BEFORE THE HOUSE STATE GOVERNMENT COMMITTEE
Proponent Testimony On HB 439
Tuesday – May 4, 2004

Mr. Chairman and Members of the Committee,

My name is Daniel Navin and I am the managing director of legislative affairs for the Ohio Chamber of Commerce, although much of my responsibility lay in the area of taxation and public expenditures. I am here today to testify in general support of HB 439, legislation that would require the Office of Budget & Management (OBM) to develop more formal, institutional procedures that would assess the efficiency by which existing state services are provided and establish a rating system for evaluating the effectiveness of all state programs.

In the context of the state budget and spending debates over the past few years, I want to underscore the fact that our support of the bill is not intended to point the finger of blame at any institution or entity.

I used the term “more formal institutional procedures” in describing what in our view HB 439 seeks to accomplish. We want to see established sensible, reasonable criteria by which all the interested parties – the governor, agency directors, legislators, service providers, recipients of government services and taxpayers – understand how the state will decide before and during the budgeting process that taxpayer dollars will most efficiently be spent.

Some may argue that any parallels between how the private sector works and how the public sector should work amounts to comparing apples and oranges. However, the Chamber believes that at the very least state agencies and programs should have a clear purpose, specific goals for achieving those ends, and objective criteria for measuring performance, just like business organizations. A rating system for evaluating the effectiveness of all state programs fits with these principles, identifying programs that aren’t performing up to standards and providing specific information documenting why a program should be unchanged, revised, scaled-back or eliminated.

The provision in the bill creating the Asset and Enterprise Review Committee to inventory and appraise all state assets and enterprises in order to determine which of them may be sold, leased or otherwise removed from state operation has merit. State-owned assets such as airports, stadiums, ports, buildings, land and golf courses have been sold or leased to the private sector by other states over the past two decades. A rigorous inventory and realistic appraisal of the value of these assets is overdue in our state, so as to identify privatizing opportunities and possibly incentivize agencies to sell or lease nonproductive assets by, for example, allowing them to keep a portion of the sale proceeds rather diverting all of it to the general revenue fund. Other states have done this successfully, and Ohio should be establishing a process whereby the state can seriously investigate and consider these options.

One final point and, again, this is not intended as a criticism either of the bill’s intent or of OBM. A number of states have created bi-partisan or, in some cases, business-oriented commissions to thoroughly review state spending and purchasing practices and make recommendations for reform. We’re not sure that the responsibility for this assignment should rest solely with OBM, which has its own process of formulating the executive budget proposal every two years.

In fact, as I have staffed the Chamber’s Taxation & Public Expenditures Committee for the last 12 years, I have heard more interest in the last few years from our committee members as to what the state is doing to control and improve efficiency on the spending side of the budget. Consequently, I can safely say that Chamber members would be interested in serving on nearly any type of commission whose mission is to review the provision of state services and develop tools to evaluate their effectiveness. We would welcome that opportunity.

Mr. Chairman, that completes my testimony and I would be happy to answer any questions.