April 30, 2004
The Untapped Potential of Public Sector Innovation
It is said that when Dennis Archer succeeded Coleman Young as mayor of Detroit in 1993, after twenty years of the latter’s reign in power, he made a shocking discovery. The majority of paychecks for employees in the nation’s tenth largest city were still being made out by hand. Perhaps he shouldn’t have been surprised. The forces of competition that prod organizations to innovate and modernize in order to survive aren’t the same in the public sector. As a result, the organizational structure, functions, and geographic purview of local governments still look a lot like the legislation that brought them into being more than a hundred years ago.
That can make you very happy, or very sad, depending on your point of view. The unchanging face of local government has helped make the public sector a safe harbor of security and sameness in a world where other landmarks and institutions are changing before our eyes. But as we live through a period where demands on government are unrelenting, yet tax coffers are running empty, that situation is becoming less tenable.
And the fact is that governments are locked up in a competition of a sort. Together with the businesses and people they govern, jurisdictions compete for people, investment, and jobs. How well, and how efficiently the public sector does its job in a community is an important, perhaps the most important, piece of the puzzle when it comes to helping the economy grow and thrive.
So why not explore the ways we might get more bang from the public dollar? That’s the question asked by the Indiana Chamber of Commerce’s report on Local Government Efficiency released two months ago. It is only natural for a group of businesses leaders, themselves subject to the discipline of the market, to ask for some streamlining and reforms in the companies we all own stock in – our local governments.
These kinds of studies ask very sensible questions. Such as, why do we have so many governmental units with duplicative services? Or, why do we have professionally unqualified individuals occupying positions with professional responsibilities? Or, even, why are some functions carried out by the public sector at all?
We’ve already seen dramatic evidence of failure of our local governmental structure to perform adequately in the area of property tax reassessment. The state’s tax bureaucracy, with more than 1,100 tax assessors in townships and counties across Indiana, not only presided over a system that created inequalities so large that they were declared to be unconstitutional, but they failed to implement revisions to that system before tax bills could be prepared. The result has been millions of dollars of interest charges necessitated by delays in tax draws that will ultimately be borne by taxpayers.
If we do not learn from this mistake, and take positive steps to ensure that it does not reoccur, then we will only have ourselves to blame.
And therein lies much of the problem. Reform and reorganization of government rapidly gets personal. Eliminating agencies, offices and jobs is seen as a personal indictment of individual performances, which, of course, it is not. It is also a direct threat to the power base of agency heads and elected officials. In the top-down management structure of the typical private firm, with the competitiveness and survival of the organization at stake, such concerns do not control the outcome. But in the public sector they often do.
To their credit, many local leaders around the state are ready and willing to dive into the problem. But they need legislation passed inIndianapolis to make it happen. Let’s hope that our leaders there recognize that innovation in the public sector can be every bit as important as the private sector in helping our cities and communities thrive in the competition for investment and jobs.
About the Author
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