McDonnell's Reform Measures Have Little Impact

By Bill McMorris, Virginia Statehouse News Tuesday, November 29, 2011

ALEXANDRIA - Gov. Bob McDonnell released a flurry of reform proposals aimed at streamlining government, but his plan would do little to reduce a state budget gap of $1.5 billion.

On Tuesday, the governor endorsed several proposals put forward by his hand-picked Commission on Government Reform and Restructuring.

The governor's office claimed the plan to eliminate or merge more than 50 state boards and agencies would save around $2 million. The details behind how it arrived at the number, however, proved murky.

"We are fine-tuning the individual numbers, but we are confident the total will be greater than $2 million," said Jeff Palmore, McDonnell's deputy policy adviser who served as executive director to the commission.

Commission members said cost cutting was a secondary factor behind their proposals.

"We were more concerned about making the services more accessible," commission member Jack Rust said.

Rust pointed to the merger of the Department of Aging, Department of Rehabilitative Services and adult protection programs operating under the Department of Social Services as an example of increased accessibility. A senior citizen in need of home care could register with the post-merger Department for the Aging and Rehabilitative Services rather than separately approach the departments of Aging and Social Services.

McDonnell's plan would eliminate the Virginia National Defense Industrial Authority, or VNDIA, and Board of Towing and Recovery Operators, or BTRO, as well as 19 boards.

"The agency eliminations and mergers will produce the most savings," Palmore said. "Some will be realized in this coming budget because if there’s a duplication of function, they will streamline quickly."

The governor warned that some reforms could produce layoffs, but his plan would affect a handful of state workers. VNDIA employs three people and BTRO, four.

VNDIA Executive Director Stan Scott said the future of the program will not be known.

"The reform commission made the same recommendation last year, but the General Assembly did not act on it," he said. "If they do pass it, our role would likely be taken over by the Secretary of Veterans Affairs and Homeland Security."

The 19 boards the governor has proposed eliminating would not affect employment since board members are not paid and have other employment in the public or private sector.

Commission members told Virginia Statehouse News that the commission did not know exact cost-savings details or layoff estimates for all of its proposals. Commission Chairman Fred Malek said the figure sounded like a ballpark estimate.

"I think $2 million was the minimum the governor's people could put their arms around," said Malek, who was at McDonnell's side in Orlando for a Republican Governor's Association conference.

There could be short-term costs associated with the reforms, including the acquisition of office space, new letterhead and moving of personnel. The governor's office has yet to make these estimates.

"There will certainly be transactional costs with mergers, but we think there will be net savings in the end," Palmore said. "We don't have the details finalized."

In addition to the Reform Commission's proposals, the governor has asked state agencies to draw up plans for spending cuts of 2, 4 and 6 percent. The proposed agency mergers and eliminations will not affect the budgeting in place.

"Until we get this done, the individual agencies will have to prepare their own cuts, but if a merger happens, I expect they would do so under a unified department," Rust said.

Department of Rehabilitative Services Commissioner Jim Rothrock said the proposed merger may end up increasing the budget share of elderly services, rather than lead to cost cutting. Adult services under the Department of Social Services attracted about $7 million in state and federal spending in 2011.

Rothrock said that once these services are lumped together with the $43 million budgets of rehabilitative services and aging, lawmakers will be more inclined to increase spending on the program.

"The consolidated forces will ensure there will be more of a magnet for (budget) attention," he said.

The governor created the 32-member reform commission after taking office in January. The committee's primary task is "creating efficiencies in state government, including streamlining, consolidating, or eliminating redundant and unnecessary agency services," according to its report.

The American Federation of State, County and Municipal Employees, which represents several thousand state employees but carries no collective bargaining rights, did not return calls for comment.

The General Assembly will consider McDonnell's reform measures when it reconvenes on Jan. 11. The governor is working on his first two-year budget.