County Budget Battle Puzzles Business Experts

Some of Ventura County’s top managers are resisting budget cuts by either trying to pass the buck or paint disaster scenarios, prompting this wry comment last week from Chief Administrative Officer Harry Hufford:

“In the corporate world, you’d get canned if you did that.”

Although at $1.06 billion the county’s new budget will be larger than ever before, much of the $111-million increase from last year has already been eaten up by inflation and salary raises.

Hufford is asking county managers to cut $12.4 million from their departments to help balance the budget and end a trend of overspending. And he has asked them to do so in a way that minimizes impacts on services.

But Sheriff Bob Brooks warned that the prospect of laying off dozens of deputies may lead to a rise in crime. Dist. Atty. Michael D. Bradbury said he would be forced to scale back misdemeanor prosecutions.

Both elected officials--two of the most powerful politicians in the county--reminded supervisors during a budget meeting last week how important public safety is to voters.

“I want to cooperate,” Brooks told the board. “However, not all services provided by government are created equal. Public safety is the first priority.”

Meanwhile, Health Care Agency director Pierre Durand and his mental health chief, David Gudeman, both of whom are appointed, also resisted budget cuts. They essentially ignored their orders, putting the onus on county supervisors to decide what services should be cut.

Business experts agree that such tactics are far less acceptable in the corporate world, where insubordinates are quickly replaced.

“In the private sector, they probably would have just fired Durand,” said Herbert Gooch, chairman of the political science department at Cal Lutheran University. “If I were the manager of someone who said, ‘I haven’t got a clue in the world how to spend less,’ I’d say you’re only half a manager.”

At Thousand Oaks-based Amgen Inc., the nation’s largest biotechnology company and the county’s largest private employer, managers deal with the budget they are given and make the best of it with minimal grousing, said company spokesman David Kaye.

“If you’re not willing to take responsibility for managing your budget, you’re probably not going to become a manager,” Kaye said.

Private sector managers also have a strong financial incentive when their own divisions take a hit for the greater good of the company, Kaye said.

“We’re all shareholders in the company,” he said. “Wall Street has expectations for earnings per share, and we’re committed to doing whatever we can to deliver on those expectations.”

Companies live and die by the bottom line, but governments rarely go bankrupt, some officials point out. And while consumers and investors can turn their backs on one company in favor of another, government is a monopoly, and taxpayers don’t have the choice to stop funding it.

“In a corporation, the last thing they’ll do is cut services through their products, because their products bring in the money,” said Supervisor Frank Schillo, who runs a financial planning company that designs pension plans for corporations.

If a corporation has to save money, it will slash employees from the top down but maintain production, Schillo said. But in government, where the commodities are more abstract and employee unions are generally more powerful, services are cut even as salaries and benefits go up, he said.

Joel Fox, president emeritus of the Howard Jarvis Taxpayers Assn., said if services must be cut, government managers should be straightforward about the consequences rather than crying wolf.

“People like me will say you’ve got to run government like a business. And [bureaucrats] will say ‘But government isn’t a business,’ ” he said.

“The answer is between those two absolutes. But the fact is, there’s only so much water in the bucket. Government must learn to be a little more responsible with the budget and make some difficult choices.”

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In particular, Fox criticized the budget presentation by Durand and Gudeman, a presentation that sent supervisors Judy Mikels and Susan Lacey into a rage.

“What were these guys hired for?” Fox said. “It’s their job to tell the supervisors what the priority is,” rather than force supervisors to make a choice without enough information.

But Samuel A. Culbert, a business professor at UCLA’s Anderson School and author of books about government and corporate management cultures, said the truth is more complex.

“In the public sector, department heads put themselves at peril if they come in with concessionary budget proposals,” Culbert said.

“The police chief doesn’t get evaluated on how well he did with crime given that his budget was cut 20%. And the parks guy doesn’t get evaluated on the fact that his parks closed early in the face of cuts. So [it’s] self-defeating if they cut back to what the county can tolerate.

“There are very few rewards for being a team player, and there’s everything to lose.”

Meanwhile, Culbert said, there is plenty of maneuvering in some private companies, particularly ones that don’t offer stock options. The difference is how upfront managers are about their intentions.

“In the public sector, they’ll say ‘You can’t do that to me,’ ” Culbert said. In the private sector “they have these meetings where everyone says the right stuff” and then works behind the scenes to get what they want.

Gooch, the Cal Lutheran professor, said open-meeting laws raise the stakes for public managers at budget time. Managers and politicians learn to play to the audience, spinning issues to draw on the hopes or fears of the electorate or to shift the focus of blame.

“You disperse accountability,” Gooch said. “Which one of the supervisors or which branch of government do you blame? All the sides are, in effect, playing to the audience. Every side is going to look for a tactical maneuver in which they look great.”

Whether the department head in question is elected or appointed can be key.

Because the sheriff and the district attorney are elected in Ventura County, they can call on the public to pressure supervisors to keep their budgets intact, Gooch said. Supervisors can’t fire them and may even be reluctant to chastise them if their endorsements carry sway with voters. The chief administrator also has less of a hold over elected agency heads than appointed ones.

Durand, an appointed department head, took a greater risk in his attempt to minimize departmental cuts, Gooch said. Supervisors and Hufford have the power to fire Durand as well as ultimate control over his agency’s operations.

While some supervisors had harsh words for Durand, none have threatened to discipline him. Supervisor John Flynn even defended him, and Schillo said he believes Durand’s motivation was a true concern for the patients he serves. Durand argued last week that it’s not fair that county administrative fees charged to his agency are increasing, while he is being asked to cut services.

Supervisors recently gave Hufford more power over department heads, precisely so that he could keep such tactics by department heads to a minimum. But Hufford said he does not plan to discipline Durand, only to ensure he returns to the board with more specific proposed cuts and information on their impact.

Culbert, the UCLA professor, said Hufford’s interim position--he is expected to stay only through next spring--gives managers little incentive to step in line.

When Hufford ran Los Angeles County from 1974 to 1985, “Your heroics this year could get credited the next year,” Culbert said. “And the guys knew if they [bluffed] him, at some point he’d find out and put the evil eye on them.”

But in a short-term post, Culbert said, “There’s no memory. He leaves, the next guy comes in, and he doesn’t say, ‘Wow, you did terrific given the budget pressure you were under.’ He looks at the negatives.”

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Hufford said he wants to retool the county system so that budget authority is more centralized in the long run. He also hopes soon to hire a chief financial officer, as most corporations have, to focus year-round on county finances.

Still, he said, government operates on democratic principles that allow for ongoing debate among public officials and the electorate on both the priority and delivery of services.

“You want to create structure and discipline, so that government is running in a businesslike way,” Hufford said. “But it is government.”