom in the nation in the production of baccalaureate and post-baccalaureate degrees. That is by any stretch an unacceptable part of our reality.

We are so much more than what we’ve become.

Your partner in service,

Reuven.

(Disclosure: I have received campaign donations from some of the companies mentioned in this post).

The state House passed the $8.9 billion transportation budget on Friday. The two-year legislation funds transportation projects statewide and received overwhelming bipartisan support with only six nay votes among 91 yeas. The newspapers statewide generally ran a simple AP story from the Olympia bureau with bipartisan quotes and no details. The bill now goes to the Senate.

$8.9 billion dollars and hardly a whisper of policy dialogue, political theater or deep analysis in the media.

I did vote in favor of the transportation spending plan despite my reservations about the prioritization of the dollars and a number of troubling policy issues in the package. I did manage to include one major amendment that was accepted on the House floor (increasing flexibility for local, county and state agencies in the purchase of expensive, proprietary radio interoperability equipment).

A second amendment that I sought, to stagger funding for a $10.8 million ‘time sheet’ application for the Department of Transportation rather than hand the entire amount over to the agency upfront, was unfortunately defeated.

Everyone seems distressed that we spend a projected $1.9 billion a biennium on technology in our state, yet actually changing course on major applications for state agencies is something entirely different. Challenging the status quo of the bureaucracy seems radical or even disloyal to some. I’m disappointed that I couldn’t convince a majority of the 98 House members that rather than hand all of the money to the agency up front we should instead force a serious ‘business process’ reform initiative before buying another huge bucket of technology. Had I been a member of the Transportation Committee it would have likely been more successful, but it’s tough to convince members to change course once a bill is on the floor for a final vote.

One serious disappointment for our own legislative district and our neighbors is that a major state grant to improve the West-East travel route along Market to 45th was bumped from a priority spot and the dollars switched to a suburban project. I would have voted against the budget for this reason alone since the state DOT staff has objectively ranked the project near the very top. However, the House transportation leadership has promised to fight hard in negotiations with the Senate to restore the objective rankings and provide the funding as originally planned.

On a broader, more systemic level, it’s hard not to ponder the profound political differences between the transportation budget and the coming operational budget that will, undoubtably, be more partisan and certainly more controversial.

The speeches on the House floor from Republicans were glowing in their praise of the bipartisanship of the Transportation Budget. Rightfully so and it would be a compelling approach to public service if we could replicate the relatively united front that the transportation community presents during budget time.

Still, the reason actually has very little to do with personal friendships or special relationships. The reason the transportation budget is cordial is, of course, that both Democrats and Republicans appreciate the local political benefits that accrue from bringing home state funding for local transportation projects.

It serves both sides to play nicely in the same sandbox. There is no need to openly threaten or even subtly prod members with the loss of potential projects. Everyone in Olympia has that sixth sense.

The ideological, political and/or policy arguments and debates in transportation are simply not between Democrats and Republicans, they are between those advocating a highway centric approach and those advocating a more balanced model where public transit services have at least a fighting chance for resources. Due to the 18th Amendment in our state Constitution gasoline tax dollars may only be used for highways, including water highways of our ferry system, and not for general public transportation. The power dynamic created by this constitutional construction leaves transit advocates a distant third cousin to highway funding. Exceptions are just that: Exceptions.

My own insight into the details of the $8.9 billion is modest at best since my time is spent hunched over line items of the $32 billion biennial operating budget. And yet I do long for a different approach to transportation budgeting that would help us to tackle serious structural challenges more openly.

It is no coincidence that the Transportation Committee has more members of the House than any other committee.

When it comes to transportation spending, Olympia needs only one sheet of talking points for both political parties.

Your partner in service,

Reuven.

On Thursday, March 17 the new revenue forecast will be announced. The current behind-the-scenes thinking is that we are likely to see an additional $500 million to $1.5 billion shortfall in revenues, increasing the overall 2011-2013 deficit close to the $6 billion range. The anxiety level in Olympia is rising by the day. I find it troubling that some are already beginning to suggest the Legislature may not finish in the current 105 day scheduled slot–April 25 this year–and slide into a special session.

There are no budget decisions that we would make in May or June that we cannot or should not make in April. This is not to imply that it is easy or pleasant, only that we absolutely must move forward and complete the work of crafting a two year budget on time. The quality of political thought and even the objectivity of policy analysis sometimes seems adversely linked to the length of time the Legislature is in session.

As a part of that work, we should also have the courage to push and prod the political establishment into touching the untouchables.

My goal here is not to map out a specific budget proposal by any stretch of the imagination. As a member of the Ways & Means Committee, I work closely with key leadership to address core policy issues in as productive a fashion as I can. However, I personally believe there remains a larger, institutional resistance to the depth of ‘zero based budgeting’ that I believe we need. Simply, we are crafting a budget from the ‘top down’ not the ‘bottom up.’

I have called for a zero based budgeting process before here, and yet the political, policy and logistical barriers to a courageous zero based budgeting process remains high by any standard–and in all 50 state capitals.

A central barrier is our fear, uncertainty and doubt around the institutional resistance to reform. Are my suggestions for reform any more valid than anyone else’s? Of course not. But I do know that we won’t be successful if sacred cows are tucked safely away from fair and equal treatment.

To help you understand the implications of this budget writing effort, in the coming days I will begin to post a series of policy options and categories and the level of funding they represent. And I will also post a series of tax exemptions and tax policy options that also attempt to show the importance of courageous honesty in prioritizing how taxes impact our quality of life.

Should health care costs for public employees be greater than the 15% suggested by the governor? Yes. Should special interest tax exemptions that can’t prove their return on investment be closed? Yes. Should some critical taxing decisions be sent to the local level in categories where the state can no longer sustain programs? Yes. Should we reform how our state treats indemnity and demand both greater risk management focus and modifications of immunity guidelines? Yes. Should we reform how local school districts commit to payroll increases without knowing their revenues? Yes. Should we reform levy equalization so that we don’t send close to $630 million to more than 200 of the 295 districts statewide? Yes. Should we reduce salaries for state employees making more than double or triple the state medium family income? Yes. Should we force some of the 295 school districts to merge? Yes. Should we stop raiding dedicated accounts in the environmental arena to subsidize the general fund? Yes. Should we stop subsidizing policies and programs from the general fund that are more efficiently paid for by user fees? Yes. Should we reconsider taxation of non profit health care organizations that fail to provide sufficient indigent care services? Yes. Should we reconsider senior citizen discounts for ferries and other services that are not income-based? Yes.

Any list of untouchable categories is bound to be long, complex and uncomfortable. Let’s talk about all of them openly and courageously.

I invite you to come along as we strive to write the most difficult state budget in history. We can only tackle this challenge with the public fully engaged.

What are your priorities? What are the politically untouchable issues and ideas you’d like to see explored with a sense of courageous honesty?

Your partner in service,

Reuven.

Recently I asked the Office of Financial Management to crunch the numbers of how taxes and expenditures flow in our state: At a high level who pays taxes and who receives the benefits. Asking for the data–and prodding for a robust public dialogue about the policy and political implications–unleashed thoughtful but pointed criticism from no less than the Seattle Times as our state’s paper of record. It’s hard not to sense, however, that many of those who consider the data to be provocative doth protest too much.

First, the facts. Six counties contribute a whopping 75% of the state’s taxes and eight are ‘net contributors’ of taxes while 31 are ‘net recipient.’ In a overarching generalization with exceptions, the political disposition of those 31 ‘net recipient’ counties seem to lean Republican while the six ‘net contributor’ counties might be seen to lean Democratic. The 31 are mostly rural while the six are more populated.

This isn’t the real issue or even the reason I am promoting a robust public dialogue. My real goal is simple: As we make substantial reductions in state spending, we must break free of the stale, rigid political cliches and recognize that we cannot cut our way out of this Great Recession.

The only long term way out–the only long term pathway–is private sector economic growth.

And in order to rejuvenate our economy, we must look to aggressively reinvest in the strongest part of the economic engine itself. While it clearly makes the institutional infrastructure of Olympia uncomfortable, the literal truth is that Seattle and King County are the economic fuel of Washington State.

Yes, we are “One Washington.” The friendly and vibrant tension between East and West, Democrat and Republican, rural and urban is as old as our nation itself. It’s part of our fabric and ensures a robust public dialogue about issues and ideas. Our diversity makes us stronger.

Still, during this extraordinary time when ‘everything is on the table,’ we must ask why it is continually acceptable for those who are stridently opposed to government spending to receive radically more than they pay in taxes without consequence or shame? All the while, those who pay more into state coffers than they receive are openly criticized as irresponsible big spenders.

The irony is not lost on anyone but when it’s actually pointed out with cold hard data, the gentle political dialogue of state government shifts uncomfortably in its chair.

Why is it acceptable for some counties, for example, to receive $2 or more for every dollar they send to state government year in and year out and yet vote against every tax imaginable without grasping the implications? I may be accused of proposing to “punish” counties for voting against taxes, but surely those counties should feel the honest, true and legitimate externalities of implications for their policy positions. That is not “punishment,” it is courageous honesty that is outside of the comfort zone of our state’s current political discourse.

By accepting the status quo and reducing spending across the board or close to it–without regard to the actual drivers of economic growth–we are shielding net recipient counties from feeling the true, objective, honest implications of spending reductions that they themselves voted to implement. This allows legislators from those areas to have the hypocritical luxury of voting against all taxes regardless of merit, forcefully criticizing those who disagree as irresponsible big spenders, all the while cashing extremely generous subsidy checks in education, health care, housing supports, transportation and every other category of spending.

And by spending so much money to mask the real effects of these reductions, we are hurting our ability for One Washington to pull ourselves out of this crisis by hurting the economic engine of the innovation economy–the fuel of our economy–more than we should.

If we slash the programs, systems and higher educational infrastructure that disproportionately drives our economic growth we will wallow in the Great Recession. If we bend politically to first protect the disproportionately high subsidy programs and funding for areas that do not generate strong economic activity, we will wallow in the Great Recession. If we don’t invest in our areas of strong economic forces–trade, global health, higher education, biotech, biomedicine, software, aerospace and so much more–we will wallow in the Great Recession.

And so in making reductions in state spending, we must have the courageous honesty to acknowledge that no non-political enterprise, business, non profit, no other large entity would make reductions based solely upon the location or political influence of programs alone. We must make budget reductions wisely and reinvest scarce tax dollars in those areas of strong economic activity that will regenerate economic strength. We must feed our areas of growth to regenerate our collective economic engine or we will fail.

When Ford Motor Company was rebuilding from near-bankruptcy, did they invest in their low-margin brands? Of course not. While counties and people are not cars, and the soul of a just and moral society requires more than cut-throat business decisions, we must also recognize that it is decidedly un-conservative and unwise business practices to redirect investment dollars into those areas that do not produce the most economic activity.

For example, today in Olympia one of the fiercest political battles is whether the make reductions in levy equalization, an education subsidy program for property poor districts that now cover 231 of 296 school districts. It is the ultimate redistribution of wealth and is about equity, not efficiency. And I support it. But I do not support treating levy equalization as a holier than thou, untouchable monument to political correctness. It is a rural subsidy program that attempts to recognize that property poor districts are at a distinct disadvantage in funding public education. No more and no less. But why do we allow the recipients to make the ‘equity’ argument in levy equalization while they simultaneously propose to eliminate Basic Health Care, Disability Lifeline and every other ‘equity’ program the state has created? Equity for me but not for thee.

We continue tax exemptions for zinc mines in Pend Oreille County and coal mines in Lewis County while we devastate the University of Washington’s economic engine that generates hundreds of times the economic return on investment for taxpayers. I’m not surprised at the policy given the nature of our political dynamics, but I also am no longer willing to be be party to the lack of honesty or transparency with the public about it.

Last year on the House floor I counted numerous times when various legislators from net recipient counties pointedly and aggressively criticized the operations, transportation and capital budgets for projects “that can be seen from the Space Needle.” I can think of few instances when a legislator from an urban district took to the same floor to suggest or even imply that, in truth, the dollars flow the other way.

I am, of course, most of all disturbed by what I describe as the moral inconsistency of those who claim we must “reduce the footprint” of state government but who fight relentlessly for programs in their own districts regardless of financial return on investment. It is the natural disposition of a citizen legislature. Yet for me as a representative of a ‘net contributor’ district, city and county, I hope I am entitled to at least express genuine frustration at the lack of objectivity in our spending reductions.

To be crystal clear: I am not arguing that the 36th District, Seattle or King County–or other urban areas– should be shielded from the negative effects of necessary spending reductions because we are net contributors of taxes in every category of state revenues. But I am arguing that we should not experience reductions that are completely divorced from the proven, uncomfortable (for many) reality that Seattle and King County are the economic engines of the State of Washington.

Olympia denies it everyday, but without a healthy economic infrastructure and educated workforce for innovation in King County, Snohomish County, Pierce County and other economic centers, our state’s economy would literally implode.

There are those who may take one sentence from this broad-based post and claim that I’m a big city elitist arguing for money for my own special projects and interests, but that misses the spirit of honesty I’m trying to bring to a very difficult dialogue about how our taxes and spending decisions are made. We need thought leadership that brings our economy forward during these difficult times. We need a willingness to raise tough issues and question the institutional grip of the status quo that gets uncomfortable too easily. We need a willingness to risk being wrong. I can’t do this job as a part-time citizen legislator, and take so much time away from my family, if I’m unwilling to take that risk.

We are so much more than what we’ve become.

Your partner in service,

Reuven.

Last night the House Ways & Means Committee voted for an ‘early action’ bill to reduce spending by $222 million for the current fiscal year. I voted for the bill despite my fierce internal opposition and efforts to prevent a $42 million reduction in funding for a bureaucratic sounding program called “K-4 enhancement” that is very, very important to Seattle.

For me as a new member of the powerful budget-writing Ways & Means Committee, this tough vote was a cold shower of reality.

For Seattle schools, the K-4 enhancement program–which translates into funding for 58 elementary school teachers–means that the district will be forced to use their reserve account to keep paying the bill for the rest of the year. My sincere hope is to maintain funding for this program in the 2011-2013 operational budget. If it is not, the jobs of at least 58 elementary school teachers in Seattle will be endangered.

While K-4 dollars flow equally to districts statewide, Seattle and other districts that do not receive levy equalization dollars value the funds a great deal. Statewide about 1,500 teachers are funded by K-4 dollars.

In higher education, we painfully took $2 million from both the University of Washington and Washington State University out of their research budgets.

Watching so many efforts to restore funding fail, I am proud of aggressive efforts inside and outside of Olympia to restore $7.2 million for the highly capable program, equating to $400,000 for Seattle schools. The APP program in Seattle is funded primarily by local dollars but the state funds are essential to maintaining the APP infrastucture.

Parents saved the highly capable program. Hundreds and hundreds of email to legislators from parents statewide made the difference. I am so proud of 36th District education advocate Janis Traven of Magnolia who helped energize parents citywide to reach out to legislators.

It made the difference.

While many legislators care deeply about highly capable and worked hard, Rep. Jamie Pedersen deserves enormous credit for his steadfast support and thoughtful, quiet work to support restoration of funds.

My particular focus today in this post is on education but we made substantive reductions in a wide range of programs. It was a sobering introduction to the front lines of budget writing.

Your partner in service,

Reuven.

restore $7.1 million in state funding for the highly capable program. For Seattle this cut would have been an additional $400,000 but the impact would have been particularly painful. I fought tooth and nail for restoration of the funds and am so grateful for the hundreds of emails from parents that made it all possible. While this cut doesn’t make up for the awful $5.4 million cut made to Seattle Public School District overall, it was a small moral victory for parents.

It is a deep sense of humility for the budget challenge facing our state that I am pleased to have secured a seat on the coveted Ways & Means Committee. I will also sit on Higher Education and Technology, Energy and Communications committees as we struggle to rebuild our economy, reform government and reignite the possibilities of our state’s quality of life.

It is an honor to have the opportunity to work on crafting the state budget at a time when the challenges we face are so serious. The Ways & Means Committee has also folded the portfolio of the Finance Committee into its workplan so the full range of taxation and spending programs are under one roof. It is equally important to note that the entire 36th District team–Sen. Jeanne Kohl-Welles, Rep. Mary Lou Dickerson and I–hold posts on Ways & Means in our respective chambers.

State Rep. Ross Hunter, (D-Medina) is the new committee chair. Committee members are already hard at work tackling many of the structural issues the Governor discussed in the past few weeks.

One of my central objectives as a member of the committee is to focus on the core issue of tax and budget transparency. How does the money flow from taxpayers to Olympia and back in the form of services? Who receives what level of funding, for what services and why? How are tax exemptions calculated in terms of return on investment, value and opportunity cost? And most importantly, what works and what does not.

Another core driver of my policy interest remains higher education. I intend to fully engage in higher education policy and financial issues at our community and technical colleges, our four year institutions of learning, and our workforce development programs.

Finally, I will continue to be ruthlessly honest about my belief in the moral responsibility to provide services for foster youth, a group over whom we as a state have a fiduciary legal obligation as guardians. More than 30% of former foster youth are in prison in our state within 18 months of leaving the state’s care. Less than 2% of foster youth will ever achieve the dream of a college education.

Imagine the power and possibilities for our society if we could reverse those numbers?

We are so much more than what we’ve become.

Your partner in service,

Reuven.

The Governor’s budget has, if nothing else, helped to crystalize the profound structural changes underway in the political environment of state government. Pensions, health care, furloughs along with direct program cuts and substantial reductions in every area make it clear that we live in a very different time than just a year ago. I commend the Governor and her budget staff for engaging so personally and directly, raising real issues, and making the first move that allows the Legislature to now thoughtfully consider building a two year budget from her working draft.

While we can outline specific objections or concerns or recognition, I am more interested at this stage in a systemic dialogue about some key issues we need to address. To me there are four key ingredients in the Legislature’s next steps.

1. A new role, relationship and partnership with local and county governments;
2. A way to act upon the many conversations over the past years about a more productive, effective and outcome oriented way to finance higher education;
3. A radical approach to structural reform and transparency that takes the priorities in government process to the next level of effectiveness and seriousness.
4. The voice of citizens.

First, the only way we can build a next generation public service delivery model is to engage directly with local communities. Seattle and Walla Walla are fundamentally different communities and our citizens have different interests with respect to revenues and spending. It is time, simply, to engage directly in a systematic reform of what level of government should deliver what type of service. State government can no longer afford a model of equal service delivery in every category of public services regardless of cost or effectiveness.

One idea in the community college system concerns local property taxes. Should the local communities that house our 34 community and technical colleges have taxation authority to support their local institutions? Colleges in property rich communities would have additional funding while those in property poor areas would not. I do not support a radical shift away from the state’s obligation in any fashion but I do support exploring the question of whether there is a role for local taxation authority to supplement existing budgets. Overall I am deeply torn on the subject and see both sides.

Another obvious example is transit funding. Should local communities be given greater local taxation authority to fund local transportation priorities while the state pulls back from this role? Given that gasoline taxes are not allowed to be used for transit there is a case to be made for the change. Seattle or King County taxpayers should have a right to fund transit services such as Metro and Sound Transit without 17 state legislators from Eastern Washington or elsewhere overriding their wishes.

In some areas of government such as public K-12 education the role of ‘levy equalization’ goes to the heart of a massive shift of resources from property rich areas like Seattle to property poor areas such as Eastern Washington and other areas (approximately 240 of the 296 school districts statewide receive levy equalization funding from state government). Seattle receives $0.37 in education spending from Olympia for every dollar in education spending we send to state government. In today’s world, with today’s challenges, is this massive level of subsidy viable?

The real point is not that we should halt all subsidies from Seattle and King County which together account for an estimated 40% of state tax collections, if my memory serves, but that we need greater transparency into how the money flows to better understand what types of services should be locally supported and what type should be driven exclusively from state government. It’s a courageously difficult conversation but it’s important.

Now is the time for transparency of our spending and our taxes. What is the value, effectiveness and impact of tax exemptions? Today it’s virtually impossible to know since tax exemption decisions are both permanent and unaccountable for results. Why, I have to wonder, are spending on programs accountable for results while spending on tax exemptions (good, bad or indifferent) not subject to the same level of transparent accountability? This is not about closing loopholes in and of itself but demanding consistent budgeting so that all areas of spending regardless of their format are subject to real oversight.

Second, I had hoped to see bold structural proposals from the Governor around higher education. In the past few years there have been dozens of studies, commissions, task forces and policy reviews of higher education. All of them have struggled with the core question of how to create a bolder financing scheme that both values the fundamental moral obligation to create an educated workforce and engaged citizenry and how to improve accountability. The goals of all have been to improve student access, affordability and quality.

It is time to move forward. It is time to courageously tackle the lack of ownership from the business community toward our higher education system. It is time to recognize that the many, many programs we support in workforce development arenas are not managed with an overarching strategy that allows for openness and understanding of our goals. We can’t even track the tens of millions in federal funding on workforce development. We can do so much more for workers seeking training, access to a job and lifelong skill development.

The Governor’s budget proposal–creative in some areas but unimaginative in others– simply continues the unrelenting 15 year trend of reducing state spending for higher education while shifting the burden of costs to students. This trend is on a march that we will regret for generations. The base proposal to increase tuition by 9, 10 and 11 percent at our various institutions is not the answer in that it fails to include a way to ensure that students are paying for more than the status quo. I would only support increased tuition as part of a plan to pay for outcomes instead of inputs. The plan to stand by the State Need Grant is a critical step in protecting student access but eliminating Work Study and all of the smaller scholarship programs–including the Passport to College Promise Program for foster youth–is simply unacceptable. And I’ll work hard to find the money to restore those programs and not just complain. See my earlier post about Pay as You Go here.

I don’t have a magic answer but I am pretty sure that we can find one together by engaging in a more open, transparent dialogue about how to fund higher education while improving quality, access and affordability. The answer, it seems to every task force report we’ve written, is to pay for genuine and meaningful outcomes and performance not the inputs of first day student enrollments. And the answer includes recognizing the profound need for a regulatory scheme that treats our institutions of higher learning differently and not the same regardless of mission.

Third, the Governor’s reform initiatives are a strong first step. The governance changes (consolidation of state agencies in the same category of service delivery, IT consolidation, etc.) probably should have been done many years ago. They are part of the answer and are important to improved quality service delivery. The challenge with state government as well as every large institutional system such as a multinational corporation is to embed a profound willingness to reform from within.

I do not pretend for a moment that state employees haven’t been the subject of much criticism as our economy has struggled. They are, unfortunately, an easy target. But I would venture to challenge the Legislature and Governor–current and past–to recognize that we have not pushed, prodded and aggravated earlier for structural changes from within. We have not demanded improved productivity or quality improvement. We have not forced more meaningful measurement tools. We have not taken the Governor’s GMAP process seriously because it hasn’t forced structural reforms. The state auditor’s reports–some extremely helpful and some simplistic and shallow–rarely result in meaningful reform because no one seems to own the deliverable.

The most striking difference for me between the public and private sectors is the lack of hands-on ownership of measuring productivity. In the private sector we simply don’t have a choice. In the public sector, we rely upon reports, studies, commissions or task forces to tell us whether we have been productive or successful or effective for clients, customers or taxpayers. Why? This is not a technocratic question, it goes to the core of how we can improve quality and efficacy and value.

We need to unleash the entrepreneurial energy of our state employee workforce. We need people on the front lines to have the freedom to make the case for quality improvement and reform not because they have a boss looking over their shoulder but because they want to deliver a great service at a great price for our state’s quality of life. Most employees are passionate about doing good work. I don’t think we have nurtured or systematically supported that sense of innovation and courageous honesty that exists within the front lines. Our agencies are often too political, too unwilling to risk, too afraid of the consequences of speaking out with good suggestions because it might result in a bad review or a budget cut. Until we form a new partnership with state employees and citizens, we will continue to write budgets at the executive and legislative level that is somewhat disconnected from the realities on the ground.

Fourth, what are we asking of citizens? What is the call to action for people throughout our state from Seattle to Spokane, Grays Harbor to Yakima? I believe that in today’s world it is essential to demystify government and bring it closer to the people who are a part of everything we do. This budget, understandably difficult on all fronts, needs to include a more more powerful dialogue about the role of citizens–labor, business, cities, counties, non profits, school children, college students–that is more than ‘take your medicine.’ President George W. Bush was criticized after September 11 for failing to challenge Americans to summon their willingness to build community together. To serve. Today, here at home, we need to find a new approach to budgeting that allows people to feel the impact in a way that unleashes their desire to build community together.

Until we do that, negative stereotypes will continue. Citizens will continue to believe that government is cutting the public’s favorite programs while keeping state employees, special interests and other insider-deals fully funded.

We can rebuild the institution of state government into a 21st Century team that is nimble, flexible, innovative and passionate about quality–and that respect the taxpayer–by working together. That is the work of reform that will serve us for generations.

We must seize the opportunity of this crisis not just to balance the books for two years, but to transform ourselves and rejuvenate our state’s quality of life.

Your partner in service,

Reuven.

As the internal and external conversations about the state budget get extremely serious, it’s important to create an organizing principle and framework for how we can prioritize programs. “Pay as you go”–the core idea that in proposing spending legislators (and stakeholders) must also include ways to pay for their ideas in off-set cuts or new revenues–would radically change the dynamics of our political dialogue.

While this idea has been an abject failure in Congress because of the temptation to exempt the tough decisions, it offers a lot more hope for progress here at the state level since we don’t have the luxury or burden of printing money.

It’s tempting to think of this as the Balkanization of our politics since each party and interest would be forced to go after someone else’s favorite program, but at least it would force us to discuss the true ‘opportunity cost’ of the spending.

You can imagine the behind-the-scenes discussion: “I propose we increase funding for smaller class sizes in kindergarten through fourth grade, and I propose we eliminate the state tax exemption that allows agribusiness interests to pay no sales, B&O or utility taxes proportionally to pay for it.”

The Legislature needs to open the doors to the public for a rich, vibrant public dialogue about the true opportunity cost of programs and fiscal policy. By keeping tax exemptions and funding for non-core programs, for example, we are making a policy and moral choice not to fund other programs such as foster youth initiatives. We are making a choice and the linkage is direct, but the public often views it as indirect.

Today all of these conversations are raging on the inside. We need to bring them out into the open and demand that stakeholders who come to Olympia pushing and prodding for programmatic funding also have a sense of ownership of the need to pay for it. Today the public is losing out on the apples-to-apples discussion that would educate them about how tradeoffs are made in the budget writing process.

And it would force legislators and stakeholders to scrutinize the budget with a much more profound sense of conviction around finding savings in programs that are not priorities.

I’ll go first.

I propose that we increase funding for Passport to College, a scholarship program that sends foster youth to college and provides wrap around services to help ensure their success; College Success Foundation, a scholarship program for low income high potential youth including many foster youth alumni; Treehouse, an esteemed provider of wrap around tutoring and mentoring services for foster youth; Mockingbird Society, a highly effective, youth-based employment and advocacy group for youth in care. (All of these private, non-profit programs combined receive only a few million in public dollars).

Today, only 2% of foster youth ever achieve the dream of a college education while 15 times that number will go to prison within 18 months of leaving the state’s custody. The short, medium and long term financial cost of this failure–to say nothing of the moral implications–is stunning.

It is my personal and political dream to reverse those numbers. I know it’s a radical idea, but I think we’d all do better to send foster youth to college instead of prison.

In order to do that we need support for these amazing organizations that are actively, aggressively and boldly delivering high quality services to youth in and beyond care. They are getting tangible results that save taxpayers millions. It’s a great return on investment from a taxpayer perspective regardless of the immeasurable social, moral, intangible and ethical value.

To pay for these vital hands-on programs, I suggest we stop following a single vendor strategy for purchasing servers from Cisco and that we better coordinate with cities and counties in bulk purchasing. By introducing true competition into the marketplace with Washington as a massive government customer, Cisco, Juniper Networks and other companies would more aggressively price their solutions saving enough to safely and joyfully send our state’s foster youth to college and life.

Your partner in service,

Reuven.

(Disclosure: I want to send foster youth to college instead of prison and so I contribute to the organizations listed above. Many of the folks who run these organizations have also supported my political campaigns).

Arun Raha and the state’s Economic Forecast Council–a bipartisan, technically-oriented team of high level fiscal staff and legislators that together review economic data and project our future economic status–did not have a good week. And while it would be irresponsible of me to guess why the revenue picture and numbers were so off base this entire year (since I don’t sit on the council or the Finance Committee), I can’t help but express a deep sense of frustration at the curious consistency of the incorrect numbers.

For real people living real lives, the public policy implications are profoundly distressing. The Legislature is now scrambling to find ways to address the immediate ‘shortfall’ of revenues so that, at the least, we are ready to charge into the 2011 Legislative Session and focus primarily on the 2011-2013 budget, and not only the current fiscal year’s budget.

Prior to the latest forecast report, I noted the necessity of a special session so that we could make immediate progress in a strategic fashion on the current fiscal year budget deficit. And yet the surprise of the entire Olympia establishment as to the forceful drop in revenues from just last quarter is not lost on anyone, as evidenced by Director of the Office of Financial Management Marty Brown’s statements. It’s hard to understand how the data could have been so far off from collections of revenue in the past few months given the sense that fall collections usually show some degree of consistency.

Among legislators, Rep. Ross Hunter, chair of the House Finance Committee, has probably the strongest insight into our process and data and he continues to vote in favor of the forecast, so I assume he’s convinced of the validity of the economic research model.

Still, it’s hard not to wonder why our state’s projections have been so off base.

As a non economist, I can’t help but remain troubled at the consistency in our lack of accuracy as a state toward revenue projections this year when we have an economy that is ruthlessly tied to consumer spending. I believe to the fiber of my core that consumer behavior has fundamentally and radically changed in this nation during this Great Recession. The Great Depression changed perceptions on every level, and in many ways today’s consumers have altered their behavior in equally dramatic ways by redefining expectations for their own needs versus wants.

Normally staid bond markets in the public sector are struggling to convince the marketplace of their safety. How could that mean anything other than a deep sense of reservation about public funding models, volatility in previously rock solid tax funding streams and other major indicators about the concern over the city, county and state public sector’s stability?

Everyday the Wall Street Journal and other publications outline how saving rates are skyrocketing, debt loads are changing with respect to use of credit, individuals are making different buying choices in virtually every category of life. With a state tax system that is without question consumption based, how could we be anything other than deeply skeptical of the slow growth curve ahead of us as a state? I know that Raha’s statements have been credible and consistent in their natural lack of visibility into the future, and I appreciate the profound difficulty of his task. I certainly couldn’t do the job and I don’t pretend to trivialize the challenge of reading a crystal ball. But my hope, like all legislators, is that we can shore up our luck to at least have more accurate visibility into the revenue picture from here.

Your partner in service,

Reuven.

For the past few months Governor Gregoire’s efforts to reduce spending using across the board tools have been close to heroic. Now, almost regardless of the coming revenue forecast, the Governor has likely reached the end of her logistical ability to perform the remaining required cuts for the 2010 budget–the current fiscal year–without the help of the Legislature.

My hope is that the Administration and legislative leadership can agree upon a series of responsible reductions in spending to enable us to execute upon a responsible plan during the already-scheduled committee days in early December. The 147 current legislators are scheduled to be in Olympia for two days of committee work and thus there are few incremental costs to the special session.

It is critical, in my view, that we enter the 2011 legislative session in January focused on efforts to craft a thoughtful, fiduciary two year biennial budget as well as the transportation and capital budgets. Logistically, we could easily lose two to three weeks of critical productivity in budget work by focusing on the supplemental budget requirements first and only later turning to the two year budget process.

The tension is already rising about the profound implications of the budget reductions required during the past months. There are legitimate public policy questions about how the across the board cuts are impacting programs, and we need to closely examine vital programs at the macro and micro level.

We are entering arguably the most difficult legislative session in generations. We are facing profound structural challenges with respect to revenues, spending, constitutional and federal guidelines and so much more. The question is not whether we will make reductions but how. And since that is reality, it’s time for us to appreciate the complexity of making reductions without the right tools.

Now is the time.

Your partner in service,

Reuven.