Inside the Capitol

Tuesday, November 09, 2004

SaveSmart Not Smart

SANTA FE My attempt to at least partially defend Gov. Bill Richardson’s Save Smart program didn’t meet with much reader acceptance out there.
Richardson expects his initiative for a central purchasing collaboration among all state agencies under his jurisdiction to save millions of dollars that can be redirected to education, economic development and tax cuts. And he’s already proposing some major tax cuts for the 2005 Legislature beginning in January.
But readers I’ve heard from claim the state’s efforts to save from central purchasing will be no more successful than the federal government’s efforts that Richardson may have been trying to emulate. And they don’t like the pressure on local government, especially school districts, to join the program.
One reader noted that government is often the largest business and employer in small communities. Since its purchases are vital to those communities, it should be a good neighbor just like any other local business. It should buy locally if the price is reasonable.
Otherwise, government becomes part of a process that sucks economic activity to the center, starving and depopulating the rest of the state. Depopulation of rural communities is becoming a serious demographic phenomenon and this kind of policy aggravates that effect.
When small businesses have to close, state and local governments suffer from lost taxes and the economy suffers from lost jobs. Likewise, when purchases are shifted to outlets of big chains, profits go out of state.
The federal government’s experience with central purchasing has produced some disasters. One case is Halliburton. Going back at least as far as President Lyndon Johnson and his coziness with Brown and Root, the Pentagon has consolidated its war zone procurement of everything from construction to basic services into fewer and bigger suppliers, until it could justify the sole-source award to Halliburton in Iraq on the grounds that no other firm could offer all the goods and services on the scale needed.
That was much more convenient for the procurers than buying from hundreds of smaller firms that could provide all the products and services through individual, competitive contracts. And it obviously requires fewer government workers to run such an operation. But the end result has been that taxpayers have been held hostage by a sole source, which has proceeded to gouge the government without delivering the goods.
Another instance is the current influenza vaccine mess. Over the years, the government has found it more convenient to consolidate purchases, making it uninviting for small producers until there were just two sources of the annual vaccines. One had to shut down last week and the nation is left with only half the amount of vaccine it needs.
So maybe Save Smart isn’t as smart as it might appear.
The Richardson administration is going ahead with another money saving program that stirred controversy in the Legislature earlier this year. But it will produce much less financial benefit than previously planned.
Jan Goodwin, secretary of the state Taxation and Revenue Department, told a legislative interim committee last week that the administration will implement new contracts by the end of the calendar year to charge fees that could generate $800,000 a year from companies for access to an electronic database of state motor-vehicle records.
Currently, the state collects about $80,000 a year from vendors for the information. The increased fee would amount to about 75 cents a record. The nationwide average is $5.90 per record, with surrounding states charging even more.
But higher fees were strongly opposed in the 2004 Legislature by a powerful lobbying effort from the company that would have been most heavily impacted by the fee increase. Individuals will continue to have free access to a copy of their own driving record.


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