Reformist Revolution Shakes Up Statehouses

IN New York, freshman Gov. George Pataki (R) presided over the first decrease in general-fund spending since 1943. In North Carolina, Gov. James Hunt (D) pushed through $363 million in tax cuts. In Texas, first-term Gov. George W. Bush (R) pushed through converting Medicaid to managed care.

The same winds of change that swept through Washington last November and precipitated the most radical rethinking of government since the Johnson administration are also spurring reform from Boston to Sacramento.

From crime to welfare, taxes to health care, governors and legislatures in virtually every state are rewriting the way they do business. Although state governments have grown steadily more professional in the past three decades, the level of reform activity now under way is unprecedented., analysts say.

The issue was a focus of conversation at the National Governors' Association summer meeting earlier this week, where state executives shared ideas about streamlining bureaucracy.

''Everybody is trying to operate more efficiently and to make government systems work better for people. That's just the era we're living in,'' says Gov. Fife Symington (R) of Arizona. ''If you want to reduce taxes, you have to build the economy to generate revenues and reduce the cost of government.''

Behind the reform push at the state level are two primary forces.

One is fiscal necessity. Changes in the economy and the increased emphasis on federalism in Washington are forcing state leaders to rethink priorities and ways of doing things.

Jack Pitney, a professor of government at the Claremont McKenna College in Claremont, Calif., cites a historic comparison.

''There is a strong parallel between the current situation and the years after World War II,'' he says. ''After World War II, the thought was that government had to reorganize for a new world. Now, there's the internationalization of the economy. And technological changes are having a profound impact on the way government works.''

Also, voters are demanding more-efficient, less-expensive government, and as a new study suggests, are prepared to force accountability at the polls.

Voter dissatisfaction

According to a survey of voters across the country by a Virginia-based GOP pollster, Frank Luntz, an overwhelming majority of Americans are dissatisfied with the way their state governments operate on a number of key issues. Some 75 percent of participants rate their state's performance on welfare reform as ''fair/poor''; 73 percent are similarly critical of state education reform.

A significant majority rated as ''fair/poor'' state efforts to manage health care, hold down taxes, and maintain roads.

''While public dissatisfaction with state governments' performance on specific issues has not yet translated into pessimism and public anger toward state officials, that possibility can only grow,'' the report says.

At the same time, however, the nation's governors enjoy public-approval ratings averaging 70 percent, the study found, because the public seems willing to give, especially the new governors, a ''fair chance.''

The public's desire for greater devolution of power to state and local government, according to the study, is strongest among middle-class Americans and those living in the South and West.

Tax-cut momentum

Since the elections last November, which gave Republicans a majority of statehouses, roughly half the states have passed tax cuts; several have increased funding for education; and many have passed tougher crime-prevention laws, including, in some states like New York, the death penalty.

One method of reform that has gained popularity among state leaders in the past two years is performance-based budgeting, which stresses accountability - results for dollars spent.

In Texas, for example, all state agencies are required to set specific goals, and strategies for meeting them, prior to the budget process. The system allows program managers greater flexibility, but requires results.

''Accountability is the word going around,'' says Karen Carter, a budget expert at the National Conference of State Legislatures in Denver. ''Lawmakers are revisiting those services that haven't achieved the goals that were set when the programs were created.''

Budget squeeze

As the reform drive continues to move forward at both the federal and state level, many governors worry about a potential squeeze.

Congress wants to give the states more responsibility for running such costly programs as welfare and Medicaid, the health-care assistance program for the poor.

Governors want the flexibility to run their own programs, but warn Congress not to pass on unfair fiscal burdens.

''First you have to deal with Congress and tell them they can't balance their budget and bust ours,'' says Gov. Benjamin Nelson (D) of Nebraska. ''The people of Nebraska are asking for less government in Washington, but not by downshifting government to the state without the money to pay for it.

''The people won't live with that,'' he warns. ''They'll take it out on Congress.''