Orange County Voices : COMMENTARY ON GOVERNMENT SPENDING : Comparison Shopping for Public Services Can Be Frustrating : Orange County officials can help restore citizens' trust with greater accuracy and candor in reporting expenditures.

By ALAN HESLOP

Aug. 20, 1995 12 AM PT

<i> Alan Heslop is director of the Rose Institute of State and Local Government at Claremont McKenna College. He is co-author, with Steven B. Frates, of a report to Partnership 2010 on Orange County governments and their costs. </i>

Today’s consumers want products and services to be clearly priced and labeled: We insist on knowing what we are buying for our dollars. Why is it, then, that there is one area--government--where prices are hard to find and comparison shopping is impossible?

Ask yourself: How much do you spend to buy police protection? How much do fire and paramedic services cost you? You probably can come pretty close to estimating the costs of most of the private sector products and services you buy; but, unless you are very unusual, you won’t know what any local government service costs you.

Try asking more general questions: Do services in your community cost more or less than services in neighboring communities? What proportion of the cost of services in your community is for employee compensation?

The difficulty is compounded when we want to know what is accomplished by the expenditure of tax dollars: What gains have been achieved by increases in program costs? How do quantities and quality of a service in your community compare with those in other communities?

Some taxpayers, when they try to ascertain the costs of local government services and assess their results, are tempted to believe themselves the victims of a conspiracy between elected and appointed officials. As evidence, they point to local budgets--their lack of clear information on employee benefits, the absence of comparative and trend data, the failure to measure the results of expenditures, and many other obscurities of local public finance.

Although less dramatic than conspiracy, the truth is almost as troublesome. The fact is that many elected officials are confused by the budgets they adopt and know very little about expenditures or their results. Appointed officials, it is true, know much more about costs and service levels in their own jurisdictions than they may report; but they have almost as little information as taxpayers on what goes on in other jurisdictions. County staff knows little about the cities, city staff knows little about the county and other cities, and neither knows much about special districts and school districts. Because different jurisdictions keep and report their data in many different ways, even top appointed officials have access only to the scantiest comparative cost and service level data.

Thus, even those who run local government lack needed decision-making information on costs, results, and alternative ways of conducting programs. In boom times, they might not feel much need for such information. When recessions hit and tax revenues slow, its lack becomes a major problem to government itself.

Consider recent events in the Orange County government. Throughout the boom years of the 1980s, the county added to its payroll and to employee compensation. At the end of the period, although it was a time when private sector incomes were falling, the county government increased spending on employee salaries and benefits by more than 15%, from $783,792,979 in 1992-93 to $899,043,769 in 1995-96. Did the supervisors understand the magnitude of the increases they were approving? In light of revenue trends, and compared with levels of private sector compensation, the increases seem very badly misjudged.

Today, it is clear that the increase of $115 million in spending for county employee compensation added mightily to pressures for unprecedented high returns on investment. Better decision-making information in the hands of elected officials--and more accessible information for taxpayers on the growing gap between public and private compensation--could have obviated the need for the county’s fatally risky investment strategies.

In the aftermath of the bankruptcy, the lack of financial decision-making information has become more painfully apparent. After the defeat of Measure R, officials talk boldly about “restructuring” and “cost-cutting strategies.” But, unless one knows the costs of the different governments involved, and what their various programs and services actually accomplish, how can they be restructured rationally? Unless one can measure the results of tax expenditures in different government programs, how can one know a good cost-cutting strategy from a bad one?

The problem is the same for the taxpayer as it is for the official: Local government budgets provide insufficient useful decision-making information. Whether you are a taxpayer or an elected official, whether your concern is private versus public employee compensation or a comparative analysis of program efficiencies, today’s budgets leave you with unanswered questions.

Orange County’s governments need to provide clear, comparable base-line budget data. Each budget should show precise costs for each service, along with service level measures. Each budget should list the total number of employees, along with the total amounts spent on salaries and benefits. Armed with this information, taxpayers and elected officials can get a real grip on comparable per capita expenditures for public services in Orange County.

Partnership 2010’s GEAR Project already has developed a model format for city budgets. The next step is to implement it in Orange County’s cities and other local governments. An Internet Web site (perhaps at a university or a major foundation) should serve as an open public repository of the needed budget information; the county government, each city, special district, and school district should provide their budgets in standard format on CD-ROM.

Local governments in Orange County can do much to restore the trust of citizens by greater candor and accuracy in reporting costs and levels of service delivery. Better budget documents--a simple reform that, in today’s world, should be no more controversial than clear pricing and labeling of consumer products--can provide a basis for greater citizen understanding and improved leadership in local government.