Commentary: After Covid-19, How Much Government? (June, 2020)

By John McClaughry

A year from now Vermont state government will almost certainly look quite a bit different than it does now. We will hopefully have worked through much of the economic destruction of the COVID- 19 pandemic. State government will have pocketed and allocated $1.25 billion in Federal funds to cushion the pandemic’s impact, but that pot of gold will not be continually replenished.

Vermont, facing a $250 million shortfall in General Fund revenues for the fiscal year that starts a month from now, will have to rethink what it is and what it does. To undertake that task intelligently we must bravely launch a thorough-going Performance Review.

A Performance Review is not merely a process for squeezing out waste from the current operations of our $6 billion state government. Every administration proposes to take aggressive action to improve operational efficiency and squeeze out waste. 

The present administration, for example, is carrying on a Program Improvement for Vermont Outcomes Together (PIVOT).  It has generated a Program Modernization and Efficiency Plan “to identify and eliminate confusion, waste and duplicability (sic) in operational processes”. Under the direction of a very capable Chief Performance Officer, the administration is striving for “results based accountability” based on the answers to three questions: “How much are we doing? How well are we doing it? Is anyone better off”? 

Note that this jargon-rich process, like several feeble predecessors (such as the costly failure called “Challenge for Change” and an ephemeral  creation named GRORC), assumed that our state government  has properly become the Great Caretaker of Us All, charged with maintaining a prosperous economy, healthiness, cleanliness, sustainability, safety, nurture, education, family, caring for children and the disabled, and so on. These felicitous “population-level outcomes” were actually spelled out in the statute books in 2014 (3 VSA 2311). 

A Performance Review, by contrast, is not based on a foundation of expansive and expensive government serving as Great Caretaker of Us All. Performance Review is a careful and deliberate study by knowledgeable and disinterested people – not people who labored for decades to constantly create and expand government – of what state government is doing, how it does it, and how what the people want done can be done better and more efficiently. The goal is to balance over the long term the cost of state government’s programs and the revenue from taxpayers, without imposing regulations and taxation that would shut down economic growth, affordability, and revenue production.

In a more pointed formulation, a Performance Review asks “what are the core functions of government? How well is state government performing those functions? Are there better ways to achieve the same results, at less cost? What functions can be entrusted to a free people without invoking the governmental powers of regulation, confiscation, coercion, and prohibition? What should our state government just stop doing?” With my pro-liberty bias, I would add, “Are the activities of state government protecting or endangering our constitutional rights and liberties?”

The modern Performance Review idea has strong bipartisan roots. In the 1990s Texas Controllers John Sharp (D) and Carole Keeton (R) fed hundreds of cost-saving recommendations to Governors Ann Richards (D) and George W. Bush (R), saving Texas taxpayers billions. Michigan Gov. John Engler (R) was soundly reelected in 1996 due to the success of his review called PERM, for Privatize, Eliminate, Retain or Modify. 

In fact, the Vermont Democratic platform of 2004 pledged that party to conduct a “top-to-bottom ‘performance review’ of the functions of state government… to find creative, smart new ways to make government run more efficiently on the resources we have.” Unfortunately the Democratic legislature elected that year seems to have forgotten this promising proposal, but it’s not too late for them to catch up.

It won’t be easy to conduct such a review under the fierce and immediate pressure of a pandemic, huge looming deficits, and the ever –present resistance of special interest groups. But unless it’s done, the state government will from stumble haphazardly on through the recurring cycle of politically-driven program expansion, increased spending, revenue shortfalls, tax increases, and then expanding all over again until the next recession.

If the Democratic majority in Montpelier needs inspiration, they need look no further than their leader, Barack Obama. In naming his director of the Office of Management and Budget on November 25, 2008, the President-elect said: “We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of politicians, lobbyists, or interest groups. We simply cannot afford it. This isn’t about big government or small government. It’s about building a smarter government that focuses on what works.”

 – John McClaughry is vice president of the Ethan Allen Institute

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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