Two Transparency Initiatives We Really Need

Many years ago, when I hung around manufacturers for a living, “total quality management” was the rage.  A focus for many firms was something called ISO 9000 – implementing management system standards that created rigorous processes, procedures, and documentation to assure quality.  Many companies found ISO 9000 helpful in pursuing “zero defect” manufacturing practices.  However, others questioned whether ISO 9000 distracted time and attention away from things that were arguably more important.  Skeptics contended ISO 9000 focused energies on controls, procedures and paperwork, not product understanding and improvement, innovation, and customer responsiveness.  One running joke was that ISO 9000 made you very, very good at making everything except money.

The post-session commentary about the need to reform our messy, dysfunctional legislative process brought me back to those days.  The harsh criticism coming from legislators, the media, and the public is certainly understandable.  Unsurprisingly, there is now a lot of talk about changing rules and procedures to improve the process, add transparency, and restore public confidence.  Recommendations include longer advance notices before taking final votes on bills, prohibitions against post-midnight bill passage, restricting the subject scope of bills, and increasing public transparency of legislators’ own activities, practices, and spending.  There is certainly merit to these ideas.  Policymaking will always be a very chaotic and volatile “manufacturing” process, and changes that better manage the volatility and chaos are worth exploring.

But just as ISO 9000 certification doesn’t preclude manufacturing barbed wire toothbrushes, process improvements won’t prevent policies that run counter to the pursuit of efficient, effective use of taxpayer dollars and results-oriented government.  We’ll never realize “good government” if we spend our transparency energies on process but ignore substance.

A transparency agenda that focuses on outcomes would allow citizens to evaluate whether their tax dollars are being used efficiently and productively and is very different from the inside baseball world of legislative rules and procedures.  Here are two important initiatives that need to be part of that agenda:

A Big Budget Boost for the Office of the Legislative Auditor.  Created in 1973, the OLA is the state version of the federal Government Accountability Office – the only entity within government specifically dedicated to promoting accountability, strengthening oversight, and enhancing government program effectiveness.  The OLA’s Program Evaluation Division has the authority to evaluate virtually any state funded program or study any topic that affects state government.  Simply put, this office is the most indispensible tool in the government performance and accountability toolbox.

Current support for the OLA is, in a word, appalling.  Since 2003, state spending from all government operating funds has increased nearly 60%, or over $13 billion.  Meanwhile, the OLA’s staffing has fallen 25% from 80 to 60.  In FY 2015, state general fund spending was $20.3 billion, an increase of 4.9% over the previous fiscal year.  The OLA’s budget appropriation was $6.2 million – a slight decrease from FY 2014.  And since the OLA has considerable financial auditing responsibilities like the use of the Legacy Fund and MNSure, only a fraction of that $6.2 million can go to program evaluation and special investigations.

Frankly, this should embarrass a state that prides itself on a good government ethic.  As the size, scope, cost, and complexity of government programs escalate we should be aggressively building up our internal capacity to evaluate program performance and policy results.

Create a Tax Expenditure Commission.  For a state that expresses so much doubt about the ability of taxes to influence behavior, Minnesota lawmakers have never shied away from tweaking the tax code to incentivize certain taxpayer behaviors, reward particular actions, treat certain taxpayers favorably, or advance some policy outcome.  And there is absolutely no sign such interests are lessening.  The number of new or expanded tax credits adopted in the conference committee bill is a small fraction of the number legislators introduced this year.

In 2010 lawmakers directed the Department of Revenue to recommend ways to improve the oversight of tax expenditures.  The subsequent report1 provided an excellent blueprint for systematically reviewing and evaluating tax expenditures via a new Tax Expenditure Commission and incorporating the resulting findings into ongoing budget and policy making.  But like so many reports of this nature, the findings and recommendations sit untouched gathering dust in the Legislative Reference Library.

Current practice allows tax expenditures – largely spending in another form – to escape any semblance of normal budget discipline.  A Commission would help ensure tax expenditures constitute sound public policy and meet their stated objectives.

Support for these two ideas would be a very good test of how serious lawmakers really are in their quest for making government more open to the public and improving the ability of legislators to craft sound public policy.  Unlike procedural changes, these initiatives would cost money.  That’s asking a lot when every competing area of government spending now gets to label itself as “investment.”  Ironically, these two recommendations are examples of where that idea really applies.   MH

  • 1 Tax Expenditure Review Report: Bringing Tax Expenditures into the Budget Process, Minnesota Revenue, February 2011