State CIOs Told IT, Not Taxes, Offers Road Out Of Fiscal Woes - InformationWeek
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9/20/2004
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State CIOs Told IT, Not Taxes, Offers Road Out Of Fiscal Woes

State governments can't tax their way out of their current fiscal woes. Instead, they need to lower costs and focus on results, a speaker at this week's state CIO conference says.

State governments can't tax their way out of their current fiscal woes. Instead, they need to lower costs and focus on results. That was the message author and consultant David Osborne delivered Monday during the opening session of the National Association of State CIO's annual conference in New Orleans. Not only won't citizens allow their taxes to be raised for this purpose, the current mindset for spending on public services is a broken model that needs to be updated from one that depends on industrial-era bureaucracies to one that embraces services-oriented agencies.

"This fiscal crisis is permanent, and the only way through it is through the door of fundamental reform," said Osborne, co-author of "The Price of Government: Getting the Results We Need in an Age of Permanent Fiscal Crisis," along with Peter Hutchinson (Basic Books; 2004).

Citizens are willing to spend an average of 37 cents per dollar of personal income on government services, Osborne said. This has been consistent over the past 50 years, breaking down to 22 cents for the federal government and the remaining 15 cents for state and local governments. Although citizens tend to want the cost of government to go down, this dynamic corrects itself when they see how tax cuts affect important services, including law enforcement, road maintenance, health care, and education.

The solution, Osborne contends, is for government to use technology to drive down the cost of government while prioritizing budgets to focus on intended results rather than individual line items. Using health care as an example, Osborne noted that the condition of the public's health generally depends upon their environment, personal behavior, access to health-care services, and individual genetic risk factors. While government generally invests in access to health-care services, research indicates that changes in personal behavior are most effective in improving health and relieving the cost burden on the government.

When Washington state needed to close a $2.5 billion budget shortfall a few years ago, Osborne's company, Public Strategies Group, advised the state government to focus on cutting ineffective government programs while streamlining through better use of IT. This included separating IT policy decisions from IT operations. This meant Washington could govern IT without having to run IT operations itself. Osborne said New York state, Iowa, and the city of Baltimore, Md., are adopting similar models.

Osborne's presentation wasn't short on plugs for his book and consulting business, but his views provided food for thought. "Knowing that others have tried this gives credence to the outcomes-based model," said Otto Doll, commissioner of South Dakota's Bureau of Information and Telecommunications. "I can take pieces of what (Osborne) said and imagine how it can be applied to my state." Doll acknowledged, however, that his voice is one of several when it comes to state fiscal policy. "A lot depends on getting buy-in from the administration," he said.

In other news, NASCIO announced its new officers for the upcoming year. When the conference concludes Wednesday, Delaware CIO Tom Jarrett will take over as NASCIO president, with Wisconsin CIO Matt Miszewski as the organization's new vice president. Utah CIO W. Val Overson will assume the responsibilities as secretary and treasurer.

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