State budget crisis: searching for the silver lining.

• Author: Peirce, Neal
• Position: Commentary

Can there really be a silver lining? Could the grave fiscal crises now gripping the states prompt something beyond mindless across-the-board cuts? Might the door actually be opened for tough but critically important reforms?

A few straws of hope are in the wind--states reporting major operational changes as they seek to balance their budgets. These could be big-time learning experiences for America's governors and legislatures. One sees a way for them to do right for their states' future stability and welfare-acting in vivid contrast to official Washington's deep deficit mix of heavy war spending packaged with massive tax cuts.

Consider Washington state, where Gov. Gary Locke and the Legislature are facing a prospective $2.4 billion gap between the cost of existing services and anticipated revenues. But they didn't choose the same-old same-old-starting with the existing budget and then foraging for cuts.

Instead, with counsel from the Minneapolis-based Public Strategies Group and its "reinventing government" crew headed by Peter Hutchinson, Locke and his advisers decided to start by listing their state's most critical goals, how it should be spending its money in the first place.

The Locke team first identified 10 key results it believed the state's citizens most wanted from state government-from improved achievement by students, to a productive work force, better health for the state's citizens, a vital business climate and enhanced natural resources.

"Results teams" were set up for each outcome, to produce a "purchasing plan" to procure the best possible results. The health team, for example, decided the biggest returns came from prevention strategies--better health clinics, improved food sanitation, and the like--rather than more spending on Medicaid for working adults.

Each team then took a look at its share of the state government's current 1,400 activities, and ranked them from high to low priority--from services they'd purchase more of to those they would not buy at all.

Drawing the line where anticipated revenues ran out, the governor then produced his budget with its list of $24 billion it would buy and $2.4 billion it would not. It was perhaps the most comprehensible budget legislators had ever seen.

The budget-still in discussion-involves lots of pain, including elimination of Medicaid for nearly 60,000 of the working poor and cutting 2,500 state lobs. Though Locke is a Democrat, interest groups and organized labor objected...