Jindal budgeting plan may lack will to overcome politics

It’s old wine in new bottles. It’s been tried elsewhere with little results. But that doesn’t mean that Louisiana shouldn’t take a shot with it, as long as it maintains realistic expectations about what it can and cannot do.

Gov. Bobby Jindal apparently has turned to an old pal to help the state winnow away projected massive projected budget deficits over the next three years, using an old strategy. Rolfe McCollister, a backer of Jindal’s for years and publisher of the Baton Rouge Business Report, has been enlisted to raise money to support an effort to improve the state budgeting process. McCollister leads Believe In Louisiana, an interest group that typically has backed the Jindal public policy agenda.

The strategy to be employed they call “outcome-based budgeting,” although it goes by many other names. Its idea is to create an overall budgetary benchmark. This establishes a pot of money for distribution to government. Then, all functions of government are broken down into discrete units and the activities related to them calculated with their cost figures. Each function then is rank ordered from most to least important. Finally, activities are funded starting at the top and moving down the list until the available money is exhausted, after which those activities are not funded and thereby not pursued by government. Another variant would set for different service levels using different amounts of money. Still another determines what will be considered the priorities, and then finds the money to fulfill as many as possible.

To facilitate this, the state has spent a (relatively) small amount of money to hire David Osborne, a leading proponent of the technique who gained fame for his “reinventing government” rubric in the 1990s, borrowing from ideas that had been around for a quarter-century previously. These plans are all well and good, but the reality of the situation is this is a very hard row to hoe with the threat of overinflated expectations.

The single biggest mistake made in these kinds of campaigns is failure to understand that, at a fundamental level, you cannot “reinvent” government. This idea is that procedures in government’s operation can be implemented to increase its efficiency and to save substantially. In a word, that is unattainable because of the very nature of government. It is attuned to achieving not greater “efficiency,” or increasing output with the same or reduced input, but with “effectiveness,” or completing judged satisfactorily a task regardless of the amount of resources used. Efficiency can be achieved at the margins, but never in great quantity because, by definition without a profit motive to provide incentives needed for efficient behavior, government inherently is wasteful.

Additionally, the budgeting strategy requires a strong will on the part of implementers to put aside politics in decision-making. Right now in Louisiana there are many programs that either deliver little to the state and/or because of the mix of payers and beneficiaries needlessly cost much more than they should. (Perhaps the most expensive example is the case mix methodology for reimbursements to nursing homes regarding Medicaid payments that forces into them many people who don’t need such an intense level of care that could be done much more cheaply in home or community settings, and allows the industry to charge the taxpayers $20 million a year for empty beds.) Political decisions where certain interests have legislative allies who funnel them the money with little regard to efficiency or priority prop up this wasteful spending. It won’t be enough for Jindal to have a steely resolve to deal with these kinds of situations; also, a number of legislators will have to join him to tamp down political influences that would interfere with the use of this strategy.

Given the state’s history, one should be leery that the political will exists here to see this strategy through to its end. Louisiana is not alone in this regard: many states have talked about this, but few have gone so far as to try it and actually in the form in which it was intended (usually succeeding precisely because extreme budgetary difficulties were at hand). Still, given the magnitude of the impending crisis, it’s worth taking a shot. And if Jindal actually could pull it off in a meaningful way, given the obstacles it would rank as one of the greatest, if not the single greatest, policy achievement of any governor in the state’s history.