Turning State street upside down.

• Author: Seglem, Lee
• Position: Government reorganization in answer to budget deficits - Includes related articles

It's new, improved and entrepreneurial, too. Can all the efforts to restructure state government deliver a better system?

Faced with a runaway fiscal crisis, a bloated bureaucracy and a worsening tangle of red tape and inefficiency, the embattled political establishment decides the time is ripe for a bold new order, for a series of actions that far exceed the scope of conventional reform and cost-cutting. This is a job, the leaders conclude, that will require nothing short of complete government restructuring.

This is perestroika in the Statehouse.

Legislators and governors from coast to coast, whipsawed by persistent and successive budget deficits despite mammoth tax increases, are turning more than ever to the gospel of government reorganization and restructuring in search of answers to their problems.

Small wonder: Although state taxes have gone up by a record $25 billion nationwide over the last two years, as many as 35 states still face serious revenue gaps heading into the next fiscal year. Spending cuts, public employee layoffs, early retirement programs and a batch of one-shot revenue-raisers--like the sale of a New Jersey state highway that raised some $400 million in 1991 but still left the state facing a $600 million shortfall this year--have proved to be insufficient medicine. As a result, the language of the bureaucracy has taken on the tone of the private sector--"downsizing" is the prime buzzword of the '90s--as state officials explore everything from agency mergers to realignment of aid programs to privatization to get a grip on the situation.

One key indicator of the trend is the sheer number of task forces, review commissions and audit bureaus that have cropped up in recent years.

During the go-go, hyper-growth decade of the '89s, few states had cause to examine the structural thicket of their government operations. Today, not one lacks an appropriate organ designed to give the bureaucracy a thorough going-over. Clever acronyms abound: In Arizona, they call it SLIM--the State Long-Term Improved Management Task Force; Delaware has MAX--Maximizing Efficiency and Service Quality; and in Hawaii it's known as ACE--the Advisory Committee on Excellence. Virginia simply has Project Streamline.

In a state-by-state examination of the situation earlier this year, entitled "Looking for Light at the End of the Tunnel," the National Association of State Budget Officers (NASBO) concluded that "in many ways, fiscal 1992 may be a turning point for stage governments. [It may] be a year in which states realize that their current structures are not well suited for the challenges that lie ahead.

"Persistently deficits and the instability they cause may begin to give way to efforts to . . . redefine and reorganize state service delivery systems," the report said. "While only a start, these efforts may set the tone for a very different role for state government in the years to come."

A major public relations boost in this direction came with the recent publication of a ground-breaking book, Reinvesting Government, in which authors David Osborne and Ted Gaebler issue a sort of public policy "call to arms" for a vast re-thinking of government at all levels. The book makes the case for an injection of competition, flexibility and the enterpreneurial spirit into government operations and calls for a wide-ranging set of budgetary, personnel and regulatory reforms.

"Most of our leaders still tell us that there are only two wasy out of our repeated public crises: we can raise taxes, or we can cut spending," the authors write. "[But] for almost two decades, we have asked for a third choice. We do not want less education,fewer roads, less health care. We want better education, better roads and better health care, for the same tax dollar. Unfortunately, we do not know how to get what we want. Most of our leaders assume that the only way to cut spending is to eliminate programs, agencies and employees."

In fact, unconventional reform already is occurring:

* In Iowa, after a massive study led by a committee of private business executives and state agency heads, Governor Terry Branstad and state lawmakers have pared the number of state departments from 68 to 20, eliminated 40 state boards and commissions and cut state government personnel by 10 percent. The reorganization is credited with saving at least $60 million, even as spending for education programs and economic development has risen.

* In New Jersey, a management review commission appointed in 1990 by Governor Jim Florio produced savings of more than...