Op-Ed: Voters should ask candidates ‘How?’

As we prepare for an election season with more financial talking points than usual, we should ask candidates who make promises a basic question: How?

How will you both cut spending and address issues about which you purport to care?

Op-ed submit bugWhat is the process to “reallocate” money from an over-funded function to something that makes sense? How will you “redirect” money in a way that will generate better results?  If you plan to hold spending flat, or to cut spending, you will need to make the “reallocation” of public funds a reality.

In Connecticut, a successful candidate will need to create this process, because it does not presently exist.

Why do we spend money on one thing and not another?  The reason we spend is because we have done so in the past.  It really is that simple.  We created a function, funded it and it now has power.

Scant attention is paid to how an investment decision of government impacts the financial condition of our state and whether it should be continued. We don’t have an economic policy body that informs our public investment decisions and, honestly, the data to make this evaluation is lacking. We are literally incapable of evaluating whether one investment is more worthy than another.

Connecticut has a funding process that is political, not policy oriented. This has created entities with power funded into relevance that are now impediments to change.  Politicians that seek election must pay homage to those that have received government funds. The funding process of government actually repels the application of economic policy.

The lack of forward thinking economic policy is bad for our state’s citizens.

A state is a financial entity with a precious bottom line:  The citizenry.  There should be a maniacal focus on this bottom line. In the world of government finance, the improvement of the earning power of a state’s citizens translates into greater economic stability, i.e., more tax revenues.

How do the State’s financial decisions improve the living condition – and earning power – of this bottom line? Unfortunately, we don’t know. Improve this earning power, and you improve the financial condition of both the people and the State. This should drive how we invest an increasingly limited pool of public resources.

Most of the campaign rhetoric will center on “cutting wasteful spending” or “adjusting” rates of taxation.  These approaches imply that the present funding streams are appropriate, they merely need to be readjusted in amount, not nature. This is completely wrong.

Most citizens engage in a more sophisticated analysis on a regular basis, as they debate financial decisions based on the impact to a household: “I will go back to school to generate more income and forgo a vacation so money is available.” Simple reallocation of funds for an economic reason. Government does not operate this way. It is still desperately looking to find ways to fund what presently exists.

When the living conditions and earning power of citizens improves, the financial stability of the state improves.  Approximately 65 percent of our state’s revenue source is derived from individuals in the form of the income, sales and use taxes.  Focus on the economic productivity of people. Now.

Decisions to spend more on prisons than secondary education, to forgo investments in transportation infrastructure and to permit our urban areas to become economic dead zones all have significant financial consequences.  The vast majority of the young adults that are staying in Connecticut are in our urban areas where we have few jobs, wide academic achievement gaps and very high rates of incarceration.  Also, our existing workforce is aging out of the market. Things will not get better by funding the status quo.

States that are experiencing economic growth create relationships among the parties that will help an economy grow:  employers, academic institutions and government can work together to train young adults to enter the workforce and – just as importantly – to grow within an economy. We can create an environment that is more conducive to economic growth, but it will require a serious reallocation of resources, not a pilot project to serve as window dressing. It will also take more than four years.

So as candidates tell us that they have a “plan” to address wasteful spending and to improve the economy, ask how?  If you hear that they “will work with the people in Hartford to make sure that government spends money on programs that are best for the people of Connecticut,” ask “How?”

The process does not exist.

Brian O’Shaughnessy of New Haven is a principal in the firm Community Impact Strategies Ltd.  The mission of CIS is to facilitate the investment of public and private capital for the purpose of creating measureable improvements in human productivity and living conditions.

 

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