Sebelius’ budget team has Koch help

Seeking to fulfill her pledge to streamline government, Gov. Kathleen Sebelius is getting an assist from Wichita’s Koch Industries, whose corporate philosophy emphasizes limited government and free enterprise.

Art Hall, a Koch economist, is leading the review that Sebelius told voters would yield hundreds of millions of dollars in savings for taxpayers.

Hall and about 60 others churned out ideas in a frenzy of brainstorming after Sebelius won the election.

Now, he is the unpaid executive director of the Budget Efficiency Savings Teams that Sebelius chose to help her make government work better.

Hall says he spends about half his time as a loaned executive to the state and half in his job as a policy analyst for Koch. He could be on loan for about two years.

So far, the teams have produced about $20 million in real spending cuts. Another $32 million will be raised through higher fees and collection of overdue taxes.

Those changes, however, had littleto do with resolving this year’s budget crisis. That was accomplished with a series of accounting maneuvers, delays in highway spending, plans to collect property taxes early next year and sidestepping the state’s cash reserve law.

Now, Hall says he is looking for ways to make fundamental change in state government.

What he has found so far, he says, are state employees “extremely passionate” about doing good work but frustrated by systems and rules.

“The people who work in government get as discouraged about it as anybody I ‘ve seen,” he said.

The challenge, Hall said, is getting employees across state government to see themselves as part of the whole organization, not just as employees of the Department of Transportation or Revenue or Commerce.

Sebelius, a Democrat, is enthusiastic about Hall’s approach.

Coming from outside government, she said, “allows him to question everything. “

She says she is not concerned that Koch has contributed heavily to Republican candidates, including her opponent in the governor’s race last year.

“He is really my person in this administration, not directed by the leadership in Koch,” she added.

Sebelius said Mike Morgan, Koch’s government relations director whom she has known for years, suggested Hall when she was selecting team members.

“We were eager to have that kind of talent and think that it’s been a great collaboration,” she said.

Taking inventory

Hall’s first objective is figuring out what the state owns.

“Any large organization should know exactly what it has, where it is, what it ‘s worth,” he said.

But it’s not that easy in state government, working with agencies’ different inventory systems and computers that don’t speak the same language.

After some effort, he can tell you the state has 7,724 vehicles — at least on the day he checked. And show you a map of where they are.

Is that a big deal?

It could be, he said, if Transportation has a backhoe at one place and Wildlife and Parks needs one 10 miles away but the two departments are not communicating.

Hall plans to do the same kind of inventory on buildings –owned and leased

— and on computers and other equipment. There is no reason for Human Resources to buy computers, he said, if Corrections has some sitting on a shelf.

The same approach eventually could be applied to personnel, matching underused skills in one department with needs in another, he said.

Hall has been with Koch for six years, analyzing the effect of government policies in states and numerous countries on Koch’s far-flung operations.

Before that, he spent five years with the Tax Foundation in Washington, a group that receives contributions from the Charles G. Koch Charitable Foundation.

He also spent 18 months with the General Accounting Office, the auditing and investigative arm of Congress.

Now, he splits his time between the state work and Koch, which is not known for loaning out executives on a long-term basis.

The company has taken on small roles in other areas of the country, working with state and local governments to “foster good economic thinking,” said spokeswoman Mary Beth Jarvis.

Koch Industries has spent millions over the years advocating open markets, lower taxes, minimal government regulation and a high bar for private plaintiffs who sue corporations.

The company’s two top executives, Charles and David Koch, helped found a number of anti-tax and anti-regulation groups, including the Tax Foundation, which analyzes the effects of tax policy, the corporate activist organization Citizens for a Sound Economy, and the free-market think tank, the Cato Institute.

Hall also ended up helping Sebelius despite the fact that Koch and its top executives, including chief executive Charles Koch, backed her opponent in the governor’s race, Republican Tim Shallenburger.

Koch executives gave Shallenburger more than $10,000 individually, and the company and a top executive collectively gave the state Republican Party $55,000.

Sebelius got $2,000 from the company but none from its executives. However, she received $4,000 from Bill Koch, Charles’ brother who has battled him in court over family business for years. Bill Koch also was the biggest individual contributor to the Kansas Democratic Party, donating $100,000 over the past four years.

No matter, Sebelius said.

“None of those factors really had anything to do with Art being part of this process,” she said.

Looking for results

Skeptics of the streamlining effort are easy to find –especially among those who think they’ve kept a close watch on government spending for years.

“In general, she hasn’t produced anything that wouldn’t have been uncovered without the top-to-bottom review,” said Senate President Dave Kerr, a Republican.

Melvin Neufeld, the House budget chairman, said 95 percent of what has been done so far is on everyone’s list anytime the budget gets tight — more fees, less printing, project delays.

He is encouraged, however, that Sebelius is looking at fundamental changes, which he said never happen in government without a money crisis.

“The fact that they’re doing a cultural change and saying there aren’t any sacred cows is pretty refreshing for government,” he said.

Hall sees serious hurdles in trying to change the culture of government — not the least of which is the budget process.

Agencies submit their budget requests to the governor, who normally makes some trims. Then, they argue their case before the Legislature, which may cut more.

In the end, he said, agency officials feel like they’ve fought hard to justify their budgets.

“The whole process reinforces the mine-versus-theirs mentality,” he said.

The Legislature creates the mind-set by setting up agencies to operate independently from one another, said Ed Flentje, director of the Center for Urban Studies at Wichita State University.

Some agencies, he said, are granted near autonomy, such as the Board of Regents, which governs universities and community colleges.

In other cases, political disagreements fragment decision-making, he said, noting that half a dozen state agencies deal with water issues. Past efforts to consolidate water policy have failed.

Still, “If you can get your big, cabinet-level agencies to work jointly on things, you can make a big difference,” said Flentje, who previously worked for former Govs. Mike Hayden and Robert Bennett.

That’s one of Hall’s tasks.

He knows he can’t replicate the profit motive of private business that he credits with creating a built-in incentive for teamwork.

But Sebelius hopes he can help her team come close.

“We’re trying as much as possible to get people out of their agency hats,” she said.

Contributing: Dion Lefler and Alan Bjerga of the Eagle

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