THE AVENUE JANUARY 6, 2011
State of the state speeches usually have the feel of New Year’s resolutions. This year, say the governors, the state will be richer, smarter, better, happier thanks to new programs, new rules, and new ideas. Of course, this year the pronouncements are more sober and dourer.
But good times or bad, implementation is always the hard part. That’s where the state of the state speech from New York’s newest governor, Andrew Cuomo, looks really interesting. He has made governance reform a priority, and wants to use the fiscal crisis to make it happen.
Local governments are desperate for cash, as their revenue streams are drying up and demands on services are increasing. The state itself doesn’t have the money to make up the shortfall because it’s got a mammoth one of its own. So localities are unusually primed to respond to financial incentives to do what they’ve adamantly resisted before, which is change how they work with their neighbors. And individual New Yorkers, feeling hard-pressed by local tax burdens, are also probably readier to reexamine their commitments to hyper-local government and service provision when those commitments have a clear price tag. Cuomo’s local governance reforms are providing those incentives (which sound familiar):
- He calls for ten regional economic development councils that will coordinate state agency investments and demand that local governments show results to get funds. These councils will compete amongst themselves for a $200 million pot of additional state money for job development.
- The governor ties property tax relief to local government consolidation or outright dissolution. The state provides additional monies when local governments merge or dissolve (these processes save money in the long run, but they often incur up-front costs) already, but Cuomo would mandate that half of this extra money go to property tax reductions. The state has more than 10,500 local government units--voters may decide it’s not so bad to be part of the township next door if their property tax bill drops.
- Cuomo proposes $250 million for school districts that find administrative efficiencies, which are likely to come through several districts sharing services like busing, food service, and maintenance--or maybe even bigger steps like sharing curriculum development staff.
During the fiscal crisis, governments have shown that they will make significant changes in the way they do business for comparatively modest financial incentives. The federal Race to the Top program, which Cuomo referred to as a model, is a great example: Tennessee, New York, Florida, and Ohio had to make significant and controversial changes to charter schools, low-achieving schools, and teacher evaluations, to win Race to the Top grants in the range of $400 million to $700 million--which are just a fraction of these state’s overall education budgets of $3.8 billion to $19.9 billion.
But then there’s the legislature, which has the power to tank some of his most ambitious reorganization plans. For example, Cuomo has proposed that a state commission figure out how to eliminate more than 200 of the state’s 1000-plus state agencies, authorities and commissions. He wants the legislature to pass a law that would give it 30 days to reject the commission’s recommendations (up or down--no tinkering). If the legislature doesn’t act, the commission’s plan goes into effect.
Why would the legislature give up its power? Cuomo’s likely gamble is that they will have to, with a $10 billion budget gap looming this year, and bigger caps next year and the year after: “You can’t make up these kinds of savings over this long of period of time through a budget cutting or trimming exercise. We are going to have to reinvent government. We are going to have to reorganize the agencies. We are going to redesign our approach because the old way wasn’t working anyway, let's be honest.”