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Time for Systemic Reform

Yuval Levin, an incisive thinker at the Ethics and Public Policy Center, recently suggested a reform agenda for John McCain’s presidential campaign addressing the challenges of the 21st century.

Noting that large public institutions usually fail to adapt to changing circumstances, Levin declares, “Lurking beneath the individual concerns and anxieties that voters express to pollsters is a broad crisis of confidence, grounded in apprehension about the escalating failures of these institutions, from the intelligence community and giant Wall Street banks, to entitlement programs, the immigration system, and beyond.”

Levin identified a good part of the problem as the age of these institutions: a health-care financing system built for a post World War II economy, a 40-year-old immigration system, a military designed to fight a Cold War, and a large number of agencies – ranging from the Federal Reserve to the Federal Aviation Agency to the Food and Drug Administration – that were created in the last century and are now unable to successfully tackle the challenges of the Internet Age.

The failure of any one or two of these institutions is a challenge, but their combined decay and failure, all coming at the same moment in time, constitutes a “perfect storm” for public officials and voter confidence.

To put it in blunter terms, voters are just fed up with the fact that things don’t seem to be working. Levin offers a series of proposals for making them work.
Are there lessons here for Virginia and next year’s crop of candidates? There are more than a few areas where we could benefit from systemic reforms. Consider…
Transportation congestion is choking Northern Virginia and Hampton Roads, created largely by a 75-year old system that leaves land use policies in the hands of local governments but responsibility for building and maintaining roads with the state (one of only four states making the state capitol responsible for neighborhood roads.) It’s a system designed for the day when Fairfax County was the largest dairy-producing county in the state, and is long outdated for major population centers. A winning candidate will work to reform it.

Skyrocketing K-12 education costs are frustrating taxpayers, parents, teachers, legislators, and local elected officials. Yet the funding gap between the richest and poorest school divisions has widened since 1999. Virginia’s K-12 education funding – based on Byzantine staffing ratios and formulas – is an indecipherable, opaque revenue stream that no one understands, least of all those who actually vote on it. A system of “weighted student funding” would work better (and instill confidence in taxpayers who would actually understand it). But that would require a focused and comprehensive proposal for overhaul, rather than just throwing down budget cuts or tax increases during the General Assembly session.

Local property tax payers struggle because of rising assessments that don’t necessarily reflect their ability to pay – a struggle likely to increase as those taxpayers age and move from dynamic incomes to living off retirement funds and savings. Putting even more pressure on property owners, Virginia calculates a school district’s “ability to pay” partly on income levels – the higher the income in a county, the lower the level of state aid – resulting in even higher local property taxes because income can’t be taxed. Devising a means to “spread out” the burden, without raising net taxes on local taxpayers, would wisely anticipate the demographic changes coming down the road.

Parents keeping one eye on state college tuition can’t help but notice 10-percent tuition increases this year. The other eye is no doubt watching Virginia high schoolers’ rising difficulty in being admitted. Part of these problems stems from decreased state general fund appropriations and an increasing reliance on tuition which, in turn, creates a bias for out-of-state students who pay much more than in-state students.  But what if, instead of giving state money directly to the universities, those funds went directly to students? Not only would such a transfer put the focus back on students rather than institutions, it would also help level the playing field for lower and middle-income Virginians finding it harder to meet the tuition bill.

There are dozens more possibilities – from lowering mandates on health insurance (Virginia has the third highest number of mandates which in turn increase insurance costs), to creating more robust public-private partnerships in school and road construction.

Of course, one challenge for political leaders is the tendency toward “bumpersticker slogans”. The center-left never met a problem that couldn’t be solved by raising taxes, and the center-right’s solution is always to cut those taxes.

But judging from national politics – Barack Obama has prospered by offering a new tone and leadership style and John McCain has advanced by emphasizing solutions that go beyond customary left/right orthodoxy – Virginians may just be ready for practical solutions rather than campaign rhetoric.
In fact, if we’re lucky, they’ll demand it.

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