Gaining Ground

General Government

There's an old joke that describes the nature of bureaucracy. When a caller dials the telephone number of Jones, Jones, Jones & Jones, a voice answers.

 "Jones, Jones, Jones & Jones."
 "May I please speak to Mr. Jones?" the caller asks.
 "I'm sorry, but Mr. Jones is out of town," the voice replies.
 "Perhaps I could speak to Mr. Jones instead?" the caller suggests.
 "Mr. Jones went home sick this morning," the voice informs her.
 "Well, then, would you be good enough  to put me through to Mr. Jones?"  
  the caller persists.
 "Mr. Jones is in a meeting and can't be disturbed," the voice comes back.
 "In that case, I demand to speak with Mr. Jones!" the caller shouts.
 "Speaking!" the voice finally responds.
Few Texans seeking help or information from state government find much humor in the joke. Hard-working families who send their tax dollars to Austin and figure they have a right to friendly, competent service in return don't think it's much of a laughing matter.

A performance-driven state government should be staffed by front-line workers imbued with an entrepreneurial spirit and the flexibility to do their jobs effectively. Replacing the bureaucracy's culture of complacency with thousands of innovative actions taken day-in, day-out by members of the public work force would help regain Texans' confidence in the ability of their state government to change for the better. In the end, improving state government's performance is a task that can't be easily separated from the goal of improving the public's perception of government.

An important step would be to reinforce state government's accountability to those it serves. But, first, it would be helpful to define what we mean by accountability.

Accountability is not accounting. It isn't a way to conform with rules and regulations. There's already plenty of this kind of "accountability" in state government, where middle managers spend much of their time accounting for their jobs and compiling reports to show that they've complied with procedures handed down from above.

True accountability is judging the effectiveness of policies or programs by measuring their outcomes against agreed-upon standards. To design a useful accountability system, policymakers should answer four basic questions:

Corporate strategy in the 1990s has shifted toward efforts to satisfy its customers and win back their trust. Now that it's possible to bank by phone, shop by TV or even order a dozen roses over the Internet, Texans are beginning to expect the same flexibility and efficiency in state government.

A series of recommendations in Gaining Ground would help break the cycle of poor government performance and set the stage for rebuilding popular support for public institutions that reflect the true interests of Texans.

Capping state jobs. The great majority of state workers put in long hours. They also pay plenty of taxes and, like most Texans, are fed up with the cost of government.

In the five years from 1988 to 1993, the number of Texans working for the state ballooned by 22 percent, from just over 200,000 to just under 250,000. While much of this growth can be attributed to prison growth and federal mandates, this was more than twice the growth rate of jobs in the private sector, which rose during those years by less than 11 percent.

The biggest boom came in Texas' health and human services agencies -- more than one in every three new state jobs. Class-action lawsuits contributed to the growth, especially at MHMR. Federal changes in Medicaid eligibility requirements, expanded programs to protect the young, elderly and disabled, and other services such as child immunizations and environmental pollution control also did their part.

The prison system drove many of the new state jobs, too, accounting for more than 21 percent of new state jobs during the period, and the hiring spree continues. Again, court-ordered reforms and the public fervor for locking up criminals and throwing away the keys to their costly new cells has meant more prison guards, more law enforcement officials, more criminal justice administrators -- and more money out of taxpayers' pockets.

Higher education has also spurred state employment. Nearly 27 percent of all new state jobs in the past five years have been added in the halls of academe -- although we should note that higher education hired employees at a slower rate than it enrolled students.

The same can't be said for state government overall. Since 1988, the ratio of state employees to all Texans has dropped from 83 to one to 73 to one. TPR believes that taming the public employment growth monster would save taxpayer dollars and force state government to operate more like our most successful private industries. If we fail to act now, the number of state employees will grow to more than 290,000 by 1997.

That's why perhaps the single most important recommendation in Gaining Ground would, if approved by the Legislature, cap state government employment at current levels, while increasing training opportunities for state employees.

The purpose of this proposal is not just to stem the rising cost of the public payroll, but to force state agencies to restructure themselves along more efficient lines. The goals include reducing middle management, contracting out services where appropriate and giving front-line employees the flexibility they need to do their jobs more productively.

Attrition should occur naturally, and state agencies should hire fewer employees as others leave the payroll. Front-line public safety workers -- prison guards, state troopers and criminal investigation personnel -- should be exempt from the cap. And to make the proposal particularly effective, state agencies should be given the freedom to devise their own reduction strategies, from leaner management layers to fewer field offices.

If our recommendation is adopted, we estimate taxpayer savings of $444 million for fiscal 1996-97. By the year 2000, taxpayers would find themselves supporting a total public payroll amounting to nearly $776 million less than it does today.

Tearing down barriers to doing business in Texas. Over time, state government has fallen into the habit of micro-managing private industry. The result? Ever more complex, hierarchical regulations and overlap and duplication at almost every turn.

A grocery chain based in Arizona, for example, recently found that it needed 15 permits, licenses or registration from eight different state agencies to open a single store in San Antonio. An oil and gas producer hoping to drill for minerals regulated by the Railroad Commission of Texas was required to submit a form to that agency asking for information virtually identical to that already supplied to the Comptroller on the producer's tax reports. The potential economic harm of these and other examples is hard to measure. But it's easy to see that as long as strong public protection policies are maintained, streamlined government regulations and permitting processes can help avoid the threat to new jobs that results from chasing off businesses.

That's why TPR recommends that the Business Information and Referral Program (BIRP) of the Texas Department of Commerce expand its operations into a true one-stop point of contact for business permit applicants. Citizens should be able to call the program's existing toll-free telephone number to request all applications needed to open a business, and then return the completed paperwork to BIRP for distribution to the appropriate agency.

Texas' regulatory agencies should also expand the use of negotiated rule making, contacting all potentially affected parties and soliciting their input when drafting a proposed new rule. As an adjunct to this proposal, agencies should explicitly be authorized to use alternative dispute resolution methods throughout the rule-making and permitting processes. This kind of open decision-making would create a spirit of cooperation from the beginning, improve customer service and diminish the likelihood of later lawsuits or other costly protests.

In addition, the state should standardize all business permits, license forms and applications and make them part of an integrated system with on-line tracking databases and marketing information housed in a single location. Regulatory agencies should designate a senior-level executive to be responsible for coordinating the agency's negotiated rule-making and dispute resolution work. And this specialist should oversee the agency's permit-tracking system.

Abolishing the State Treasury. Many have begun to question the financial wisdom of continuing to fund the State Treasury, a bureaucracy with an annual operating budget of more than $11 million whose most important tasks are duplicated elsewhere across state government.

First, let's review what the State Treasury does. Its principal function is to invest state funds using two major portfolios: the Treasury portfolio, with an average daily balance of $7.5 billion and TexPool, an additional portfolio consisting of $9.4 billion managed on behalf of counties, cities and local school districts.

The agency also administers the state's unclaimed property program, which collects cash, securities and other valuables abandoned in private accounts and, after attempting to return them to their owners, turns the remainder over to general revenue.

The Treasury's Cash and Securities Management Division moves state funds in and out of deposi-tory banks, monitors state payments, makes sure all deposits are safeguarded and forecasts impending dips in the state's cash balance to determine when the sale of cash management notes might be necessary to keep Texas out of the red.

TPR recommends that the Legislature approve placing the fate of the State Treasury on the next statewide ballot, allowing Texans to approve or dis-approve a constitutional amendment to abolish the agency. If voters approve the measure, the Comptroller should then absorb the Treasury's current responsibilities for administration, unclaimed property, cash and securities management, accounting and item processing, cash management and information resources.

As for that portion of the Treasury's duties that relate to the inventory, appraisal, storage and liquidation of items from forgotten safe deposit boxes, the entire process should be opened up to competitive bids.

Moreover, the Treasury's current investment operations should be allocated in blocks to professional private-sector money managers. This would provide opportunities to boost the state's interest income without jeopardizing safety and liquidity of public funds.

Consolidating the bulk of the State Treasury's responsibilities with those of the Comptroller's office would cut costs, improve services and maintain accountability. It would also offer Texans the chance to prove that they're serious about re-ducing the size of their state government.

Reorganizing the Railroad Commission. Created in 1891, the Railroad Commission (RRC) is headed by three statewide elected officials who oversee what was once one of the most powerful -- and is still one of the least understood -- public agencies in the nation. From the 1930s to the 1970s, no state regulatory agency could hold a candle to the RRC's national importance, although the declining role of Texas as an oil source has diminished the agency's clout in the years since. And after the new year, its mission will change again.

On January 1, 1995, the national Trucking Industry Regulatory Reform Act will take effect, ending individual state regulation of intrastate trucking services and motor carrier rates, which the RRC has overseen in Texas for 65 years. The new federal law eliminates the need for the agency's sizable administrative structure to regulate trucking operations in Texas.

By September 1, 1995, the Legislature should transfer responsibility for motor carrier registration, insurance filing and the International Stamp Program (which handles Mexican trucks while on Texas soil) from the RRC to the Texas Department of Transportation (TxDOT). The dedicated Motor Carrier Act Enforcement Fund should also be shifted to general revenue as of that date.

In addition, the Department of Public Safety should be authorized to adopt all rules and regulations needed to comply with federal safety requirements, as well as have exclusive say over the assessment of administrative penalties for motor carrier safety viola-tions. The State Office of Administrative Hearings should be given jurisdiction for any hearings that result from these cases.

The result of this proposed reorganization would be better customer service, an opportunity for the agency to focus its efforts on oil and gas, natural gas, hazardous waste safety and other important tasks -- and taxpayer savings of almost $19 million during the next five years.

Restructuring the Department of Information Resources. State govern-ment's information technology has proved difficult to manage since 1967, when the State Auditor first tried to grapple with the complex issues involved. Since then, the responsibility has evolved three separate agencies, finally ending up in the Department of Information Resources (DIR), established in 1989. This continuing legislative scrutiny through the years suggests the need for a comprehensive look at how well Texas is keeping abreast of the rapid changes in information technology.

DIR has three main functions: planning for future technology needs, regulating state agencies' use of information technology and providing services to other state agencies. The department's total annual budget is nearly $11 million. But DIR lacks the authority in some areas and the structure in others to take a true leadership role in tracking and coordinating statewide efforts to join the Information Age.

TPR recommends that the Legislature transfer DIR's regulatory function to the Legislative Budget Office. This would strengthen the link between state government's information technology and the appropriations process at a time when agencies are spending $900 million a year on their electronic resources.

The Legislature should also give DIR the telecommunications functions currently housed in the General Services Commission. This would eliminate duplication and streamline the planning and operation of state government's telecommunications efforts.

In addition, TPR proposes that lawmakers give clear authority to public school districts and other political subdivisions to make purchases through DIR's cooperative purchasing program, helping them benefit from group discount rates. And DIR should be encouraged to explore public-private partnerships, federal information infrastructure grant programs and working capital accounts.

Creating a Productivity Bank. When money is tight -- and despite the current $2.2 billion cash balance, money in Texas is tight -- state government must find alternative sources to fund its programs. State leaders have pledged no new tax hikes during the next budget cycle and told all state agencies to hold their appropriations requests at or below 1994-95 levels.

Yet, Texans continue to demand certain services. To balance these conflicting expectations, other states -- especially, Pennsylvania and Florida -- have turned to something called "innovation capital" in recent years.

The concept is simple. In Philadelphia, the city determined that it lacked the money to fund a light bulb replacement project demanded by its citizens, so officials borrowed $350,000 to replace its old bulbs with new energy-efficient lamps. Based on energy-use per public facility figures, taxpayers will now save some $415,000 per year. That's where the productivity bank entered the picture -- advancing funds for a program destined to save money in the long run but for which initial capital investment was unavailable.

TPR recommends a version of this productivity bank program for Texas. Under the aegis of the Council on Competitive Government, recommended in Against the Grain report and approved by lawmakers in 1993, state agencies should be authorized to apply for loans for projects that require capital outlay during their initial stages but promise to produce at least a 200 percent return over the period of the loan. The amount of start-up capital for the bank should be determined by the Council on Competitive Government, and no project specifically rejected by the Legislature should be funded.

The productivity bank would allow Texas to offer resources to all agencies for innovative projects that further their individual objectives, as well as the general goal of reinvention, while saving taxpayers money.

Collecting delinquent attorney taxes. Since 1992, when the Legislature instituted a $200 annual occupation tax for Texas lawyers, the tax has brought in some $9 million each year. But about 14,000 attorneys are delinquent for all three years.

Other professionals pay their occupation taxes at the time that they renew their licenses to practice. Engineers, veterinarians, real estate brokers, architects, psychologists, securities dealers, optometrists and dentists all know that they can lose their right to practice in Texas if they fail to pay. But lawyers are different. Their occupation tax is collected by the Comptroller, who has no authority to revoke professional licenses.

The Legislature should shift responsibility for collecting the attorney tax to the State Bar, which oversees all other aspects of the legal profession, and require that the tax be submitted along with each attorney's license renewal request. This would greatly increase voluntary compliance.

Although some may wish to challenge this proposed legislation as a violation of the separation-of-power clause of the state's Constitution, that judgment should rest with the Texas Supreme Court. In the mean time, the state would gain an additional $860,000 a year at no extra cost and a total of $4.3 million between now and the year 2000.

Simplifying state court fees. While we're on the subject of lawyers, TPR believes that state court fees are unnecessarily complex. A bewildering array of 12 separate fees may be assessed on those who are convicted of crimes in Texas. No one argues that criminals shouldn't pay their way, but the current system costs taxpayers money in accounting, reporting and auditing requirements at both state and local levels.

If you're cited for speeding, for example, you're liable for court fees that go to pay for judicial personnel training, law enforcement education, crime victims' compensation, criminal justice planning, rehabilitation efforts and other programs. That's fine. If you're cited for failure to maintain insurance liability on your car, you must in addition pay a fee to the Operator's and Chauffeur's License Fund.

Meanwhile, the Comptroller regularly audits local governments to make sure that they're complying with the state court fee structure, and we often find that problems at that level are directly attributed to the complications of the system, which are sometimes exacerbated by inadequate local staffing or training. Which fee applies to which violation? Which should be submitted on what form? In the instance of partial payment, how much should be allocated to this fund and how much to that fund?

There's a simple answer. The Legislature should streamline state court fees into a single uniform system. Specifically, we propose that court fees be repealed and replaced with a standard fee divided among law enforcement standards and education, criminal justice planning, crime victim's compensation, abused children's counseling, crime stoppers assistance, juvenile probation, the law enforcement management institute, breath alcohol testing, operator's and chaffeur's licencing, general revenue and rehabilitation. This proposal should result in no overall funding changes. The Legislature should evaluate the apportionment every two years as priorities shift.

Revoking state debt. Texas has about $7 billion in bonds that have been approved by voters but never issued. Two of the bond issues should be immediately removed from the state's bond authorization.

The first, totaling $500 million for the Superconducting Super Collider, is no longer necessary, since Congress has ended the project's federal funding. The second, $67.5 million in revenue bonds for the State Preservation Board's Capitol renovation project, have been ruled illegal. Yet, both remain on the books.

So what? Here's what. Rating agencies regularly review the state's debt structure to determine municipal bond ratings, which affect the interest Texas pays. Our current "Aa" bond rating from Moody's, "AA" rating from Standard & Poor's and "AA+" from Fitch Investors Service show potential debt that's higher than it need be, exposing the state to as much as $15 million extra in debt service payments.

TPR suggests that lawmakers revoke $317.5 million in revenue bonds right away and submit the remaining $250 million in general obligation bonds for the Superconducting Super Collider, which require voter approval to revoke, to the ballot at the earliest possible opportunity.

Consolidating state agency field offices. Think of the changes in Texas over the past few years. Counties that were once rural are now predominately urban. Transportation and telecommunications advances have created new ways of doing business. Local demographics have changed almost beyond recognition.

State government's field offices, however, still dot the landscape. And taxpayers are paying for these redundant field offices, even when the population of those served by the offices is too small to justify their continued existence.

The Comptroller's Property Tax Division, some of whose employees spend more time on the road in rural areas than in an office, has already saved taxpayers money by allowing certain workers to "telecommute" from their homes through faxes and other modern technology. The General Services Commission is promoting the consolidation of different agencies' regional service centers. The various state health and human services agencies are exploring opportunities to co-locate their field offices to save money and offer their clients more convenient service. The rest of state government should follow suit.

The Legislature should create a task force, as a pilot effort, to rethink the state's field office structure. In much the same way as military base-closing evaluations on the federal level, the task force should analyze all state-leased and state-owned property in the pilot area and devise plans for consolidation or closing offices.

Bringing state government on-line. A related issue is the demand for easy-to-use electronic access to government information. From lists of available services to phone numbers for non-profit groups to health care and other consumer information, the interest in electronic data is growing day-by-day.

The Comptroller's Window on State Government electronic bulletin board, for example, has been accessed 360,000 times since its debut two years ago, and usage has recently increased by as much as 22 percent from one month to the next. Laudable work by other state agencies have made pending legislation and other public information available at little cost, but these informal efforts are still hit-and-miss. Texas needs an overall strategy for delivering open, on-line government to the people who pay the bills.

At a minimum, the Legislature should require that all pending state legislation be placed on the Internet and Window on State Government, including the texts, histories and updates on the status of every bill introduced. Other features should include lawmakers' votes, committee hearing schedules and the entire Texas Register free of charge.

Moreover, Texas should pursue federal grants to help pay for the expansion of electronic access to public information. The Legislature should establish a task force to develop strategic policies for electronic commerce transactions between state agencies and private industry, and coordinate statewide services on telecommunications networks to ensure uniform standards, low costs and the broadest possible access.

Rethinking state housing. While writing mortgage checks, Texas homeowners and other taxpayers also fund homes, housing benefits or free utilities for about 1,100 state employees -- mainly, prison and university officials and parks and wildlife staff. Sometimes, security or emergency response capabilities are cited as a justification, or, in the case of the Texas Parks and Wildlife Department (TPWD), the need to protect against vandalism and provide after-hours assistance to visitors.

State policy is inconsistent on wheth

er housing should or shouldn't be provided to certain state employees. Some state agencies recover a portion of the costs. All TPWD employees, for example, pay at least a nominal fee per month, although that agency, the Texas Youth Commission, the Texas Department of Health and others collect less than 40 percent of their yearly maintenance costs in these below-market rents charged to workers. The Texas Department of Criminal Justice reports that two-thirds of its supervisors who receive housing subsidies pay no rent at all.

TPR recommends that the Legislature develop a policy for state-owned and public university-owned housing to recover the cost of taxpayer subsidies, with the exception of homes and historic sites used for statewide ceremonial purposes. Employees currently receiving free utility service should be required to pay, and rental fees should be adjusted every two years to reflect market conditions.