You can’t spend much time on the subject of public education without understanding that teacher unions are serious obstacles to reform. From school choice to merit pay, they oppose efforts to introduce market discipline and consumer sovereignty.

But Rudolph J. May, president of The Free State Foundation, points out that unionism in education isn’t limited to teachers. Principals have their own union, too. Did you know?

As a story in the Washington Post describes, Martin O'Malley, mayor of Baltimore, recently rolled out a plan to hire new principals for the city’s most troubled schools. It involves hefty signing bonuses—up to 10 times the usual amount.

“Read the story closely,” says May, “and you might be struck by something that perhaps is now so embedded in our government that it often goes unremarked: The extent to which most all of our public servants are unionized. Putting aside the teachers' union, the story refers to the ‘National Association of Secondary School Principals,’ ‘the principals union in Prince George's,’ and the ‘city administrators union.’”

Though the plan could, if properly implemented, benefit children by offering big rewards to principals who can fix schools by shaking them up, a union official responds, not surprisingly, by showing an ignorance (or is it disregard) for economics.

Doris Reed, executive director of the principals union in Prince George's, said “I have a concern that you're labeling the school and the kids in these neighborhoods as so bad that the only way you can get someone to come in is to pay them all this money.”

Let’s see. Your organization has rising costs and declining quality. You want to bring in a leader who can turn things around. And you’re going to be able to do this without offering a financial advantage compared with a less troubled situation?

Though the citizen initiatives got their origins in populism, they have on occasion been used to restrain government growth. Such was the case with Prop 13, the original tax limitation measure, and the Taxpayers Bill of Rights, the constitutional amendment that helped Colorado boom during the 1990s.

Activists are working to implement tax and spending restraints in other states as well. One of them is Nevada. Even though the state has no income tax, there’s still a need to keep spending under control. Enter TASC, the Tax and Spending Control amendment. It is a modified version of Colorado’s measure, and as you might expect, it’s come under fire, especially from government employees who fear that their jobs will be lost.

The Nevada Policy Research Institute says that the measure has “significant potential” to strengthen Nevada’s “historic legacy of individual liberty.” In Frequently Asked Questions (and Hysterical Allegations) Regarding TASC (PDF), Michael J. New, Charles F. Barr, and Steven B. Miller explain how TASC would work, how it would benefit Nevada families, and answer objections to the measure.

The TASC, if enacted, would limit growth in state and local government spending to a sum equaling the population growth and the inflation rate. It includes provisions for a rainy day fund, and voter approval for spending beyond the limit.

Budget hawks put a lot of emphasis on the federal government, though state governments get some attention. Local governments, by contrast, don’t get so much scrutiny, and that’s too bad.

The South Carolina Policy Council reminds us that local government spending can lead to an impending fiscal crisis.

For the last three decades, says Neil Mellen, state and local spending in South Carolina (and perhaps in your state as well) has increased faster than government revenue, or, more importantly, personal income.

The recent history of South Carolina should make us all wary of tax swaps, especially those that introduce new means of taxation.

“Three times state lawmakers have responded with swaps and reforms to the tax system. Despite the relief, the counties, cities and school districts have engaged in a perpetual increase of fees and property tax millage in addition to the adoption of local option sales taxes. The swap of funds has actually driven up revenues and expenditures at all levels of government.”

While advocates of tax swaps argue that they constraint growth by putting responsibility in the hands of government closest to the people, the council finds that the opposite occurs. With more funding projects passing through the state capital, local governments have less incentive to economize, and more incentive to overstate their needs.

"Maine is the last place most would look for evidence on vouchers," says the Maine Public Policy Institute. "School choice is, after all, a solution proposed for the inner cities and for failing schools, challenges Maine rarely faces."

And yet, Maine does have publicly provided vouchers. It includes 18 percent of all students in the state, and the experience with vouchers goes back to 1873. Far from being limited to a single city in the state (as is the case in Wisconsin, or was the case until recently in Ohio), three of every ten towns in Maine participate, as do three out of every four high schools.

There’s one thing that’s different about the Maine voucher program. It isn’t called a voucher program; what Maine uses is “tuitioning.” Towns collect tax money to pay for education. They may establish school systems. Then again, they may not, and opt instead to let families of students decide where to spend the money. Originally, the vouchers could be taken to religious or government-run schools. Because of a state supreme court ruling, religiously oriented schools are barred from receiving taxpayer funds—but nonsectarian private schools are not.

The advocates of vouchers (and tax credits and charter schools) base their work on the claim that competition among providers works to promote innovation, lower costs, and superior performance—in education as well as in business as we know it.

A study of school performance in Maine lends credence to these claims. Click through to the report for the rest of the story.

In responding to natural disasters and other challenges, voluntary efforts are often better than local government action, which in turn is often better than national government action.

With the one-year anniversary of Hurricane Katrina on us, it’s time to remember the remarks made by Forest Thigpen, president of the Mississippi Center for Public Policy, about a month after the storm. Thigpen commented on the attitude of residents and volunteers in his state: “You haven’t heard a lot of complaints from Mississippi about the lack of federal response because there have been very few complaints. … The prevailing attitude seems to be driven by some confusion: “Why should we be mad about the government not coming to help? That’s not their job - it’s ours.” (Be sure to catch the touching story of what the state’s First Lady was told during a post-Katrina visit to a family that had lost its house.)

In separate commentaries, Thigpen calls for big ideas, not big government, and commends churches for their work. “Virtually all of the shelters in the Jackson area were run by churches,” for example.

Katrina will be affecting life in the Gulf Coast for a long time. Years from now, the health of states and communities hit by the hurricane will depend not only on how badly they were hit, but how government and the civil society responded.

Cities that are at the core of a metropolitan area often face the challenges of having an older population and infrastructure and a more-expensive workforce. But they should resist the urge to simply seek more revenue by implementing (or increasing) a tax on earnings.

The Show-Me Institute, based in Saint Louis, Missouri, is one of the newer members of the State Policy Network. Its first full-length report, How an Earnings Tax Harms Cities Like St. Louis and Kansas City (PDF reader required) compares metropolitan areas across the country.

Not all cities in a region grow at the same rate, so what distinguishes faster-growing core cities from slower-growth ones? Economists have long known that what you tax, you get less of. Economic theory says that when cities impose higher tax rates, they will get less--fewer workers and less income—compared with cities that don’t.

Fiscal policy analyst and economics professor Joseph H. Haslag looked at the tax rates and earnings growth of 101 core cities and their suburbs across the country. Cities with earnings taxes, it turns out, have grow slower relative to their suburbs than cities that don’t.

So much for the idea that taxes don’t matter. Though there are some advantages in being located in the core city of a metropolitan area, individuals and businesses do respond to tax rates.

Summertime means vacation, which for many people, means time on the road—and perhaps stuck in traffic.

The Indiana Policy Review Foundation reports that the recent $3.85 billion lease of the Indiana toll road “put Indiana in an uncharacteristically enviable position.”

The state department of transportation had projected that $5.2 billion would have to be spent for 237 construction projects. The problem was that less than half of those projects were funded.

With the cash from the Spanish-Australian consortium Macquarie-Cintra, the state will be able to upgrade the rest of its transportation network. An interstate will finally connect the southeastern regional center of Evansville to the centrally located city of Indianapolis—10 years ahead of schedule. Many other projects can now go forward.

The Summer issue of the Indiana Policy Review includes 8 articles on the toll road, and other issues in transportation. (Here’s a direct link to the 32-page PDF file)

The Murphy Commission recommended that the state’s 311 school districts undergo reorganization. Specifically, it called for the districts to be organized into

not more than 134 "administrative units" where an administrative unit is defined as "one superintendent and an associated superintendent's staff.

Since this recommendation was issued, sixty-five districts have shed administrators. In July, the Altheimer School District started the process of merging administrative functions with the Dollarway district.

Thanks to the recommendations offered by the commission, taxpayers save $175 million over a 10-year period.

Kelly McCutchen, executive vice president of the foundation, recently told a legislative committee that a tax and expenditure limit is good for Georgia. He gives five reasons why legislators should adopt a limit, including transparency and budgetary stability. A limit that allows spending to grow in proportion to population grown and inflation would allow government programs to accommodate a larger population and maintain some purchasing power.

In his testimony McCutchen anticipates concerns about a tax and spending limit and explains why they are not fatal flaws. In responding to the concern that a spending limit would put pressure on all programs, good and marginal, high-growth and low-growth, he says “this is a good thing.”

Fortunately, the Alabama Policy Institute, along with some other members of the State Policy Network, is doing something about lawsuit abuse. Alabamians know something about litigation. In 2003, a jury rendered a verdict that included an award that was larger than the top 100 verdicts in the country … combined.

Last year, the state of Alabama enacted the Jury Patriotism Act, something that the Institute had long recommended. Among other things, the Act makes it harder for professionals to avoid jury duty, which could lead to better-reasoned jury decisions. It also encourages shorter trials, which provides cost savings.

In The Unfinished Business of Tort Reform (PDF), Michael Ciamarra and Matt McDonald talk about the Jury Patriotism Act, and make many other recommendations about reforming lawsuit abuse in Alabama. They present ten model bills that can make the civil litigation system more effective and less prone to abuse.

The bills cover topics such as manufacturer’s liability, contributory negligence, and asbestos-related liability.

Among the benefits to taking these steps: over 10,000 new jobs in Alabama.

The Ethan Allen Institute, while not explicitly calling public choice theory into play, gives an example of how it works.

The technology for wind power is there, says John McClaughry, president of the Vermont-based group. But “most importantly, the subsidies are there – lots of them.” The commentary, “Big Money from Big Wind,” shows that use of government for self-enrichment at public expense can take many forms.

First, there’s a tax credit. Thanks to a federal law known as PURPA, wind-energy producers get a tax credit. State tax credits are available, too.

Now, tax credits aren’t unusual. But the wind energy business gets another boost from government: other energy companies are required, by law, to purchase their output.

Did we mention that they must do so at above market rates?

Next, Vermont law requires the state’s sole nuclear power plant to subsidize its competition.

Finally, government funds—that is, taxpayer dollars—contribute to the industry in another way. Federal grants have been given to non-profit groups that lobby for energy mandates.

A guaranteed market. Tax breaks, and help with a marketing plan.

Nice work if you can get it.

Most of the modest steps taken towards school choice have been in urban areas—Milwaukee, Cleveland, and Washington DC, for example. Collin Hitt of the Illinois Policy Institute thinks that it’s time for choice to reach rural Illinois.

"Far beyond a capital development plan, far beyond decreased class sizes, a paradigm shift in the approach to public education is essential. Nowhere is this more apparent than in rural Illinois."

Though the Chicago and East Saint Louis schools have a reputation for being just plain awful, rural schools struggle to see students graduate on time. Despite this, rural areas get little attention from either reformers or charter school operators. The Knowledge is Power Program, for example, is now concentrating its work in urban areas. School choice efforts, which are political anathema to important political groups, are even more difficult to advance in rural areas.

Yet reforms are needed, and useful. Virtual schools, which Hitt calls "the best kept secret in choice-based education reform," allowing education to be delivered over long distances. They are "an inexpensive way to diversify and improve offerings within a given school."

Another possibility for rural communities: charter schools. No, they’re not just for urban settings. Quoting a study by the U.S. Department of Education in a separate commentary, Hitt says "Rural charter schools are providing an option to school consolidation by giving parents and educators the opportunity to keep their local school open."

With some counties across the country suffering from stagnant or even declining population growth, it’s time for some innovation to spread beyond the cities.

“Everyone talks about the rising cost of gasoline,” says the New Hampshire-based Josiah Bartlett Center for Public Policy, “but we are quietly and rapidly running out of electricity and face the threat of rolling blackouts as soon as 2008.”

“New England is producing enough electricity today but the electricity needs of consumers are growing and a thriving economy will make those needs grow even faster. In a few short years, the capacity of existing power plants will no longer be enough to meet demand. Because new plants (and many existing plants) are not economically viable under current structures, the building of new plants has dried up.”

In (PDF) “The Coming Electricity Shortage in New England and What We Can Do About It,” Charles M. Arlinghaus argues that “The cost of doing nothing is incalculable.” More than personal comfort is at stake; businesses will not locate in a state with unreliability supplies.

Currently, the state uses stop-gap measures to keep plants running. Arlinghaus calls for structural changes, such as increasing the “capacity payments” to areas of New England that have the greatest need.

This is a more technically detailed report than many we discuss on the SPN blog. But the implications for failed policies are serious.

The need for ideas at the federal level is obvious. But state governments aren’t thrifty, either. The Virginia Institute for Public Policy notes that “It took the state government in Virginia 386 years to reach a $30 billion biennial budget. It has only taken the last 10 years to add a second $30 billion to that budget.”

As a way to fiscal control and effective government, the Institute has released the Virginia Piglet book. It’s modeled on the Grace Commission report.

The Virginia Piglet book applies many of the same principles to state government.

It reminds lawmakers that there are ways to reduce costs.

Competitive sourcing, for example, could cut costs by 30 percent.

Eliminating unnecessary functions could save additional money. Approximately $700 million could be saved by getting government out of the business of running liquor stores, for example.

Merging departments could bring administrative savings; at least $25 million could be saved simply by merging agencies within the Department of Business Assistance.

If all the recommendations in the Piglet book were implemented, taxpayers could save $2.4 billion.