The Impact of Social and Political Pressure on Public Capital Spending
 

Prepared for: Dr. William Leavitt By: H. Reed Fowler, Jr. Date: April 15, 1998

II. CIP PLANNING IN NEWPORT NEWS

III. DECISION-MAKING IN THEORY

IV. CIP DECISION-MAKING: THE REALITY

V. ROLE OF LOCAL POLITICS

VI. WHO COMPLAINS? – THE CITIZEN’S PERSPECTIVE

VII. IMPACT OF CONFLICTING GOALS

VIII. OPTIONS/RECOMMENDATIONS

IX. CONCLUSION

REFERENCES

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1. INTRODUCTION

The role of the public administrator is continuously changing in response to society’s demand for more efficient and effective service. The public expects taxes and user fees to remain the same and to get more for less. The service they want and expect is not necessarily the service that their neighbor is asking for.

Further complicating the issue is the agenda of the local politician. In this case, constituents are the driving forces behind service and policy demands. They may or may not have the same needs as the "general public."

Finally, the public administrator has an agenda based on his/her perception of the public’s needs. Policy issues and public spending decisions are generally based on factual and quantifiable information.

These conditions are no different in the City of Newport News. Spending and policy decisions are often made impulsively. Conflicting policy goals can create a perception of errant project planning. They affect long range plans without regard to the effect on agency budgets. Resources such as manpower and equipment are diverted to comply with service requests emanating from all levels of the bureaucracy.

Political and social implications are a reality in many aspects of the budget process. Conflicting policy goals can have a significant impact on the implementation of a "structured" Capital Improvement Project (CIP) plan. This paper discusses how current decision-making procedures in the City of Newport News Wastewater Division related to CIP budgeting are impeded by external demands.  Return to Table of Contents

 

2. CIP PLANNING IN NEWPORT NEWS

Each department in the City of Newport News is required to submit a five-year CIP plan. The plan is updated annually and is submitted around the same time as the operating budget. Departments are strongly encouraged to review the previous years plan to determine whether or not their priorities have changed. All projects submitted by city departments are combined to form a citywide CIP. City Council approves the CIP as package.

Projects submitted by the Wastewater Division are based on studies of infrastructure condition. The studies are conducted using high technology equipment such as closed-circuit television (CCTV) systems. Consultants are also used in known problem areas of the city to isolate the more severe sewer and storm drain defects. Infrastructure deficiencies are noted and rated for repair based on the severity of the defects. Severe defects are repaired immediately.

The process of prioritizing the CIP list has been streamlined using specialized software in conjunction with the infrastructure reports. Coordination between the Department of Engineering, the Wastewater Division, and the Street Maintenance Division helps to assure that future development and street reconstruction are considered.

In its final form, the CIP is presented to City Council for adoption. City Council has the prerogative of sending individual projects back to the City Manager for revision. They can also request that additional projects be added to the list. City Council reviews each project in detail before final approval of the CIP.

The Wastewater Division’s operating budget also contains a line item in the drainage and sanitary sewer cost centers for smaller capital projects. These projects are planned and designed to repair infrastructure that has a long-standing history of problems. The projects are not voted on individually by City Council. They are adopted as a part of the total budget package. Return to Table of Contents
 

3. DECISION-MAKING IN THEORY

CIP’s are designed to serve the interests of the public by repairing or replacing infrastructure before it fails. Failure to do so results in costly emergency repairs and can cause severe property damage or personal injury. As mentioned above, another function of the CIP is planning for future development or upcoming street reconstruction projects.

In the strictest sense, we would have to accept that "...public bureaucracies behave in highly structured, routinized, and deterministic fashions..." when making choices (Lineberry, 1977). The problem is that administrators of the same bureaucracies also have discretion to choose which projects to fund. The administrator’s discretion is ordinarily based on adherence to professional norms and values. Their behavior is shaped by a series of decision rules which are either unique to the organization doing the planning or follow some regional standard (Antunes, 1977).

In the case of CIP’s, decision rules tend to follow the lines of the infrastructure integrity definition. Only the worst sewer or storm drain lines are budgeted first. Remaining funding is used for additional "luxuries" such as future development or neighborhood enhancement projects. Annual revision of the CIP is based on high priority repair and/or replacement projects.

The equality rule is often applied in conjunction with decision rules. This rule is used to assure that the CIP addresses all areas (neighborhoods, sewer service areas, or drainage basins) of the city with uniformity. The equality rule is beneficial from the standpoint that wealthy and poor areas receive the same level of capital investment.

Although fairness should always be considered, stringent use of the equality rule can cause the budget process to become more political. A certain level of bargaining will have to take place to determine the types of project allocation for each district (Antunes, 1977). The major shortfall of the use of this method of budgeting is that replacement of some infrastructure components most in need may be delayed.

Representativeness or representative bureaucracy is a concept that applies to the composition of the bureaucracy in relation to the general population. On the surface, it may appear that representativeness really does not directly apply to the CIP decision-making process. Nevertheless, representative government refers to "street-level bureaucrats" (Lipsky in Riccucci, 1997). They are the government employees that have the power to influence the quality and quantity of service (in our example projects) delivered by their agency. Theoretically, the interest of the street level bureaucrat is on the technical decisions - not "where" the budgeting dollars are being spent. Return to Table of Contents
 

4. CIP DECISION-MAKING: THE REALITY

Each of the models described above assumes that citizens want government to make infrastructure decisions for them. It further assumes that they believe that the managers involved in the decision-making process are able to determine the best course of action, budget accordingly, and implement the plan. In reality, numerous factors come into play that impede the effectiveness of the CIP.

First, it is important to realize that the infrastructure system in Newport News (or any other municipality) is aging. The older sewer and storm drain lines in the city are subject to catastrophic failure. When this happens, funding must be shifted immediately to repair the lines. There is no argument that this type of project takes precedence over planned expenditures. However, any change in the original CIP results in delay of other important projects and is a source of frustration for the administrator.

If changes in capital plans simply resulted from the failure of an older sewer line, the impact would be minimal. However, other external factors such as organized politics and strong civic groups can result in a radically different CIP budget. Projects planned for many years are shifted to make room for the "hot issue of the week."

In reality, local politics, citizen complaints, and conflicting management goals affect capital budgets. Project managers, city management, and local politicians should cooperate to assure that the CIP provides the benefit that for which it was designed. This does not always happen. Return to Table of Contents
 

5. ROLE OF LOCAL POLITICS

Most spending decisions are made by politicians and not by citizens (Donahue, 1989). Political choices often override the formal CIP submission even after a significant time investment by the administrative staff. A project geared to enhance the aesthetics of a neighborhood suddenly takes precedence over pump station rehabilitation. The theory of "out of sight-out of mind" applies here. A new park is chosen in favor of rehabilitation of a storm drain system.

Edmund Burke believed that democratic representatives should serve the best interests of the public, and not necessarily conform to their will (Dye, 1995). In reality, interest groups, neighborhood groups, and other local organizations do try to shape budget decisions with their vote. Fortunately, statistics show that public policy runs contrary to public opinion at least one-third of the time.

It is not unusual for politicians to try to alter daily or routine operational decisions. Their request is generally the result of a call from one or two citizens. It is unlikely that they count on small operational changes to enhance their constituency (Donahue, 1998). Conversely, large structural changes in the CIP benefiting significant neighborhood statistical areas can result in immense political gain.

How is the influence of political leaders conveyed to the operational side of local government? By statute, local elected officials are not legally able to direct the day-to-day administration of the city. The City Manager as an appointed official must be responsive to the members of City Council. Because political appointees serve at the pleasure of the elected officials, they tend to be more loyal toward the politician (Riccucci, et al, 1997). However, responsibility for the budget, neighborhood safety, and efficiency of service tends to balance the manager’s focus. It is more likely that the manager will be responsive to City Council with the smaller political "upsets".

Just as the City Manager is inclined to satisfy the City Council, local government officials are often driven to satisfy the City Manager. Why? That is how their organizations are funded (Osborne and Gabler, 1993). Return to Table of Contents
 

6. WHO COMPLAINS? – THE CITIZEN’S PERSPECTIVE

Defining the political influence on an organization’s CIP budget does not explain the role that small neighborhood groups or citizens play. As a constituency, large groups of citizens can influence the CIP budgeting process. Neighborhood groups and civic organizations can have a powerful voice. Their message is heard loud and clear by City Council members. Yet, however influential the organization may be, ward system voting leads to group fragmentation. For this reason, smaller and less complex projects tend to take precedence over larger projects. This occurs because of the immediate gain derived from completing the projects (Antunes, 1977).

Completion of the smaller "quick-fix" project to satisfy a neighborhood or civic group is not all bad. In fact, I would argue that these types of projects provide several important benefits. For example, neighborhood improvement projects can lead to increased assessment values (which lead to increased tax revenues). Secondly, the larger more complex projects tend to remain in the CIP budget. Finally, from a maintenance standpoint, some of the calls result in the identification of serious structural conditions. Public health and safety could be at risk if left unattended.

The problem is that the requests for the "quick-fix" projects are episodic. They generally emanate from a call to a politician who requests investigation and response by the City Manager (Lineberry, 1977). As an appointed official, the manager is under pressure to resolve the complaint. This sometimes leads to a major design, engineering, and construction project. Funding may affect either the CIP or the operating budget.

But, does an equity imbalance arise from political responses to citizen’s requests? When the division’s focus is shifted to this type of work, preventive maintenance efforts are reduced. This pattern is not specific to any one residential or demographic area. The result will always be a case of a "...net benefit to some people and a net cost to others." (Donahue, 1989) Return to Table of Contents
 

7. IMPACT OF CONFLICTING GOALS

External factors play a large role in the battle for CIP funding, but internal disagreement over program goals can also be destabilizing. Different departments within the same government organization can have opposing objectives. For example, during the CIP planning phase, middle level managers may be focusing on the need to mitigate a long term flooding problem. At the same time, the Engineering Department focuses on a more systematic approach to infrastructure replacement. Their emphasis is on the replacement of older sewer or storm drain lines.

Confusion also may develop when different levels of management within the city disagree on the CIP funding goals. Inter-departmental politics are a reality at budget time. Yet, cooperation is essential at the middle management level. It is incumbent upon each manager to negotiate in good faith to develop the budget. The success of the CIP is dependent upon "sub-units negotiating with one another according to established processes" (Salamon and Land, 1989). When this does not happen, the City Manager is more inclined to approve the "politically appropriate" alternative.

It is important to understand that competition for CIP funding is not so much about which department or division has a greater need. In most cases, the needs are very real for everyone involved in the process. The problem mainly arises out of the total availability of funding. For example, "we cannot possibly fund a new City Hall, build three new recreational facilities, and replace two thousand linear feet of sewer line this fiscal year." The choices are difficult. There is always something else to build, install, or repair. Return to Table of Contents
 

8. OPTIONS/RECOMMENDATIONS

There are many efforts underway to minimize the chaos involved with capital budgeting. Funding sources are not increasing. In fact, government will continue to experience funding limitations for both capital and operating budgets. Fixing a problem in one neighborhood does not satisfy the perceived needs of residents in the rest of the city.

We can no longer accept that CIP budgeting is driven by the individuals who vote for the "right" elected official or gain attention by speaking at a public meeting. Citizens want to play a larger role in determining policy outcomes and guiding project implementation. The trend toward citizen task forces, committees, and neighborhood groups is replacing the "let government do it for us" style (Box, 1998). The public wants more today than ever to take control over the very things that affects their daily lives (Osborne and Gabler, 1992). Infrastructure and capital budgeting are two very important components.

Kansas City, Missouri realized that "crisis management and pet projects" often dictated capital spending. City council formed a "Community Infrastructure Committee" to produce a more politically neutral and community friendly CIP (Lester, 1997). The public respects the committee. They recommended a sales tax increase to expedite the repair and replacement of bridges and other infrastructure. The committee understood that sacrifices would have to be made. However, higher tax expenses to pay for the expanded CIP made sense. The condition of the bridges would have continued to deteriorate. Public health and safety concerns outweighed any concern over the tax increase.

How was a citizen’s committee able to recommend the tax increase during such difficult financial times? The answer is simple. There was no political pressure to delay tax increases. In fact, surveys demonstrate that citizens will generally favor small incremental changes in taxes. In return, they expect to see improvement in their own back yard.

Another trend is emerging that may further enhance the CIP process is community building. Community building is designed to build "...community in individual neighborhoods: neighborhoods learning to rely on each other, working together on concrete tasks that take advantage of new self-awareness of their collective and individual assets..." Overall, as a result of community building, pressure on elected officials are minimized. Why? As a community, the citizens are determining their own priorities for neighborhood service and community investment (Kingsley et al, 1998). The citizen gains a valuable understanding of the complexity of the budget process. Politics are removed from the process. The budgeting is done at the neighborhood level.

Communities understand their problems better than public servants (Osborne and Gabler, 1992). They may opt for a community center instead of curb and gutter installation. The politics play out at the community center not at city hall. The feeling of ownership in the system is a powerful public service tool. Return to Table of Contents
 

9. CONCLUSION

Continued fragmentation of CIP budgeting efforts is unproductive. The social and political battle about "who gets what, when, and how" will always exist (Laswell, 1958 in Antunes, 1977). City budgets will always be less than needed. It is our responsibility as public administrators to plan and budget wisely.

Some of the more difficult choices may be in contrast to public opinion. Budget allocation decisions will usually result in "winners and losers." We will always have to make decisions when it comes to public safety and health. Community involvement in the planning process would reduce the tension. Neighborhood groups willing to make the more difficult local decisions should be strongly endorsed.

Lastly, continued emphases on inter-departmental negotiation and decision rules are a necessity. Citywide capital plans cannot be implemented even at the neighborhood level if departments cannot agree on what needs to be done. We are still the experts in the field of infrastructure design. Community or neighborhood groups need the resources from which to make the educated choices.Return to Table of Contents