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January 6, 2013

Daniels: Practical is the name of the game

Outgoing state governor says privatization efforts stemmed from push to increase government efficiency.

INDIANAPOLIS — For those wondering what Indiana Gov. Mitch Daniels may bring to his next job as a public university president, it may be helpful to consider the details of a story he tells about window washers.

Twenty years ago, the then-corporate executive Daniels was head of a commission assigned to figure out how to make Indianapolis city government operate more efficiently. Among the many questions the commission asked was why the windows on the city-county building were being washed weekly — much more frequently than nearby similar structures owned by private companies.

The answer: It wasn’t because the windows were so dirty, but because the city had four window-washers on its payroll and had to do something to keep them busy.

“This is the power of the tiny example,” said Daniels, during a break from cleaning out the Statehouse office he’ll vacate within days. The commission’s findings triggered sweeping changes in the delivery of city services — including many that were contracted out to private companies — and resulted in a 40 percent reduction of city employees and about $230 million in savings.

That experience came after Daniels had intimate exposure to both local and federal government; experience that ranged from working for Richard Lugar, when the now-retired U.S. senator was Indianapolis mayor in the early 1970s, to working for Ronald Reagan in the White House before becoming President George W. Bush’s budget chief.

Experiences, coupled with his years as a top executive at the pharmaceutical giant, Eli Lilly & Co., that helped shape the views that Daniels brought to his eight years as Indiana governor.

“I developed along the way some sense that government, absent results-oriented management, absent the transplanted accountability (of the private sector) would just drift on….” Daniels said. “It was ‘Well, we’ve got four people, so I guess we’ll just wash (the windows) once a week, even though they don’t need it.’”

Daniels isn’t ready to say much about whether there are too many window-washers, or other inefficiencies, at his next place of work: Purdue University.

“We’ll just have to wait and see,” said Daniels, diplomatically, before noting Ohio State University’s recent decision to lease out its parking lots to private investors to operate for the next 50 years, in return for a lump payment of $483 million.

That deal, one of the first of its kind at a large university, is a lot like the deal that Daniels made in 2006, after he took office the year before as Indiana’s first Republican governor in 16 years.

Daniels’ decision to lease the money-losing Indiana Toll Road to private investors for $3.8 billion was part of a series of decisions he made to turn over a wide range of public services — from prison food to welfare payments — to private entities. In 2007, the New York Times dubbed him “Governor Privatize.”

The label has stuck, but Daniels argues it’s a misnomer. Much of what he’s done, from consolidating procurement across state agencies to selling off a fleet of unused state vehicles, was about making government more efficient, he said.

“I can’t get it through the thick heads of some people,” Daniels said. “They want to talk about privatization. I say, ‘You got the wrong p word. The p word we use is practical.’ ”

Daniels said his mission, when he took office eight years ago, wasn’t to make the state government smaller — though he has, by reducing state personnel rolls to where they were in 1970s.

His mission, he said, was to make state government better, faster and cheaper.

He’s earned some sharp criticism for how he’s done that.

Labor leaders howled in protest when he ended collective bargaining for state employees and put performance-pay measures into place. Teachers and school administrators reacted angrily when he cut education spending to help balance the budget. Former Democrat House Speaker Pat Bauer called the toll road lease “a very, very bad deal,” and state legislators in his own party were among his toughest critics when efforts to privatize the state’s cumbersome welfare system went awry.

Daniels said there’s room for argument about how to make government better, faster and cheaper. But no argument about the goal.

“If you’re a believer in limited government as I am, you should think that the sphere of its activity is limited and government shouldn’t get outside it. But inside it, you should be really determined…that every dollar be well spent,” Daniels said.

“And, on other hand, if you believe in a large and very active government, I would think you’d be the most offended of all if it’s botching the job and wasting money, because then it’s failing to serve people. You also should want every dollar spent well.”

Too often, he argues, ideologues on both sides fall short. “Too many in the first group stop when they think they’ve limited the government,” Daniels said. “And the second group acts like they don’t care at all if government is ridiculously wasteful and inefficient.”

When Daniels took office, he inherited an $800 million deficit and eight previous years of unbalanced budgets. As Daniels is wrapping up his final days in office, Indiana has a $1 billion surplus.

“The good news is government can shoot straight,” Daniels said, adding: “But it is not the natural order of things.”

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com.

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