“Cap and Trade” to Reduce State Government Workforce?
At our bi-weekly state house breakfast seminars on January 22, 2008, I discussed potential tax savings that exist within the state government workforce. In a nutshell, Maine could save $400 million if state compensation and employment ratios were at the national average–see here for more details.
Policymakers have a unique opportunity to reach this goal–the retirement of 40 percent of the state government workforce over the next 10 years. However, doing so will require a solid game-plan that is put in place before the exodus begins.
During my presentation, I presented an idea to institute a “cap and trade” system that will gradually reduce the state workforce in line with estimated retirements while also ensuring that the most important state jobs remain fully staffed.
Cap and Trade would:
1) Limit the total number of positions and/or payroll available to state agencies. This would be similar to the salary caps employed by the NBA or NFL.
2) State agencies and departments would “bid” against one another for the limited number of positions and/or payroll slots available.
3) The bidding would establish a clear value for every job available within state government. Just as prices set the value for the goods and services that Mainers purchase every day.
4) With a clear value established, higher valued jobs will be retained while lower valued jobs will be phased out.
The end result is lower state spending and lower taxes for all Mainers. I plan to further develop this idea with more concrete details, so stay tuned to this blog . . .