I have either been involved in or closely observed some level of government for almost ten years. In that time I have studied a series of local, county and state government entities, as well as an array of government public trusts.
I have spent a good deal of time listening to those groups argue about why they needed to continue receiving taxpayer largesse, need more taxes and fees, or want approval for new debt spending. I cannot recall one single time when a representative of any government group admitted to having too much money and suggested that the money be returned to the taxpayers from whom it was taken.
A naive person who did not maintain a healthy sense of skepticism would quickly adopt the point of view that almost all elements of government are terribly underfunded and much good would be accomplished with higher taxes and more debt spending.
Those who advance the notion of more government spending usually do so in a smooth and professional manner but every once in a while, a bureaucrat mistakenly reveals the true state of affairs. This was illustrated when I recently attended a meeting in which a group government officials listened to a very professional presentation by a representative of a government entity. The presentation communicated the need for money faced by the agency and was not unlike any number of similar presentations I have heard over the years.
Following his sales pitch, the presenter introduced to the group a high ranking official in his agency. Apparently unaware that a few state representatives where in the room, that official announced that he had been very busy lately because his agency was nearing the end of its fiscal year and his boss had apparently discovered a few extra hundred thousand dollars and had tasked him with quickly spending the money before the fiscal year expired. After all, the agency wouldn't want elected officials to discover they had overfunded the agency, and certainly the agency did not want to run the risk of facing reduced funding.
To hear a high ranking official make this comment was shocking in and of itself, especially following the recently concluded sales pitch of his subordinate. However, what I found to be the most discouraging was the reaction of the audience. Instead of expressing shock or disgust at this obvious waste of taxpayer dollars, several of the government officials met the comments with applause and laughter.
Their reaction created the distinct impression in my mind that those who celebrated these comments support taking from the taxpayer even when it is unnecessary to do so. This speaks to the fact that they no longer consider their positions to be positions of trust in which their foremost duty is to guard the taxpayers' money.
Incidents like this illustrate the importance of tax reduction and much greater transparency. To this end, I look forward to drafting and sponsoring an aggressive schedule of legislation during the upcoming session that both cuts spending and brings about greater transparency than ever before. The taxpayers must have the easy ability to see how, where and when the government bureaucrats are spending our money.
Sunday, September 27, 2009
Wednesday, September 23, 2009
Tuesday, September 22, 2009
Monday, September 21, 2009
Sunday, September 20, 2009
Conducting a Review of State Employee Insurance
You may have read recent headlines regarding an increase in rates that state, school and county governments will be paying for the insurance of their employees. An increase in the cost of the co-pay provisions of the primary PPO plan (state-run self-insurance program known as HealthChoice) will be handed down to state, school and county employees.
Over the past two years, it appears HealthChoice has kept rates from significant increases by subsidizing them with investment income derived as part of a increasing amount of reserve funding. However, during this time, because of this subsidy, and possibly because of investment income reversals as part of the downturn in the economy, the plan's reserve fund appears to have dropped from the 170 million dollar level down to about the 100 million dollar level.
These changes led me to predict earlier this year that the HealthChoice board would probably stop subsidizing the rate premiums which would result in a large rate increase for the upcoming year.
Because rates were artificially kept lower in the past couple of years, much of the impact of three years of health care cost inflation will be felt this year.
The HealthChoice board appears to have made the decision to split the cost of the increase among the employees by raising their co-payments and the employers by raising the cost of the premiums.
Fortunately, House and Senate leadership, working with Insurance Commissioner Kim Holland, foresaw this issue and passed legislation impaneling a five-person study group to look at various solutions to the problem. As a member of that group, I believe it is essential for us to develop legislation to keep costs to employees and employers as low as possible.
There are some innovative and creative concepts that have been pioneered in the private enterprise system that I feel we should attempt to incorporate. One of the most exciting is an incentive plan developed by the Safeway Corporation that aims to drive down costs by incentivizing wellness and prevention by rewarding those who stay fit by lowering their insurance costs (which I believe many who are experiencing an increase in co-pays would be happy to take advantage of in order to lower their co-pay).
Another important reform must be to put a benchmark in place so that the entire system can be evaluated on a regular basis and a cost comparison can be conducted to make sure the lowest cost is being passed down. A key component of this ongoing benchmark should be to require the state-run plan to participate in a process designed to compare it to the plans being offered in the private sector. As is often the case, the private sector is much more incentivized to produce a quality product than a government entity.
I hope we can find a solution to reverse the costs increases of this year and I think it is our job as Legislators to make sure these types of increases are avoided in the future.
Over the past two years, it appears HealthChoice has kept rates from significant increases by subsidizing them with investment income derived as part of a increasing amount of reserve funding. However, during this time, because of this subsidy, and possibly because of investment income reversals as part of the downturn in the economy, the plan's reserve fund appears to have dropped from the 170 million dollar level down to about the 100 million dollar level.
These changes led me to predict earlier this year that the HealthChoice board would probably stop subsidizing the rate premiums which would result in a large rate increase for the upcoming year.
Because rates were artificially kept lower in the past couple of years, much of the impact of three years of health care cost inflation will be felt this year.
The HealthChoice board appears to have made the decision to split the cost of the increase among the employees by raising their co-payments and the employers by raising the cost of the premiums.
Fortunately, House and Senate leadership, working with Insurance Commissioner Kim Holland, foresaw this issue and passed legislation impaneling a five-person study group to look at various solutions to the problem. As a member of that group, I believe it is essential for us to develop legislation to keep costs to employees and employers as low as possible.
There are some innovative and creative concepts that have been pioneered in the private enterprise system that I feel we should attempt to incorporate. One of the most exciting is an incentive plan developed by the Safeway Corporation that aims to drive down costs by incentivizing wellness and prevention by rewarding those who stay fit by lowering their insurance costs (which I believe many who are experiencing an increase in co-pays would be happy to take advantage of in order to lower their co-pay).
Another important reform must be to put a benchmark in place so that the entire system can be evaluated on a regular basis and a cost comparison can be conducted to make sure the lowest cost is being passed down. A key component of this ongoing benchmark should be to require the state-run plan to participate in a process designed to compare it to the plans being offered in the private sector. As is often the case, the private sector is much more incentivized to produce a quality product than a government entity.
I hope we can find a solution to reverse the costs increases of this year and I think it is our job as Legislators to make sure these types of increases are avoided in the future.
Wednesday, September 16, 2009
Sunday, September 13, 2009
Learning from the Failures of other States
If you spend much time watching business or news networks such as CNBC or FOX, you may have noticed a commercial promoting Michigan as a good location for business owners to conduct business. For the past several years, Michigan's political leaders have offered $3.3 billion in tax credits through the Michigan Economic Development Corporation, and spent another $1.6 billion in outlays to create and retain jobs. The subsidies include tax breaks for film production, funding for new industrial plants, and millions for the nationwide TV ads starring celebrities talking about business and tourism to Michigan.
Upon seeing the ad, and aside from thinking about how wasteful it is for state government to spend money on television commercials, I seriously question how the politicians in Michigan can so aggressively insult the intelligence of American business owners.
Even though I live miles from Michigan, I know all too well that the state has one of the most business unfriendly tax climates, and I would never consider locating a business in that hostile business environment. In 2007 alone, Michigan raised business taxes by $1.4 billion. It does not matter how much money they want to spend on first class television commercials. it is hard for them to cover up the truth.
A recent article in the Wall Street demonstrated just this point. The article stated that Michigan's program is "one of the largest experiments in smokestack chasing in American history, but one thing it hasn't done is create jobs."
The article also pointed to a study by Economist Michael Hicks, a business school professor at Ball State, in which he calculated the rate of return on the corporate tax credits. He found that for every $1 million in tax credits awarded, there were 95 manufacturing jobs lost in the counties where the companies were located, and there was no gain in personal income in those counties. Fortunately, these massive failures in Michigan may mean good news for states like Oklahoma.
For years, state level politicians across the nation, including Oklahoma, have engaged in a foolish arms race by spending millions of state dollars in a recruiting war for offering tax incentives for new businesses. These incentives punish business owners who are already here by giving their new competition an unfair advantage and opens the door to corruption and massive amounts of waste.
High profile failures like Michigan will make it easier for those of us who oppose these schemes to win the critical votes when the next tax giveaway is presented in the Legislature (it seems like some sort of new scheme is concocted or expanded on each year).
By saying no to these types of schemes, perhaps we can focus the attention of Oklahoma's leaders on the polices that will result in true economic development while treating those who currently have businesses in Oklahoma in an even handed manner. What really should be implemented is across-the-board tax reduction for everyone.
Upon seeing the ad, and aside from thinking about how wasteful it is for state government to spend money on television commercials, I seriously question how the politicians in Michigan can so aggressively insult the intelligence of American business owners.
Even though I live miles from Michigan, I know all too well that the state has one of the most business unfriendly tax climates, and I would never consider locating a business in that hostile business environment. In 2007 alone, Michigan raised business taxes by $1.4 billion. It does not matter how much money they want to spend on first class television commercials. it is hard for them to cover up the truth.
A recent article in the Wall Street demonstrated just this point. The article stated that Michigan's program is "one of the largest experiments in smokestack chasing in American history, but one thing it hasn't done is create jobs."
The article also pointed to a study by Economist Michael Hicks, a business school professor at Ball State, in which he calculated the rate of return on the corporate tax credits. He found that for every $1 million in tax credits awarded, there were 95 manufacturing jobs lost in the counties where the companies were located, and there was no gain in personal income in those counties. Fortunately, these massive failures in Michigan may mean good news for states like Oklahoma.
For years, state level politicians across the nation, including Oklahoma, have engaged in a foolish arms race by spending millions of state dollars in a recruiting war for offering tax incentives for new businesses. These incentives punish business owners who are already here by giving their new competition an unfair advantage and opens the door to corruption and massive amounts of waste.
High profile failures like Michigan will make it easier for those of us who oppose these schemes to win the critical votes when the next tax giveaway is presented in the Legislature (it seems like some sort of new scheme is concocted or expanded on each year).
By saying no to these types of schemes, perhaps we can focus the attention of Oklahoma's leaders on the polices that will result in true economic development while treating those who currently have businesses in Oklahoma in an even handed manner. What really should be implemented is across-the-board tax reduction for everyone.
Wednesday, September 9, 2009
Payroll, Human Resources Streamlining Discussed at House Interim Study
Several state agencies testified at an interim study today about their ongoing efforts to streamline and consolidate payroll and human relations services, which has not only saved the state money, but has also improved services.
Rep. Jason Murphey, chairman of the House Government Modernization Committee, said the goal of the study is to look at agencies currently sharing similar services and see how those concepts may be spread to other agencies.
“The idea is to look at ways state agencies have realized savings in the past and map out a way to expand those savings to other agencies that are performing similar functions,” said Murphey, R-Guthrie. “The opportunity for savings is huge as services are centralized to a single entity that can be more efficient and effective, all at a lower cost. The private sector has been doing this for years; our state government needs to catch up.”
The Office of Personnel Management testified at the hearing that they provide payroll support services and other human resources functions to more than 40 state agencies, many of which are small and have no need to have a separate payroll or human resources departments.
The Office of State Finance also runs a centralized payroll for several state agencies and proposed an expansion of that program to additional agencies at the meeting.
It is estimated that there are about 114 state employees trained to process payrolls, with about 68 full time employees dedicated to payroll functions across state agencies. Centralization of payroll services could save as much as $2.6 million in salary and benefits alone—even more if Higher Education is included— an Office of State Finance official noted. Additionally, a centralized payroll system would allow each agency to focus on their main mission instead of technical processes like payroll.
A Tourism Department official said the agency has saved an estimated $40,000 per year by working with the Office of State Finance on centralizing the agency’s payroll.
House Speaker Chris Benge said the on-going effort to modernize state movement will continue next session.
“Especially in the midst of an ongoing global recession, we must be more diligent than ever to ensure taxpayer dollars are spent as efficiently as possible,” said Benge, R-Tulsa. “This study will help us will take a look at the innovative steps many agencies are already taking to modernize government and the possibility of expanding those efforts across government.”
Rep. Jason Murphey, chairman of the House Government Modernization Committee, said the goal of the study is to look at agencies currently sharing similar services and see how those concepts may be spread to other agencies.
“The idea is to look at ways state agencies have realized savings in the past and map out a way to expand those savings to other agencies that are performing similar functions,” said Murphey, R-Guthrie. “The opportunity for savings is huge as services are centralized to a single entity that can be more efficient and effective, all at a lower cost. The private sector has been doing this for years; our state government needs to catch up.”
The Office of Personnel Management testified at the hearing that they provide payroll support services and other human resources functions to more than 40 state agencies, many of which are small and have no need to have a separate payroll or human resources departments.
The Office of State Finance also runs a centralized payroll for several state agencies and proposed an expansion of that program to additional agencies at the meeting.
It is estimated that there are about 114 state employees trained to process payrolls, with about 68 full time employees dedicated to payroll functions across state agencies. Centralization of payroll services could save as much as $2.6 million in salary and benefits alone—even more if Higher Education is included— an Office of State Finance official noted. Additionally, a centralized payroll system would allow each agency to focus on their main mission instead of technical processes like payroll.
A Tourism Department official said the agency has saved an estimated $40,000 per year by working with the Office of State Finance on centralizing the agency’s payroll.
House Speaker Chris Benge said the on-going effort to modernize state movement will continue next session.
“Especially in the midst of an ongoing global recession, we must be more diligent than ever to ensure taxpayer dollars are spent as efficiently as possible,” said Benge, R-Tulsa. “This study will help us will take a look at the innovative steps many agencies are already taking to modernize government and the possibility of expanding those efforts across government.”
Interim Study Looks at Ways to Streamline State Permits and Licensing
Interim Study Looks at Ways to Streamline State Permits and Licensing
Streamlining the thousands of licenses and permits issued by various state agencies is critical to modernizing state government, House members were told at an interim study today.
Various agencies testified at the study about efforts they have taken to make permits and licenses more convenient to obtain, especially by making them available online.
“Often, Oklahomans who need a series of permits or licenses must encounter a long line of bureaucracy, including multiple trips to several locations,” said Rep. Jason Murphey, chairman of the House Government Modernization Committee. “Technology has advanced to a point where these licenses and permits should be made available online and they should be easy to obtain without mounds of paperwork and unnecessary use of staff resources.”
Health Commissioner Terry Cline said it is the goal of the Health Department to have all of their license applications online by July. The department maintains licenses for 108,000 individuals and over 35,000 businesses in Oklahoma, many of which have multiple certification requirements.
An official with the Insurance Department said the agency was able to reduce or reallocate its workforce by 35 percent following implementation of online licensing in 2007. The transition not only saved the department money, but improved customer service and accessibility.
Before electronic processing of licensing was available at the department, there was as much as a five week processing time for new and renewal resident applications. The department also received about 66,000 calls in a year with an average hold time in excess of 10 minutes.
Currently, because of online capabilities, a new or renewal license application can be processed in as little as two hours. Phone calls were reduced by about 20,000 after online capabilities were added. The need for storage space was also reduced as records are now stored electronically.
“These efforts are not just about saving the state money, which is obviously one of the goals, but also improving services to our citizens,” said House Speaker Chris Benge, R-Tulsa. “We have worked hard to make Oklahoma a business-friendly state, and streamlining licenses and permits will be just another step toward that goal, which will help attract jobs to our state.”
Streamlining the thousands of licenses and permits issued by various state agencies is critical to modernizing state government, House members were told at an interim study today.
Various agencies testified at the study about efforts they have taken to make permits and licenses more convenient to obtain, especially by making them available online.
“Often, Oklahomans who need a series of permits or licenses must encounter a long line of bureaucracy, including multiple trips to several locations,” said Rep. Jason Murphey, chairman of the House Government Modernization Committee. “Technology has advanced to a point where these licenses and permits should be made available online and they should be easy to obtain without mounds of paperwork and unnecessary use of staff resources.”
Health Commissioner Terry Cline said it is the goal of the Health Department to have all of their license applications online by July. The department maintains licenses for 108,000 individuals and over 35,000 businesses in Oklahoma, many of which have multiple certification requirements.
An official with the Insurance Department said the agency was able to reduce or reallocate its workforce by 35 percent following implementation of online licensing in 2007. The transition not only saved the department money, but improved customer service and accessibility.
Before electronic processing of licensing was available at the department, there was as much as a five week processing time for new and renewal resident applications. The department also received about 66,000 calls in a year with an average hold time in excess of 10 minutes.
Currently, because of online capabilities, a new or renewal license application can be processed in as little as two hours. Phone calls were reduced by about 20,000 after online capabilities were added. The need for storage space was also reduced as records are now stored electronically.
“These efforts are not just about saving the state money, which is obviously one of the goals, but also improving services to our citizens,” said House Speaker Chris Benge, R-Tulsa. “We have worked hard to make Oklahoma a business-friendly state, and streamlining licenses and permits will be just another step toward that goal, which will help attract jobs to our state.”
Monday, September 7, 2009
Local Road and Bridge Construction Report
One of the my tasks last week was to accumulate my biannual list of upcoming area road projects as a component of my 2009 Constituent Report. This report provides an update for local residents to know when road projects are scheduled in their area. The report also serves as a tool for allowing the people to know that their local officials are working hard to properly fund the roads in their area.
I enjoying providing this update because I feel that the roads issue is one of the two issues (the other being public safety) that are at the core of what government should be focused on and I believe that elected leaders have the responsibility to be especially transparent about their performance (or lack thereof) on this issue.
If you are fortunate enough to live in the Oklahoma County District 3 part of my district, odds are that you live on a paved road. Each year, Oklahoma County Commissioner Ray Vaughn spends about $5-7 million in a capital improvement program to upgrade roads and keep them in good shape. This program saves money in the long run because the improved roads require less ongoing maintenance. In my time in office I can only remember one contact from an Oklahoma County constituent concerned about county roads.
If you live in the Logan County part of my district, you may live on a dirt, gravel, or poorly paved road that has many potholes and requires much maintenance. Logan County Commissioners have no capital improvement budget for improving roads, and their allotted funding is used up just by trying to maintain the roads in their current condition. This leads to a "spinning wheels" effect as countless dollars are spent trying to maintain roads that do not have enough funding to be improved. One of the few ways for them to actually pave roads is to push the paperwork that secures state and federal funding when possible.
This will be the second time in my term of office that I have performed this reporting task and I noticed how much longer this year's list is than in 2007 when I assembled the list for the first time. When you receive your copy, you will notice that many of the road and bridge improvements will occur as a result of a series of state and federal funding programs.
I have become a strong critic of this system because we are now forced to elect our County Commissioners not on their ability to maintain roads, but on their ability to push paperwork in order to jump through a bunch of bureaucratic hoops. This is a costly system. It would make much more sense for local tax dollars to stay in local government instead of being sucked up by state and federal government and returned to local government only after the bureaucracy has soaked up a bunch of the money and imposed a series of costly restrictions on how the money can be spent. This is a massive waste of our taxpayer dollars.
This year's list contains about 72 million dollars of funding that local or state officials have secured, including several million dollars which Logan County District 2 officials just recently secured, for paving 15 miles of Forrest Hills, Midwest and Luther Roads. I have been impressed by the hard work these indiviudals have shown in getting the funding. The report is available at HouseDistrict31.com under the Reports menu option.
I enjoying providing this update because I feel that the roads issue is one of the two issues (the other being public safety) that are at the core of what government should be focused on and I believe that elected leaders have the responsibility to be especially transparent about their performance (or lack thereof) on this issue.
If you are fortunate enough to live in the Oklahoma County District 3 part of my district, odds are that you live on a paved road. Each year, Oklahoma County Commissioner Ray Vaughn spends about $5-7 million in a capital improvement program to upgrade roads and keep them in good shape. This program saves money in the long run because the improved roads require less ongoing maintenance. In my time in office I can only remember one contact from an Oklahoma County constituent concerned about county roads.
If you live in the Logan County part of my district, you may live on a dirt, gravel, or poorly paved road that has many potholes and requires much maintenance. Logan County Commissioners have no capital improvement budget for improving roads, and their allotted funding is used up just by trying to maintain the roads in their current condition. This leads to a "spinning wheels" effect as countless dollars are spent trying to maintain roads that do not have enough funding to be improved. One of the few ways for them to actually pave roads is to push the paperwork that secures state and federal funding when possible.
This will be the second time in my term of office that I have performed this reporting task and I noticed how much longer this year's list is than in 2007 when I assembled the list for the first time. When you receive your copy, you will notice that many of the road and bridge improvements will occur as a result of a series of state and federal funding programs.
I have become a strong critic of this system because we are now forced to elect our County Commissioners not on their ability to maintain roads, but on their ability to push paperwork in order to jump through a bunch of bureaucratic hoops. This is a costly system. It would make much more sense for local tax dollars to stay in local government instead of being sucked up by state and federal government and returned to local government only after the bureaucracy has soaked up a bunch of the money and imposed a series of costly restrictions on how the money can be spent. This is a massive waste of our taxpayer dollars.
This year's list contains about 72 million dollars of funding that local or state officials have secured, including several million dollars which Logan County District 2 officials just recently secured, for paving 15 miles of Forrest Hills, Midwest and Luther Roads. I have been impressed by the hard work these indiviudals have shown in getting the funding. The report is available at HouseDistrict31.com under the Reports menu option.
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