In "Fiscal Management Implications" Christine Martell and Paul Teske explain the downsides of limiting the size and scope of government.
Colorado state has amended its constitution in 1992 with a Taxpayer Bill of Rights (TABOR), the strictest Tax & Expenditure Limitations (TELs) to date. By limiting the scope and size of government, TABOR has also limited the governmental capabilities of weathering economic recessions and employing sound fiscal management practices.
The reasons for this loss of fiscal control is the increasingly part of budget already earmarked, privatization, and the shift of responsibilities. In the financial and educational field, binding TELs reduced Colorado ability to invest in a rainy-day fund and the access to quality public education.
Authors conclude affirming that public administrators have to determine whether the trade-offs of increasingly restrictive budgets - through earmarks, mandatory expenditure and direct democracy - are worth the adoption of a TEL.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2007.00752.x/abstract
segunda-feira, 28 de fevereiro de 2011
The roles of Budget Stabilization Fund
In "Substitution and Supplementation Between Co-Functional Policy Instruments" Yilin Hou and Gene Brewer talk about the two roles that Budget Stabilization Fund (BSF) have on General Fund Balances (GFB).
The first role is substitution. BSF is created by policy-makers in order to ward off spending pressure and limitations from balanced budget requirements of GFB. States take savings from GFB and place them into BSF.
The second role of BSF is supplemental. By increasing state's total savings substantially, BSF helps public administrators mitigate revenue shortfalls during economic downturns.
Although BSF roles help GFB, these multiple policy instruments are only effective at initial stages. During policy implementation process, both BSF and GFB encounter internal and external resistance resulting in increased budget displacement by supplemental policy overtime.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2010.02223.x/full
The first role is substitution. BSF is created by policy-makers in order to ward off spending pressure and limitations from balanced budget requirements of GFB. States take savings from GFB and place them into BSF.
The second role of BSF is supplemental. By increasing state's total savings substantially, BSF helps public administrators mitigate revenue shortfalls during economic downturns.
Although BSF roles help GFB, these multiple policy instruments are only effective at initial stages. During policy implementation process, both BSF and GFB encounter internal and external resistance resulting in increased budget displacement by supplemental policy overtime.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2010.02223.x/full
Multiyear Countercyclical Budget
In “Budgeting for Fiscal Stability” Yilin Hou defends a Multiyear Countercyclical Budget (MCB) to deal with uncertainty.
Rather than annual budgets aiming balanced budget requirements, MCB ensures stability during fluctuating economic conditions by creating stabilization funds (General Fund Surplus and Budget Stabilization Fund).
MCB encourages cutbacks during surplus years and overspending during lean years. Fiscal revenues accumulated during boom years create surplus funds to be available in lean years to maintain fiscal stability.
The other benefits of MCB is that it addresses cyclical deficit budget by requiring governments i) to prioritize and express policy goals explicitly and consistently, ii) to force current policies to fit the multiyear strategy, and iii) to help mitigate cyclical fiscal deficits (structural deficits has to do with mismatch between revenue and expenditure and managerial deficit is a result of poor management).
The challenges to adopt MCB are mainly political and technical. MCB supporters have to convince legislators that they can also benefit from this budgetary politics. The technical difficult of MCB is to estimate accurate future revenues and expenditures. “Fiscal Conservatism” tends to underestimate revenue and overestimate expenditure, hence putting at risk the maintenance of public services during recessions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2006.00638.x/abstract
Rather than annual budgets aiming balanced budget requirements, MCB ensures stability during fluctuating economic conditions by creating stabilization funds (General Fund Surplus and Budget Stabilization Fund).
MCB encourages cutbacks during surplus years and overspending during lean years. Fiscal revenues accumulated during boom years create surplus funds to be available in lean years to maintain fiscal stability.
The other benefits of MCB is that it addresses cyclical deficit budget by requiring governments i) to prioritize and express policy goals explicitly and consistently, ii) to force current policies to fit the multiyear strategy, and iii) to help mitigate cyclical fiscal deficits (structural deficits has to do with mismatch between revenue and expenditure and managerial deficit is a result of poor management).
The challenges to adopt MCB are mainly political and technical. MCB supporters have to convince legislators that they can also benefit from this budgetary politics. The technical difficult of MCB is to estimate accurate future revenues and expenditures. “Fiscal Conservatism” tends to underestimate revenue and overestimate expenditure, hence putting at risk the maintenance of public services during recessions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2006.00638.x/abstract
quarta-feira, 23 de fevereiro de 2011
Fiscal Reform
In "The Blur Between Spending and Taxes" Gregory Mankiw defends a fiscal proposal which addresses the long-term budget imbalance in the US' economy.
The Bowles-Simpson proposal argues that the federal budget needs to move toward fiscal sustainability and the best way to do so is broadening and lowering tax rates. These measures are expected to increase government revenue and distort incentives less.
However, the left wing disagrees with any action that reduce marginal tax rates on the rich and right pundits are suspicious of any measure that increases government revenues.
Despite political differences, Mankiw affirms that Bowles-Simpson's proposal is the best one to address the nation's fiscal challenges and thus both parties should agree on it.
http://www.nytimes.com/2010/11/21/business/economy/21view.html
The Bowles-Simpson proposal argues that the federal budget needs to move toward fiscal sustainability and the best way to do so is broadening and lowering tax rates. These measures are expected to increase government revenue and distort incentives less.
However, the left wing disagrees with any action that reduce marginal tax rates on the rich and right pundits are suspicious of any measure that increases government revenues.
Despite political differences, Mankiw affirms that Bowles-Simpson's proposal is the best one to address the nation's fiscal challenges and thus both parties should agree on it.
http://www.nytimes.com/2010/11/21/business/economy/21view.html
US Federal Budget Reform
The White House issued in December 2010 "The Moment of Truth: Report on the National Commission on Fiscal Responsibility and Reform".
The objective of this report is found in the preamble: "America cannot be great if we go broke".
The Federal Government plans to use the guidelines of this report to tackle an unsustainable budget plan, to anticipate austerity measures that might be triggered if China, the largest foreign holder of US' debt, loses confidence that the US government is able to repays its loans.
The plan to address the nation's overwhelming debt burden, make Social Security solvent, reduce long-term growth of health care spending, and cut red tape consists of a fiscal restraint program that promotes reform and efficiency forcing the government to produce better results and save money.
The components of this fiscal restraint program are:
1) Discretionary Spending Cuts. The consequences of this measure are i) force budget discipline in Congress, ii) include enforcement mechanisms, and iii) cut low-priority programs.
2) Comprehensive Tax Reform. This reform requires to i) sharply reduce rates, ii) broaden the base, iii) simplify tax code, iv) reform corporate tax, v) cap revenue to avoid excessive taxation, and vi) cut spending in tax code.
3) Health Care Cost Containment. Achieve this goal by implementing a common-sense reform to i) physician payments, ii) cost-sharing, iii) malpractice law, iv) prescription drug costs, iv) government-subsidized medical education
4) Mandatory Savings. For these savings it is necessary to i) cut agriculture subsidies, ii) modernize military & civil service retirement systems, and iii) reform student loan programs.
5) Social Security Reforms. "Reform it for its own sake, not for deficit reduction".
6) Process Changes. In other words, reform the budget process to ensure that the debt remains on a stable path.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
The objective of this report is found in the preamble: "America cannot be great if we go broke".
The Federal Government plans to use the guidelines of this report to tackle an unsustainable budget plan, to anticipate austerity measures that might be triggered if China, the largest foreign holder of US' debt, loses confidence that the US government is able to repays its loans.
The plan to address the nation's overwhelming debt burden, make Social Security solvent, reduce long-term growth of health care spending, and cut red tape consists of a fiscal restraint program that promotes reform and efficiency forcing the government to produce better results and save money.
The components of this fiscal restraint program are:
1) Discretionary Spending Cuts. The consequences of this measure are i) force budget discipline in Congress, ii) include enforcement mechanisms, and iii) cut low-priority programs.
2) Comprehensive Tax Reform. This reform requires to i) sharply reduce rates, ii) broaden the base, iii) simplify tax code, iv) reform corporate tax, v) cap revenue to avoid excessive taxation, and vi) cut spending in tax code.
3) Health Care Cost Containment. Achieve this goal by implementing a common-sense reform to i) physician payments, ii) cost-sharing, iii) malpractice law, iv) prescription drug costs, iv) government-subsidized medical education
4) Mandatory Savings. For these savings it is necessary to i) cut agriculture subsidies, ii) modernize military & civil service retirement systems, and iii) reform student loan programs.
5) Social Security Reforms. "Reform it for its own sake, not for deficit reduction".
6) Process Changes. In other words, reform the budget process to ensure that the debt remains on a stable path.
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf
terça-feira, 22 de fevereiro de 2011
Administrative Law and Independent Commission
In “Regulating Business and Independent Commission” Marver Bernstein highlights the lifecycle of organized groups.
Independent Commissions usually emerge after public outcries over poor management in state companies.
i) Gestation: in this period, interest groups react against a newly-established independent commission since it promotes a rearrangement of political power.
ii) Youth: regulated groups still enjoy better organization and influence than regulators.
iii) Maturity: regulator agency crystallizes its program but start protecting its own system against substantial internal change as it becomes part of the status quo.
iv) Old Age: independent commission presents a bureaucratic conduct and ethical problems.
In this context:
How does the government establish regulatory agencies which maintain their original direction?
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6357784
Independent Commissions usually emerge after public outcries over poor management in state companies.
i) Gestation: in this period, interest groups react against a newly-established independent commission since it promotes a rearrangement of political power.
ii) Youth: regulated groups still enjoy better organization and influence than regulators.
iii) Maturity: regulator agency crystallizes its program but start protecting its own system against substantial internal change as it becomes part of the status quo.
iv) Old Age: independent commission presents a bureaucratic conduct and ethical problems.
In this context:
How does the government establish regulatory agencies which maintain their original direction?
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6357784
sexta-feira, 18 de fevereiro de 2011
Budget and Fiscal Discipline
How to create a budget process predictable and accountable when governments have increasingly contracted out and a large part of budget has been removed from public review?
This is the question that Irene Rubin poses in "The Great Unraveling: Federal Budgeting, 1998 - 2006".
In the United States the failure to fund Medicare and Social Security depicts the urgency to review federal budgetary processes. Chronic deficits have to be addressed by the return of fiscal discipline.
This is the question that Irene Rubin poses in "The Great Unraveling: Federal Budgeting, 1998 - 2006".
In the United States the failure to fund Medicare and Social Security depicts the urgency to review federal budgetary processes. Chronic deficits have to be addressed by the return of fiscal discipline.
Decision-Making and Resouce Allocation
Paul Posner argues in "The Persistence of Reform" that allocation of limited resources is the most important decision that political leaders have to make every year.
I would add that besides the allocation of resources, it is necessary that public officials be able to design roadmaps and monitoring systems to ensure that public money has been used efficiently and appropriately by state agencies to reach desired social outputs and outcomes.
Resource is useless if one does not know how to utilize it accordingly.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2008.01966.x/abstract
I would add that besides the allocation of resources, it is necessary that public officials be able to design roadmaps and monitoring systems to ensure that public money has been used efficiently and appropriately by state agencies to reach desired social outputs and outcomes.
Resource is useless if one does not know how to utilize it accordingly.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2008.01966.x/abstract
Government Size and Authority
In "Crisis and Leviathan" Robert Higgis points out that the measure of government size should not derive from expenditure, employment, or taxation rates but from authority and how it discourages the private sector to engage in new activities.
The US government hired more and increased investments during economic and political crisis. However, public money injected in the national economy did not prevent businessmen from deciding on how to best allocate resources.
Big Government is about authority. It takes place when public officials accumulate excessive power and this situation does not allow the private sector to participate in economic decision-making process.
As Higgins points out, the source of authority are "executive orders, statutes, court decisions, and the directives of regulatory agencies".
http://www.independent.org/store/book_detail.asp?bookID=15
The US government hired more and increased investments during economic and political crisis. However, public money injected in the national economy did not prevent businessmen from deciding on how to best allocate resources.
Big Government is about authority. It takes place when public officials accumulate excessive power and this situation does not allow the private sector to participate in economic decision-making process.
As Higgins points out, the source of authority are "executive orders, statutes, court decisions, and the directives of regulatory agencies".
http://www.independent.org/store/book_detail.asp?bookID=15
Administrative Law
Last night started a new module: Administrative Law (AL).
AL is defined as the body of regulations that govern state agencies. It clarifies i) rulemaking - the process to create and promulgate regulations, ii) adjudication - the process to review judicial decisions, iii) and enforcement - the process by which legislation come to force.
Another objective of AL is the provision of necessary rules for the implementation of statutes. Statutes are legislative acts gathered in States' Revised Statutes.
It was mentioned that AL is part of the arena of Public Policy (PP). PP was explained as an action plan that determines present and future decisions. Also, PP process is largely influenced by i) rationality - experts ii) power - interest groups and press and iii) ideology. The usual decision-making process of PP is identifying i) real problem ii) alternative solutions and iii) implementation (Executive - order, Legislative - statutes, Judicial - decision, Electorate - referenda).
In the context of PP, AL provides a set of rules known as Administrative Procedures Act (APA) to i) delegate power, ii) limit boundaries, and iii) provide a legal set of regulations to guide the implementation of PP by state agencies.
Throughout this process, Due Process (DP) is the legal instrument to protect citizens' rights against state agencies' harmful decisions. Citizens can always argue against a regulation based on the following arguments i) constitutionality ii) legislative intent and iii) precedent.
During the explanation of APA and DP, it was highlighted the importance of constant judicial reviews to hold public officials accountable for their decisions and acts. It was also pointed out that the nature of most cases against state agencies is technical - mainly taxation -; therefore, justifying the need of specific courts to arbitrate over complicated matters.
Circuit of Court of Appeals (CCA) in the US is quite strong, although functions as intermediate appellate court of the federal court system. CCA wields great power because i) sets precedent ii) influences national law and iii) serves as financial arbiter in most federal cases.
I am looking forward to this module and learning more about the relation between AL with management functionality, legal accountability, economic efficiency, transaction cost, democratic governance (transparency and inclusiveness), and global trends.
AL is defined as the body of regulations that govern state agencies. It clarifies i) rulemaking - the process to create and promulgate regulations, ii) adjudication - the process to review judicial decisions, iii) and enforcement - the process by which legislation come to force.
Another objective of AL is the provision of necessary rules for the implementation of statutes. Statutes are legislative acts gathered in States' Revised Statutes.
It was mentioned that AL is part of the arena of Public Policy (PP). PP was explained as an action plan that determines present and future decisions. Also, PP process is largely influenced by i) rationality - experts ii) power - interest groups and press and iii) ideology. The usual decision-making process of PP is identifying i) real problem ii) alternative solutions and iii) implementation (Executive - order, Legislative - statutes, Judicial - decision, Electorate - referenda).
In the context of PP, AL provides a set of rules known as Administrative Procedures Act (APA) to i) delegate power, ii) limit boundaries, and iii) provide a legal set of regulations to guide the implementation of PP by state agencies.
Throughout this process, Due Process (DP) is the legal instrument to protect citizens' rights against state agencies' harmful decisions. Citizens can always argue against a regulation based on the following arguments i) constitutionality ii) legislative intent and iii) precedent.
During the explanation of APA and DP, it was highlighted the importance of constant judicial reviews to hold public officials accountable for their decisions and acts. It was also pointed out that the nature of most cases against state agencies is technical - mainly taxation -; therefore, justifying the need of specific courts to arbitrate over complicated matters.
Circuit of Court of Appeals (CCA) in the US is quite strong, although functions as intermediate appellate court of the federal court system. CCA wields great power because i) sets precedent ii) influences national law and iii) serves as financial arbiter in most federal cases.
I am looking forward to this module and learning more about the relation between AL with management functionality, legal accountability, economic efficiency, transaction cost, democratic governance (transparency and inclusiveness), and global trends.
Budgeting and Accountability
"Budgeting for Accountability" is a paper written by Jun Ma and Hou Yilin comparing US and China's budgetary systems and their importance for accountability.
Ma and Yilin argue in favor of "societal accountability" which means i) exposing governmental wrongdoings ii) bringing new issues onto the public agenda and iii) activating the operation of horizontal agencies.
They define accountability as answerability and enforcement. Public officials must provide information on their decisions and justify their actions. The government must also be able to impose sanctions on public servants who have failed to comply with financial responsibilties.
Political accountability, therefore, is better understood as financial accountability. Budgetary control serves taxpayers to monitor the milestones and wrongdoings of state agencies.
Citizen Participatory Budgeting is a mechanism that not only allows constituents to decide on how best to allocate resources but also to hold representatives accountable for their financial decisions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2009.02089.x/abstract
Ma and Yilin argue in favor of "societal accountability" which means i) exposing governmental wrongdoings ii) bringing new issues onto the public agenda and iii) activating the operation of horizontal agencies.
They define accountability as answerability and enforcement. Public officials must provide information on their decisions and justify their actions. The government must also be able to impose sanctions on public servants who have failed to comply with financial responsibilties.
Political accountability, therefore, is better understood as financial accountability. Budgetary control serves taxpayers to monitor the milestones and wrongdoings of state agencies.
Citizen Participatory Budgeting is a mechanism that not only allows constituents to decide on how best to allocate resources but also to hold representatives accountable for their financial decisions.
http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2009.02089.x/abstract
Somalia: Governance Case Study
This article from The New York Times about the lack of public governance in Somalia depicts the economic benefits and challenges of doing business and thriving as society.
If competition is fierce and prices low, public services inexist and security privately owned in Mogadishu, the capital.
Somalis have learned to make money without government's help but say they need coordination to ensure the provision of basic services like education, health and infrastructure.
Somalis are willing to pay taxes to reduce the social costs costs of doing business in a headless and unpredictable context.
The real challenges, however, seems to be: How big should be the government? Too large may lead to well-known cases of corruption. Too tiny might not be enough to address all public problems faced by Somalis.
The hurdles of the most eastern African country also raises other side questions: How effective are United Nations actions? What is needed to form a government? Why Somalis cannot shape one?
https://laulima.hawaii.edu/access/content/group/MAN.87410.201130/CourseReadings/Fisher-Somalia.htm
If competition is fierce and prices low, public services inexist and security privately owned in Mogadishu, the capital.
Somalis have learned to make money without government's help but say they need coordination to ensure the provision of basic services like education, health and infrastructure.
Somalis are willing to pay taxes to reduce the social costs costs of doing business in a headless and unpredictable context.
The real challenges, however, seems to be: How big should be the government? Too large may lead to well-known cases of corruption. Too tiny might not be enough to address all public problems faced by Somalis.
The hurdles of the most eastern African country also raises other side questions: How effective are United Nations actions? What is needed to form a government? Why Somalis cannot shape one?
https://laulima.hawaii.edu/access/content/group/MAN.87410.201130/CourseReadings/Fisher-Somalia.htm
sexta-feira, 11 de fevereiro de 2011
Fiscal Note and Hawaii
Fiscal note is a mechanism that legislators and constituents rely on to grasp the financial impacts of enacting a bill.
Precisely, it estimates the costs, savings, revenue gain & loss resulting from the implementation of proposed legislation.
Fiscal notes help legislators and taxpayers better understand how a bill might impact the state budget as whole, individual agencies and, in some instances, local government.
Fiscal analysts are the ones who assess the financial impact of a proposed legislation. Fiscal note price tag accompanies a bill throughout the legislative process.
Oppositionists claim that the work done by fiscal analysts are redundant since Taxation Department provides estimates on many bills already. Also, estimates provided are vague inasmuch as numbers evolve through the process and they only aim the short-term.
Supporters argue that fiscal notes are especially important when money is tight. In addition, public authorities must ensure greater transparency of legislative process. Taxpayers have the right to request “death by fiscal note” when the costs of a bill is not offset by revenues.
Hawaii is the only state that does not require fiscal notes. In the current legislature process, two bills proposed by Republicans (SB 268 and HB 449) wait for public hearings. Democrats, the great majority on both houses, are reluctant to allow testimonies, though.
Precisely, it estimates the costs, savings, revenue gain & loss resulting from the implementation of proposed legislation.
Fiscal notes help legislators and taxpayers better understand how a bill might impact the state budget as whole, individual agencies and, in some instances, local government.
Fiscal analysts are the ones who assess the financial impact of a proposed legislation. Fiscal note price tag accompanies a bill throughout the legislative process.
Oppositionists claim that the work done by fiscal analysts are redundant since Taxation Department provides estimates on many bills already. Also, estimates provided are vague inasmuch as numbers evolve through the process and they only aim the short-term.
Supporters argue that fiscal notes are especially important when money is tight. In addition, public authorities must ensure greater transparency of legislative process. Taxpayers have the right to request “death by fiscal note” when the costs of a bill is not offset by revenues.
Hawaii is the only state that does not require fiscal notes. In the current legislature process, two bills proposed by Republicans (SB 268 and HB 449) wait for public hearings. Democrats, the great majority on both houses, are reluctant to allow testimonies, though.
State Budgeting and Strategic Planning
Last night we talked about state budget and how it is estimated.
It was said that the pattern of growth rate of expenditure ceiling for operational costs - the ones measured within a year - is calculated based on the average of personal income growth over the last three fiscal years.
The same rationale - but with different percentage - is applied for debt limits, which caps capital costs - expenses on long-term investments.
In other words, both operational and capital costs, which are parts of public budget, are based on past expenses, that is, past shaping future to mitigate risks.
In terms of strategic planning, this methodology of linear projections is inefficient to accelerate economic development. It does not take into account future gains, thereby misses the opportunities to make complete use of resource allocation by not fully investing, for instance, on capital improvement projects.
Oppositionists to this approach claim that budgeting based on future revenues skyrockets risks. This issue is addressed by imposing greater rates and legal enforcement mechanisms for Rainy Day Funds.
Indeed, lessons are learned from the past, but should not constrain the future.
It was said that the pattern of growth rate of expenditure ceiling for operational costs - the ones measured within a year - is calculated based on the average of personal income growth over the last three fiscal years.
The same rationale - but with different percentage - is applied for debt limits, which caps capital costs - expenses on long-term investments.
In other words, both operational and capital costs, which are parts of public budget, are based on past expenses, that is, past shaping future to mitigate risks.
In terms of strategic planning, this methodology of linear projections is inefficient to accelerate economic development. It does not take into account future gains, thereby misses the opportunities to make complete use of resource allocation by not fully investing, for instance, on capital improvement projects.
Oppositionists to this approach claim that budgeting based on future revenues skyrockets risks. This issue is addressed by imposing greater rates and legal enforcement mechanisms for Rainy Day Funds.
Indeed, lessons are learned from the past, but should not constrain the future.
quinta-feira, 10 de fevereiro de 2011
Testimony and Policy-Making
Testifying is the opportunity that constituents enjoy to voice their concerns during legislature process. Both writing and oral deliveries must be concise, logical, and passionate.
Enlisted arguments for or against a bill must include facts, figures, quotation from authority as well as lessons learned and best practices from other localities.
During oral delivery, it is important to follow protocol, maintain eye contact, stick to time allotted, conclude summarizing main ideas, and only answer questions that one is sure about. Saying “I do not know but will get back to you as soon as I find this information” is highly recommended to avoid uncertainty and contradictions.
Delivering testimonies does not only represent high civic engagement but mainly an instrument that constituents should make use of to help policy-makers make informed decisions and ensure that the enforcement of public policies will benefit the collectivity.
More on testimony and legislature process can be watched on the funny videos below.
http://www.youtube.com/watch?v=k1T75jBYeCs
http://www.youtube.com/watch?v=mEJL2Uuv-oQ
Enlisted arguments for or against a bill must include facts, figures, quotation from authority as well as lessons learned and best practices from other localities.
During oral delivery, it is important to follow protocol, maintain eye contact, stick to time allotted, conclude summarizing main ideas, and only answer questions that one is sure about. Saying “I do not know but will get back to you as soon as I find this information” is highly recommended to avoid uncertainty and contradictions.
Delivering testimonies does not only represent high civic engagement but mainly an instrument that constituents should make use of to help policy-makers make informed decisions and ensure that the enforcement of public policies will benefit the collectivity.
More on testimony and legislature process can be watched on the funny videos below.
http://www.youtube.com/watch?v=k1T75jBYeCs
http://www.youtube.com/watch?v=mEJL2Uuv-oQ
Energy Transition and Bottom-Up Decision-Making Process
I have been told this week about an interesting location in the Netherlands that has done a great job in the field of energy savings and transition.
After quick research I found that the touristic island of Texel has implemented a bottom-up decision-making process that has benefited residents and tourists alike.
Texel Energy is a small company that supplies energy from renewable sources to electricity consumers of Texel Island. Under the slogan “RESHARE”, individuals, non-profit, and private companies are committed to foster and move forward a steady energy transition process which benefits Texel islanders primarily.
This cooperative taps into a community fund to finance its activities. Externally, the government provides subsidies and tax credits; however, it is internally that Texel strikes out. In order to mitigate resistance and maximize benefits, this cooperative of voluntary participation has created smart mechanisms to address common issues arising from likely conflicts between foreigners and locals.
Besides the community funds where all participants contribute and manage it along with the municipality, the cooperative enjoys other instruments to ensure that Texel people are in control of the positive effects of this venture:
. Local ownership: energy developers offer shares of the projects to the local community;
. Compensation: developer compensates financially the community for ecological and property damage;
. Benefits-in-kind: developer invests in improvements in community infrastructure;
. Local employment: incremental jobs are offered to the community;
. Local contracting: local business are awarded contracts and actively participate in the development of energy projects;
. Energy price reduction: the community is granted the opportunity to consume energy at a lower price;
. Indirect Social Benefits: the community also benefits from not easy quantifiable indicators like ecotourism, prestige, and knowledge.
These “resharing” mechanisms to support the energy transition process in Texel has effectively addressed three of the main concerns of the community: i) environmental impacts – pollution and damages on local flora and fauna ii) NIMBY “Not in my backyard” – preservation of one’s surroundings iii) opportunism – extracting the highest possible additional benefits for personal benefits.
In a global context where energy transition has been led by governments and top-down decisions are the rule, the case of Texel serves as a laboratory of a decision-making process where the government is an important partner of a local committee that has the responsibility to decide upon how they wish to conduct this process and benefit from it.
http://www.reshare.nu/athena/site/file_database/REShare_Outline_Final_Report.pdf
After quick research I found that the touristic island of Texel has implemented a bottom-up decision-making process that has benefited residents and tourists alike.
Texel Energy is a small company that supplies energy from renewable sources to electricity consumers of Texel Island. Under the slogan “RESHARE”, individuals, non-profit, and private companies are committed to foster and move forward a steady energy transition process which benefits Texel islanders primarily.
This cooperative taps into a community fund to finance its activities. Externally, the government provides subsidies and tax credits; however, it is internally that Texel strikes out. In order to mitigate resistance and maximize benefits, this cooperative of voluntary participation has created smart mechanisms to address common issues arising from likely conflicts between foreigners and locals.
Besides the community funds where all participants contribute and manage it along with the municipality, the cooperative enjoys other instruments to ensure that Texel people are in control of the positive effects of this venture:
. Local ownership: energy developers offer shares of the projects to the local community;
. Compensation: developer compensates financially the community for ecological and property damage;
. Benefits-in-kind: developer invests in improvements in community infrastructure;
. Local employment: incremental jobs are offered to the community;
. Local contracting: local business are awarded contracts and actively participate in the development of energy projects;
. Energy price reduction: the community is granted the opportunity to consume energy at a lower price;
. Indirect Social Benefits: the community also benefits from not easy quantifiable indicators like ecotourism, prestige, and knowledge.
These “resharing” mechanisms to support the energy transition process in Texel has effectively addressed three of the main concerns of the community: i) environmental impacts – pollution and damages on local flora and fauna ii) NIMBY “Not in my backyard” – preservation of one’s surroundings iii) opportunism – extracting the highest possible additional benefits for personal benefits.
In a global context where energy transition has been led by governments and top-down decisions are the rule, the case of Texel serves as a laboratory of a decision-making process where the government is an important partner of a local committee that has the responsibility to decide upon how they wish to conduct this process and benefit from it.
http://www.reshare.nu/athena/site/file_database/REShare_Outline_Final_Report.pdf
quarta-feira, 9 de fevereiro de 2011
Budget Analysis and Social Scientists
Last night we designed few graphics based on US budget.
Bars and lines are a great tool for decision-making. They organize numbers in historical contexts by relating political and social events to economic facts. They also compare present with past numbers and trigger discussions over desired scenarios.
Lines and bars not only guide but also help illustrate amounts of money that otherwise would be impossible to grasp. They, finally, help identify trends, resource allocation, and geopolitical strategies.
Budget is a management instrument that shows how much money should be spent, what areas have been spent on, and how much more should be raised. Without graphics representing percentages of outlays and receipts informed decisions would not be made, let alone strategic public policies.
Interesting to note that everyone who receives technical training is able to make graphics, but only few have the capacity to correctly and accurately interpret explicit and implicit information lying behind bars and lines over a period of time.
That is why public administrators ought to work along with a team made up of social scientists to ensure that lessons were learned and an equal and stable society is being built.
Bars and lines are a great tool for decision-making. They organize numbers in historical contexts by relating political and social events to economic facts. They also compare present with past numbers and trigger discussions over desired scenarios.
Lines and bars not only guide but also help illustrate amounts of money that otherwise would be impossible to grasp. They, finally, help identify trends, resource allocation, and geopolitical strategies.
Budget is a management instrument that shows how much money should be spent, what areas have been spent on, and how much more should be raised. Without graphics representing percentages of outlays and receipts informed decisions would not be made, let alone strategic public policies.
Interesting to note that everyone who receives technical training is able to make graphics, but only few have the capacity to correctly and accurately interpret explicit and implicit information lying behind bars and lines over a period of time.
That is why public administrators ought to work along with a team made up of social scientists to ensure that lessons were learned and an equal and stable society is being built.
segunda-feira, 7 de fevereiro de 2011
Land Use Tax and Green House Gases (GHG)
Land use is an important aspect to be studied and carefully considered in any attempt to reduce the emission of Green House Gases (GHG). This topic becomes even more prominent in places like Hawaii where overpopulation is a great concern since it turns land into a fairly scarce resource.
Citizens are to pay increased fees for occupying public spaces. In the context of ground transportation, vehicle owners have no other option rather than disbursing more to everything running out of fossil - and renewable - fuel engines to sharply reduce GHG local emissions. At the same time, drivers should be eligible to receive fiscal incentives for promoting ridesharing and using alternative means of transportation.
Technology is an essential tool to help drastically reduce the number of vehicles on streets. As local governments create online systems through which drivers and riders can connect and transfer mileages, taxpayers can easily communicate to find creative ways to share private spaces.
Vauban, in Germany, has dramatically increased the prices of public - and private - parking. The Green Party coalition decided that the ones who opted for driving rather than taking convenient, comfortable, and reliable public transportation must pay for occupying public space for private purposes. This decision has proven to be environmentally effective since GHG-free vehicles do not address the issue of land overuse and traffic congestion as well as contribute to the economy of mass production and consumption; therefore, increasing overall emission of pollutants.
In addition to taxes, the combination of incentives and technology generates less GHG emissions precisely because it reduces the number of private cars in public areas. A comprehensive system of smart pick-up and drop-off meters, for example, combined with online database and tax refund systems may encourage car owners to share private spaces with others.
Positive consequences of these measures are various: i) promote ridesharing ii) create incentives through tax refunds iii) indirectly force drivers to replace cars with public transportation iv) increase the number of people advocating for the improvement of green transportation and road safety and v) increase public surpluses for investments on new practices and technologies.
More ideas:
http://www.house.leg.state.mn.us/hrd/pubs/congestion.pdf
Citizens are to pay increased fees for occupying public spaces. In the context of ground transportation, vehicle owners have no other option rather than disbursing more to everything running out of fossil - and renewable - fuel engines to sharply reduce GHG local emissions. At the same time, drivers should be eligible to receive fiscal incentives for promoting ridesharing and using alternative means of transportation.
Technology is an essential tool to help drastically reduce the number of vehicles on streets. As local governments create online systems through which drivers and riders can connect and transfer mileages, taxpayers can easily communicate to find creative ways to share private spaces.
Vauban, in Germany, has dramatically increased the prices of public - and private - parking. The Green Party coalition decided that the ones who opted for driving rather than taking convenient, comfortable, and reliable public transportation must pay for occupying public space for private purposes. This decision has proven to be environmentally effective since GHG-free vehicles do not address the issue of land overuse and traffic congestion as well as contribute to the economy of mass production and consumption; therefore, increasing overall emission of pollutants.
In addition to taxes, the combination of incentives and technology generates less GHG emissions precisely because it reduces the number of private cars in public areas. A comprehensive system of smart pick-up and drop-off meters, for example, combined with online database and tax refund systems may encourage car owners to share private spaces with others.
Positive consequences of these measures are various: i) promote ridesharing ii) create incentives through tax refunds iii) indirectly force drivers to replace cars with public transportation iv) increase the number of people advocating for the improvement of green transportation and road safety and v) increase public surpluses for investments on new practices and technologies.
More ideas:
http://www.house.leg.state.mn.us/hrd/pubs/congestion.pdf
sexta-feira, 4 de fevereiro de 2011
Waiahole Ditch and Transaction Cost
As part of my Direct Readings this semester, I was asked by Prof Grandy to analyze the issue of Waiahole Ditch through the lenses of transaction costs.
The debate is over water use.
On the one hand, Windward organizations demand more water to be allocated to the Windward direction to promote i) steam restoration ii) environment protection iii) native Hawaiian culture iv) gathering rights v) recharging Kaneohe Bay fishery vi) survival of taro farming Windward valleys. A commission was created to defend this group: Waiahole-Waikane Community Association.
On the other, Central Oahu farmers as well as Estate companies have claimed that if water stops flowing to Leeward, they can no longer diversify their agriculture.
There is a third party involved. State and Hawaiian groups have argued that some of Kahaka Valley water has to be stored for future needs.
In this juridical battle that erupted in 1995 after Oahu Sugar Co. closed operations on Oahu, State Water Commission and Hawaiian courts have delivered some rulings. In 1997 and 2001 the Commission decided that the ditch should allocate some water back to the Windward side. Hawaii Supreme Court overturned part of these decisions. In 2006 it was decided that 12.57 million gallons would go to Central Oahu, 12 million to Windward streams, and 2.3 millions reserved in case water-use needs arise.
Waiahole-Waikane Community Association demands that all Waiahole ditch water be allocated back to the Windward streams.
Amidst this juridical battle, what would Coase and his Transaction Costs theory say?
Windward, Leeward, and State/Hawaiian organizations should be able to come up with numbers revealing how much they would lose or gain from having more or less water. Once these numbers are on the negotiation table, litigants would have a clear picture of the economic outputs and outcomes of each part in case water is reduced or increased to either side.
Assuming that more water flowing to the Windward direction yield more economic benefits than all Leeward farms together are able to compete, then Windward leaders should provide financial compensations to Leeward residents and farmers to offset possible losses resulting from less water flowing to the Leeward side.
Leeward residents could then invest this money in businesses less dependent on water or new devices that would improve efficiency in their farms by reducing water waste - or even prospect more water.
Three main problems, though, arises for this negotiation to start and be successful:
i) Value accuracy;
ii) Leeward’s lack of leadership;
iii) Power of State and Hawaiian organizations;
iv) Cultural and environmental valuing process.
If litigants address these economic, organizational, political, and cultural issues, they should then tap into arbitration where free price mechanisms and not expensive court rulings would drive parties involved in the litigation to reach a consensual decision by allocating scarce resources as efficiently as possible and making everyone better off.
The debate is over water use.
On the one hand, Windward organizations demand more water to be allocated to the Windward direction to promote i) steam restoration ii) environment protection iii) native Hawaiian culture iv) gathering rights v) recharging Kaneohe Bay fishery vi) survival of taro farming Windward valleys. A commission was created to defend this group: Waiahole-Waikane Community Association.
On the other, Central Oahu farmers as well as Estate companies have claimed that if water stops flowing to Leeward, they can no longer diversify their agriculture.
There is a third party involved. State and Hawaiian groups have argued that some of Kahaka Valley water has to be stored for future needs.
In this juridical battle that erupted in 1995 after Oahu Sugar Co. closed operations on Oahu, State Water Commission and Hawaiian courts have delivered some rulings. In 1997 and 2001 the Commission decided that the ditch should allocate some water back to the Windward side. Hawaii Supreme Court overturned part of these decisions. In 2006 it was decided that 12.57 million gallons would go to Central Oahu, 12 million to Windward streams, and 2.3 millions reserved in case water-use needs arise.
Waiahole-Waikane Community Association demands that all Waiahole ditch water be allocated back to the Windward streams.
Amidst this juridical battle, what would Coase and his Transaction Costs theory say?
Windward, Leeward, and State/Hawaiian organizations should be able to come up with numbers revealing how much they would lose or gain from having more or less water. Once these numbers are on the negotiation table, litigants would have a clear picture of the economic outputs and outcomes of each part in case water is reduced or increased to either side.
Assuming that more water flowing to the Windward direction yield more economic benefits than all Leeward farms together are able to compete, then Windward leaders should provide financial compensations to Leeward residents and farmers to offset possible losses resulting from less water flowing to the Leeward side.
Leeward residents could then invest this money in businesses less dependent on water or new devices that would improve efficiency in their farms by reducing water waste - or even prospect more water.
Three main problems, though, arises for this negotiation to start and be successful:
i) Value accuracy;
ii) Leeward’s lack of leadership;
iii) Power of State and Hawaiian organizations;
iv) Cultural and environmental valuing process.
If litigants address these economic, organizational, political, and cultural issues, they should then tap into arbitration where free price mechanisms and not expensive court rulings would drive parties involved in the litigation to reach a consensual decision by allocating scarce resources as efficiently as possible and making everyone better off.
Budgeting in the Public Sector
The module on budget started yesterday. Three readings were assigned but one especially caught my attention.
“Reinventing Government” from Osborne and Gaebler talks about the relation of budget and governance from bureaucrats’ perspectives.
It starts off highlighting the pros and cons of Line Items Budget (LIB). This form of detailing and categorizing the cost of inputs help public administrators keep track of expenditures; however, because it is extremely centralized, LIB does not encourage savings as well as requires high expenses on monitoring mechanisms.
Expenditure Control Budget (ECB) aims to solve these problems. This mission driven budget is more concerned about measuring outcomes (quality) and outputs (volume). Since this control mechanism encourages the savings of budgets previously earmarked, it frees up resources for managers to test new ideas as well as give managers autonomy to pursue organizations’ missions. Although this system has significantly reduced red tape, it has also perpetuated undesirable situations. In public health, subsidizing more the very ill has not encouraged hospital staff to improve patients’ overall conditions.
Public administrators then came up with a mechanism that would precisely measure performance. Management By Result (MBR) is about quantifying performance. Public service would now be measured by its quality, quantity, and cost. Taxpayers and constituents were asked to fill out surveys stating how much they were satisfied with services provided. If results turned out positive, entrepreneurial public administrators would receive bonuses and other financial incentives.
Although MBR dramatically improved public performance, it has neglected the very process of accomplishing public tasks and as a result greatly raised the level of stress among civil servants and also involuntarily created a system where public goals did not necessarily match with constituents’ needs.
Total Quality Management (TQM) aimed to address the problems of MBR. As individuals were afraid of revealing their feelings against powerful bosses and institutions, TQM encouraged not individual but group feedbacks. In doing so, TQM was able to identify and tackle systematic institutional problems. Not only budget but also personnel, purchasing, accounting and other systems were anonymously scrutinized by groups of unhappy civil servants.
(After this brief budget historical analysis, it is possible to envision an evolution of budget systems in the years ahead where TQM is widely extended to constituents through online and regular feedbacks so that public administrators would be able to gratify departments and organizations who have not only fulfilled quantity, time and cost assigned goals but also, and especially, surpassed quality measurement expectations)
“Reinventing Government” from Osborne and Gaebler talks about the relation of budget and governance from bureaucrats’ perspectives.
It starts off highlighting the pros and cons of Line Items Budget (LIB). This form of detailing and categorizing the cost of inputs help public administrators keep track of expenditures; however, because it is extremely centralized, LIB does not encourage savings as well as requires high expenses on monitoring mechanisms.
Expenditure Control Budget (ECB) aims to solve these problems. This mission driven budget is more concerned about measuring outcomes (quality) and outputs (volume). Since this control mechanism encourages the savings of budgets previously earmarked, it frees up resources for managers to test new ideas as well as give managers autonomy to pursue organizations’ missions. Although this system has significantly reduced red tape, it has also perpetuated undesirable situations. In public health, subsidizing more the very ill has not encouraged hospital staff to improve patients’ overall conditions.
Public administrators then came up with a mechanism that would precisely measure performance. Management By Result (MBR) is about quantifying performance. Public service would now be measured by its quality, quantity, and cost. Taxpayers and constituents were asked to fill out surveys stating how much they were satisfied with services provided. If results turned out positive, entrepreneurial public administrators would receive bonuses and other financial incentives.
Although MBR dramatically improved public performance, it has neglected the very process of accomplishing public tasks and as a result greatly raised the level of stress among civil servants and also involuntarily created a system where public goals did not necessarily match with constituents’ needs.
Total Quality Management (TQM) aimed to address the problems of MBR. As individuals were afraid of revealing their feelings against powerful bosses and institutions, TQM encouraged not individual but group feedbacks. In doing so, TQM was able to identify and tackle systematic institutional problems. Not only budget but also personnel, purchasing, accounting and other systems were anonymously scrutinized by groups of unhappy civil servants.
(After this brief budget historical analysis, it is possible to envision an evolution of budget systems in the years ahead where TQM is widely extended to constituents through online and regular feedbacks so that public administrators would be able to gratify departments and organizations who have not only fulfilled quantity, time and cost assigned goals but also, and especially, surpassed quality measurement expectations)
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