Editor’s note: This op-ed is by Bruce Lisman, retired chairman of the JP Morgan Global Equity Division. He previously served as a senior managing director of Bear Stearns Companies from 1984 to June 2008. He is native of Burlington.
Transparency in our government matters. Its absence matters more. In our state few of us understand how our taxes are spent and fewer still know how well they are spent.
New legislation passed this year mandates more complete disclosure of fact and process at all levels of government. That’s a good first step, but it’s really a very small first step on the road to essential and remarkable transparency.
Consider this: baseline transparency—the best presentation of the state’s tax structure and where those tax dollars are spent aren’t actually provided by the state. The best version is found on a website privately managed and sponsored by The Public Asset Institute and the Ethan Allen Institute.
As for the more essential level of transparency—telling us how well our money is spent, it is non-existent across our government. There is no common approach to measurement or reporting those results to the public.
The good news is that Speaker of the House Shap Smith has suggested to the Government Accountability Committee that they embrace performance-base budgeting, and said, “The thing I hear more and more is that we aren’t necessarily getting results for the money we spend; I think we are and we need to explain that.”
The bad news, according to a report in VTDigger.org, is additional language used in the discussion: “Vermonters don’t seem to understand the value of government services.” Or, “The committee’s responsibility is to make the case for programs that are worthwhile, but that don’t at this point, come with measurable outcomes.”
Well, maybe he and the Committee are right and maybe so much more was said that wasn’t reported. But, phraseology such as this really minimizes the value of greater transparency and veers dangerously close to viewing citizens as a bunch of dopes. It ignores the essential nature of performance-based budgeting and the tremendous value provided by honest disclosure about how well we spend taxpayers’ money. Those thwacking sounds you hear are politicians who don’t understand how important this theme is becoming.
Consider these underlying reasons for moving in a forceful way down a path of remarkable transparency.
- Measuring and reporting results of spending and spending programs creates the underpinning for accountability. Accountability is literally the most powerful and essential word in a democracy. It enables ordinary citizens to determine not only how well their money is spent, but how well their government operates.
- Measuring and reporting results provides proof of purpose and its value—the essential ingredients for effective decision-making and prioritization. Having those results would enable our executive and legislative bodies to make better decisions while capturing the interconnected nature of decisions.
- Measuring and reporting results will inevitably upgrade the quality of the people who not only manage programs but those who implement those programs.
- Transparency provides the best available substitute for competition—often, competition results in better service, lower prices, and a greater awareness of costs. We don’t want competition to our government; we want the benefits that competition to government might provide.
- Our government should be acting in a fiduciary capacity. After all, it is spending other people money—taxpayers’ money; the government has a responsibility to spend it well. Proof through transparency is the best evidence of fulfilling that responsibility.
- Transparency of results might also cause us to re-examine the nature of agencies that have exclusive relationships with our state’s agencies, but do not have to compete for that relationship. When examining not-for-profit service agencies that depend upon private donations, we look at administrative costs in relation to its budget, efficiency of its operations, its ability to reach goals and measure its progress toward reaching those goals, and constancy of purpose regardless of the environment. And, we expect service-related organizations to build upon a core competency that includes empathy. We applaud and offer support for those organizations that do well and we ask for improvements or reduce contributions for those who do poorly. It’s common sense!
- We value our Social Contract; it’s a part of who we are and it connects us to those traditional Vermont values—giving protection for those who are vulnerable and offering a helping hand to those who need a boost. But we can’t measure our Social Contract; we can’t determine its value or success without simply relying upon anecdotes. If it matters so much to us, than we should understand and take pride, not in its size, but in the quality of its work.
- Our state needs an effective economic development effort. It’s essential to our long term economic health. But, we need to know how much money is spent and where, and we need to know its results. The more we know and the more accountability that is built into the system, the more likely it is that we can build an essential consensus in support of economic prosperity.
- The consequence of debt and spending limitations at the national levels is less money available to states. For the life of the economic expansion that began in 1983 and ended in 2007, states were among the most significant beneficiaries of Washington’s generosity. Even this year’s “pre-deal” budget effectively reduced funds available to the states by nearly 15 percent. There is no reason to believe this new trend will change and every reason to believe it will become more pronounced for as long as Washington cares about deficits: Money available to the states is going to decline. Without that source of money, we need to do better with less. Transparency of results will help make our government more efficient.
- Results-oriented budgeting and disclosure will neutralize the weight of a full tax burden. It tells taxpayers their money is well spent; it re-enfranchises them. Good results delivered consistently in and out of economic cycles will provide a genuine platform for a vibrant economy and the prosperity that naturally follows.
- Transparency would give proper exposure to the efforts of small groups that care a lot about narrow issues that mainly benefit them; they invest substantial resources to achieve their singular goals. Those special interest groups often benefit disproportionally, while the costs are spread so broadly among the rest of us, that protests are muted and the costs become invisible. Even if we believe in a cause, we ought to know what we as citizens have paid to achieve it. After all, it’s a rare special interest group that cares more about you than their own interests.
- Finally, our state’s government is controlled by a political party with a super-majority. That’s what voters have chosen, but in America our governments work best within a fantastic structure of checks and balances. Without an effective opposition party, those checks and the consequent balances are at risk. Clear, complete, and honest transparency—of providing true performance related results to the public, restores the balance that works best for its citizens.
The logic of moving toward a performance-oriented budget process seems overwhelming. Other states use it and though none of them suggests that it cures all problems, nearly all of them believe it offers significant value.
Challenges for Change offered real hope — the analysis beneath were good and offered real potential. But, it was a process that failed to gather a broad consensus or a commitment to invest for the long term. Surely, a state this small with a commitment to both fairness and honesty can find its way to a process that returns to its citizen’s sufficient information to re-engage their accountability.
We can start by publicly funding the website, Vermont Transparency managed by The Public Asset Institute and the Ethan Allen Institute. And, we can go further, faster by gathering a consensus in the legislature, the executive branch and among Vermont’s citizens, that this is a cause worth supporting.
