New initiatives become likely candidates for federal adoption

According to budget expert Alan Viard, resident scholar at the American Enterprise Institute (AEI): “Federal spending on defense will remain high during the upcoming year. As in most past years, there will be increases in federal health spending (Medicare and Medicaid).”

Viard also predicted that the following three appropriations bills are the most likely to post the sharpest percentage increases in fiscal year 2008: the Energy and Water bill; the Military Construction and Veterans’ Affairs bill; and the Transportation and Housing and Urban Development bill.

The AEI is a private, nonpartisan institution dedicated to research and education on issues affecting government, politics, economics and social welfare.

“The year 2008 offers a mixed picture—it’s not a year with a lot of clarity,” Nick Johnson told Government Product News. Johnson is director of the State Fiscal Project at the Center on Budget and Policy Priorities in Washington D.C. The center conducts research at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.

“As usual, I think education and health care will be the spending drivers,” Johnson added. “An area of uncertainty, I think, is environmental and climate-change-related initiatives of all sorts. It’s very unclear whether this will be a major area of state focus or whether the federal government will end up taking the lead. Cap-and-trade initiatives offer the prospect of new revenue streams to finance these kinds of initiatives, but it’s too soon to tell exactly what they’ll look like—probably not much for 2008, but maybe 2009.”

With cap-and-trade programs for greenhouse gases, emissions are capped, and businesses are permitted to trade credits to emit carbon dioxide and other heat-trapping gases.

In 2008, federal revenues and deficits are headed in opposite directions. Federal revenues are growing (see federal revenue chart), the Congressional Budget Office reported in its latest budget forecast through 2017. The goods and services chart also shows that federal purchases of goods and services are projected to increase in the years ahead.
Cato Institute, which is a nonprofit public policy research foundation headquartered in Washington, D.C.

Federal deficits, meanwhile, are shrinking, noted Chris Edwards, director of tax policy studies at the

“The deficit has fallen dramatically and continues to fall,” Edwards told Government Product News. “The final year-end numbers for FY 2007 showed that the federal deficit was down to $163 billion, which, as a share of the economy, is actually fairly low. The federal deficit is falling dramatically, and taxpayers should be celebrating. It will make it more difficult for Congress to impose new tax increases.”

In his recent “Tax and Budget Bulletin—Improving on the President’s 2008 Budget,” Edwards urged federal budget administrators to consider curbing compensation for federal employees. “Pay and benefits for federal workers have been rising much faster than for private workers. Substantial savings would accrue from skipping the usual annual pay adjustments for two years.”

Innovative information technology receives a unanimous ‘thumbs up’

As we move toward crucial 2008 elections, governments at all levels continue to embrace new information technology (IT) that increases the efficiency of important public processes. For instance, the San Francisco Board of Supervisors committee has given preliminary approval to buy newer voting machine technology for reading ballots.

The new machines, made by Sequoia Voting Systems of Oakland, Calif., promise to read lighter shades of ink on absentee ballots. Because the current equipment in use can only read darker shades, absentee ballots marked in lighter colors often were not properly read or counted in past elections. Value of the proposed contract is $12.6 million.

In a different Oakland jurisdiction—Oakland County, Mich.—IT administrators are relying on project portfolio management (PPM) software to improve governance. Developed by Islandia, N.Y.-based CA Clarity, the PPM package is helping the county’s IT operations work more effectively and better align these operations with Oakland County’s business and economic development goals.

“Return on Investment (ROI) is what drives all of our decisions in the IT world today, and even though we are a government agency, we still have to look at tangible and intangible benefits to drive projects forward,” said Phil Bertolini, deputy county executive and CIO for Oakland County. “In many cases, projects will be prioritized based on their ability to return back the investment to the taxpayers, and CA Clarity’s financial billing and project budget processing modules will help us in that regard.”

In another move to enhance operational efficiency and responsiveness, five departments in the city of Hampton, Va., soon will be using Strategy Management application software developed by SAP Public Services Inc. The installation of the IT product, which will be handled by Cipher Business Solutions LLC, is part of the city’s efforts to better define, measure and manage the effectiveness of operations, public service programs and projects for its 146,400 citizens.

“We needed a system that would improve information sharing and collaboration between city departments and promote the visibility of critical performance and program information,” said John Eagle, assistant city manager for the city of Hampton.

City officials selected SAP over nine other software vendors in a competitive process. According to Eagle, “SAP understood our goal, showed us a roadmap for achieving it and offered a full complement of services to make it happen.”

The city will use the new software to quantify performance in critical areas, such as its 3-1-1 services center and municipal and public works programs. According to SAP Public Services, the software will allow Hampton to track 3-1-1 call-abandon rates and wait times as well as view productivity and capacity levels for municipal problems such as clogged storm drains and nonworking traffic lights.

In addition, the software will help maintain critical institutional knowledge, especially for long-term projects. Goals are to avoid the negative impact of a retiring work force and employee turnover, according to SAP Public Services.

Governments buy full roster of technologies and products

Various indicators that reflect the importance of government purchases and the overall government market are outlined by the Freedonia Group, a market research firm headquartered in Cleveland, Ohio:

• Almost 25 percent of bearings used in maintenance and repair projects are bought by governments, reported a recent Freedonia study. The government market for bearings is projected to rise at a 2.4 percent annual pace through 2011 to $450 million. Sales of bearings to government will continue to be spurred by increases in defense expenditures.
  
• Demand for electric transmission and distribution equipment in government and institutional markets will increase 4.8 percent annually to $700 million in 2011. Switchgear, transformers, hardware and meters are a few of the products found in this category. Growth in government purchases will be supported by increases in transportation construction spending and government fixed investments.
  
• Government and institutional demand for electric transmission and distribution equipment, said Freedonia, is affected by the level of government investment in infrastructure, which includes highway and maintenance needs, along with new construction and maintenance of public educational and health care facilities as well as other government buildings.
  
• Demand for rechargeable batteries used in government applications is expected to increase 4.6 percent annually through 2011 to $738 million. Governments, estimated Freedonia, buy more than 8 percent of the rechargeables used in the U.S., based on the value of those rechargeables. In the future, rechargeable power supplies in the government arena will face increased competition from alternative-energy source technologies, such as fuel cells. Military, homeland security and emergency-disaster preparedness agencies (at all levels of government) are major customers for these power supplies.
  
• Demand for powered lawn and garden equipment in the government and institutional market is forecast to increase 3.4 percent per year to $580 million in 2011—up from $490 million in 2006. By 2016, governments and institutions will be spending an estimated $650 million annually for this equipment.
  

Growth will be aided by continued increases in the construction of various institutional buildings, where the installation of new lawns and gardens is typically a part of new construction. In addition, these new buildings will provide lawn and garden maintenance opportunities in the long-term. Government and institutional markets for lawn and garden supplies include military bases, schools, parks, hospitals, correctional facilities and roadsides.

Government agencies purchase a wide range of landscaping equipment, such as tractors, hydraulically powered riding mowers, boom-mounted and zero-turning-radius mowers, chipper/shredders, leaf blowers, replacement parts and attachments.

Proactive campaigns drive fleets

Currently, more than 4 million vehicles are owned by governments in the U.S. About 3.6 million of these vehicles are owned by state, county and municipal governments, and almost half a million are owned by federal agencies.
Throughout all levels of government, fleet managers are taking steps to enhance vehicle efficiency and reduce costs. For instance, governments increasingly are replacing traditional gas-powered vehicles with hybrids or other alternative-fuel vehicles. In Missouri alone, the state government fleet currently has 14 hybrid-electric vehicles and 1,032 E85 fuel-conserving vehicles.

Missouri Gov. Matt Blunt recently announced that some state agencies in his jurisdiction are leasing the Ford E85 Escape Hybrid, which is said to be the world’s first hybrid vehicle capable of operating on fuel blends containing as much as 85 percent ethanol.

“Our state is doing our part to look for alternative fuels to help lessen America’s dependence on foreign oil,” Blunt said. “The more clean-burning, renewable fuel Missouri produces and uses, the better off we will all be in the long-term.”

Like other hybrids, the Ford E85 Escape Hybrid can switch automatically between pure electric power, pure fuel power or a combination of the two. The E85 Escape produces about 25 percent fewer greenhouse gas emissions than a gasoline-fueled Escape Hybrid.

Blunt has taken other steps to make the “Show-Me State” an earth-friendly state. In addition to signing a 10 percent ethanol standard for the state, he has directed that 70 percent of any new vehicles bought or leased by state government agencies have flex-fuel capabilities.

One Missouri native and fleet executive who offers expert advice about hybrids in government is Christopher Amos, CAFM. Besides serving as commissioner of equipment services for the city of St. Louis, Amos is senior vice president of the National Association of Fleet Administrators (NAFA). Headquartered in Princeton, N.J., the NAFA is a membership-based organization that has served fleet management professionals for the past 50 years.

“There has definitely been a trend toward adding hybrids in government fleets over the past three to four years, and that momentum is building,” Amos told Government Product News. “Just like individuals, fleet managers have to be aware that current hybrid-electric technology is not a good fit for every application and pattern of use—hybrids are not a ‘silver bullet’ for combating high fuel prices. However, some fleets have found them to be a good fit—that is, high-mileage use in urban stop-and-go traffic—and are expecting a sufficient savings in fuel to more than offset the higher incremental cost of the hybrid vehicle for a lower life-cycle cost.”

New truck technology will aid government fleet conservation efforts, Amos added. “Probably the most exciting hybrid news for government fleets is that the medium- and heavy-duty truck systems from International/Eaton and other manufacturers are going mainstream and should be available this year in greater numbers,” he said. “Many fleets, including my own, will be giving them a try in applications like the aerial truck design, where the hybrid-electric system can cut the engine idle time and cost by running the power take-off hydraulic pump off the battery instead of off the diesel engine. This is a sweet system, and we all owe thanks to the Hybrid Truck Utility Forum for getting this design to market.”

Amos noted a few other steps that government fleet managers are taking to reduce the impact of higher fuel prices:

• Implementing and enforcing anti-idle rules. “Advances in diesel engine technology no longer make it necessary to leave trucks idling just so they will restart in most of the country, even in the winter.”
  
• Paying more attention to proper tire inflation. “This maintenance step reduces rolling resistance and improves fuel efficiency—not to mention improving safety and tire life.”
  
• Relying on GPS systems. “There is a big upsurge in interest and implementation of GPS-enabled telematics systems in fleets,” he added. “The implementation of telematics systems by some fleet management companies means that even those fleets leasing vehicles can get access to information generated by this valuable technology.”
• Buying smaller vehicles when possible. “Fleets, however, can get bitten when they downsize cargo handling trucks and vans too much. Operations managers and drivers have a tendency to overload these types of units, thinking that if it physically fits, then the vehicle was designed to carry it."