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April1997Vol. 2 No. 2

Reinventing

AmericanFederalism

Issues ofDemocracy

2

From theEditors

Reinventing AmericanFederalism

The United States of America is acountry of many governments. The federalgovernment is of course the largest, but the governments of the fifty states andthousands of smaller units—counties,cities, towns and villages—are no lessimportant. The drafters of the Constitutioncreated this multilayered system of govern-ment. They made the national structuresupreme and assigned it certain specificfunctions, such as defense, currency regulation and foreign relations; yet theywisely recognized the need for levels ofgovernment more directly in contact withthe people, and so they left many otherresponsibilities in the hands of state andlocal jurisdictions.

Over the past 200 years, Americanfederalism has undergone constant evolu-tion. In this issue we examine today’s newalignments and balances between the fed-eral, state and local governments from avariety of perspectives.

I N T R O D U C T I O N

As President Bill Clinton and VicePresident Al Gore point out in the leadarticle of this journal, the necessity forreinvention of government is dictated byscarcer funding resources and a greaterneed for people to solve their own prob-lems. Clinton and Gore explain how theold top-down governmental relationshipsare being replaced by partnerships thathave produced greater efficiency and better results at the local level. ProfessorEllis Katz of the Center for the Study ofFederalism at Temple University explainsthe origins and development of Americanfederalism and analyzes the forces thatappear to be moving it in new directions.Governor Michael Leavitt of the state ofUtah urges a rebalancing of the AmericanRepublic, asking his fellow governors tomake more effective use of the powers andtools the Founding Fathers had assigned to the states within the federal system. In an interview, Alice Rivlin, the vice

chair of the Board of Governors of the U.S. Federal Reserve System, advocatesreturning many federal responsibilities to state and local jurisdictions. Finally,reinvention experts David Osborne andPeter Plastrik report on how managementbased on partnerships has brought thetown of Hampton, Virginia back to life.

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Above, the Philadelphia State House, where theU.S. Constitution was signed in 1787.

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Issues of DemocracyElectronic

Journals

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Contents Reinventing AmericanFederalism

F O C U S

Forging New Partnerships . . . . . . . . . . . . . . . . . . . . . . . . 6President Clinton and Vice President Gore explain the need for realignment among federal, state and local governments.

American Federalism, Past, Present and Future . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Ellis Katz of the Center for the Study of Federalism at Temple University, explores the origins and development of American federalism.

C O M M E N T A R Y

Rebalancing the American Republic . . . . . . . . . . . . . . . . 15Michael Leavitt, governor of the state of Utah, exhorts his fellow governors to take back the powers and tools the Founding Fathers had assigned to the states within the federal system.

Dividing Federal from State and Local Responsibilities . . . . . . . . . . . . . . . . . . . . . . . 20Alice Rivlin, the vice chair of the Board of Governorsof the U.S. Federal Reserve System, advocates returning many federal responsibilities to state and local governments.

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Issues of Democracy

R E P O R T

Reinventing City Management: A Dying Town Returns to Life . . . . . . . . . . . . . . . . . . . . . . . 25Reinvention gurus David Osborne and Peter Plastrik tell how management based on partnerships revived Hampton,Virginia.

D E P A R T M E N T S

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Recent books and articles on federalism and government reinvention.

Internet Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Sites in cyberspace that feature federalism and reinvention themes.

Publisher . . . . . . . . . . . . . Judith S. SiegelEditor . . . . . . . . . . . . . . . . . Mark SmithManaging Editor. . . . . . . . . Valerie KreutzerAssociate Editor . . . . . . . . Wayne HallArt Director . . . . . . . . . . . Diane WoolvertonInternet Editor. . . . . . . . . . Deborah M. S. BrownContributing Editors . . . . . Jim Fuller. . . . . . . . . . . . . . . . . . . . . . Warner RoseReference Specialist . . . . . Barbara SandersGraphics Assistant . . . . . . . Sylvia Scott

Editorial Board. . . . . . . . . . Howard Cincotta. . . . . . . . . . . . . . . . . . . . . . Rosemary Crockett. . . . . . . . . . . . . . . . . . . . . . Judith S. Siegel

Vol. 2 No. 2

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Electronic Journals of the U.S.Information Agency

USIA’s electronic journals, published and transmitted worldwide at two-week intervals, examine major issues facing the United Statesand the International Community.The journals—Economic Perspectives, Global Issues, Issues of Democracy, U.S. Foreign Policy Agenda, andU.S. Society & Values—provide analysis, commentary, and background information in their thematic areas. French and Spanish languageversions appear one week after the English.The opinions expressed in the journals do not necessarily reflect the views or policies of the U.S. Government. Articles may be reproduced and translated outside the United States unless there are copyright restrictionscited somewhere on the articles. ❂ Current or back issues of the journals can be found on the U.S. Information Service (USIS) HomePage on the World Wide Web at “http://www.usia.gov/journals/journals.htm.”They are available in several electronic formats to facilitateviewing on-line, transferring, downloading, and printing. Comments are welcome at your local USIS post or at the editorial offices: Editor,Issues of Democracy (I/TDHR), U.S. Information Agency, 301 4th Street, S.W.,Washington, D.C. 20547, United States of America.

The era of big government is over,but the era of big challenges is not. Peoplewant smaller government, but they alsowant active and effective national leader-ship. They want government that providesthem the means and opportunities to meettheir responsibilities and solve their ownproblems.”

With these words President BillClinton, in his foreword to the Blair HousePapers, proposed a new public manage-ment model for the federal government,one based on forging new partnershipswith state and local governments.

The Blair House Papers, prepared inJanuary 1997 by Vice President Gore andthe National Performance Review staff,have emerged as a centerpiece of the newClinton administration’s effort to reinventgovernment and foster partnerships andcommunity solutions to solve problems.The Blair House Papers were named afterthe historic red-brick building across thestreet from the White House where Clintonheld the first Cabinet meeting of his new administration.

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F O C U S

by

Jim Fuller

Forging NewPartnerships

In an effort to make government

work better and cost less, new

partnerships between the federal,

state and local governments are

replacing the predominant role

Washington has played in the

recent past. In the following article,

contributing editor Jim Fuller cites

President Clinton and Vice Presi-

dent Gore’s explanations for the

realignment, and some encouraging

results.

“

Making Government Work Better

Vice President Gore continued the theme of reinvention and partnership in the introduction to the Blair HousePapers, calling on government to treat the public the way top companies treattheir customers—putting the customerfirst—and removing regulatory and legalbarriers so communities can solve theirown problems.

“In 1993, President Clinton askedme to figure out how to make governmentwork better and cost less,” the vice presi-dent said. “We called it reinventing gov-ernment. The need to reinvent was clear.Confidence in government—which is sim-ply confidence in our own ability to solveproblems by working together—had beenplummeting for three decades. We eitherhad to rebuild that faith or abandon thefuture to chaos.

“We had reason to hope we couldsucceed,” Gore continued. “CorporateAmerica had reinvented itself to competeand win. The same ideas and some newwrinkles were starting to work at the stateand local level. But it was going to beincredibly difficult—the largest turn-around ever—and management expertssaid it would take at least eight years.”

Not quite four years later, Gore can point to thousands of examples of“reinvention islands of excellence” inevery government agency. And public confidence in government has reboundedby nearly nine percent since 1993, according to a recent Roper poll.

“Everyone in government knows bigchallenges remain,” Gore says in the intro-duction to the Blair House Papers. “It istime for faster, bolder action to expand ourislands of excellence and reinvent entire

agencies—time to entirely reinvent everydepartment of government…. Luckily,partners are ready to help. Businesseshave proven effective partners in achiev-ing a cleaner environment, worker safety,and other regulatory compliance goals.Communities can solve their own prob-lems with a little help and opportunityfrom their federal partners. And whenlabor and management work as partners,everybody wins.”

Performance Par tnerships

As part of the initiative to reinvent gov-ernment, the Clinton administration isreforming the federal grant process into a system of “performance partnerships”that respond to these smaller governmen-tal units and their local needs. In fiscalyear 1996 and 1997 budgets, PresidentClinton proposed performance partner-ships that would consolidate over 200existing programs in the areas of publichealth, rural development, education,housing, transportation, and the environ-ment. Such partnerships signal a shiftaway from traditional federal grant pro-grams by moving control and responsi-bility back to the people.

One example of creating partner-ships at the local level concerns theEnvironmental Protection Agency (EPA),which got involved in the cleanup of a contaminated toxic site in Boulder,Colorado. After several parties wereentrenched in litigation over ground water contamination, the EPA asked that everyone, including citizens, acceptsome responsibility for resolving the disputes and cleaning up the water. Within six months, all those involved hadcome up with a solution and a way to pay for

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the cleanup locally, saving millions in federaldollars and saving the community from beingimmersed in an EPA Superfund cleanup pro-gram that would have taken more than adecade to complete.

Speaking at the second annual Rein-vention Revolution Conference in Washing-ton, D.C., April 7–9, 1997, Secretary of theInterior Bruce Babbitt explained the need forpartnerships to continue into the 21st century,“not working as separate, independent agen-cies, but understanding that we all representthe same people, and that we can stretch ourresources to get better results by workingtogether, by sitting down and mapping outcommon goals.”

As an example, Babbitt cited partner-ships that can streamline the regulatoryprocess in dealing with a problem like waterpollution.

“It’s easy for the EPA to issue permitsto the local water treatment plant or local fac-tory to stop discharges into a stream,” Babbittsaid. “But increasingly we’re finding that theenemy in water pollution is us. Small farmersand residential development projects affectthe entire landscape…and we’re finding thatpeople at the local level can actually create aclimate in which these laws can be made towork. [They] have the power to create a poolof resources and public support that will getresults.”

Some of the most impressive examplesof the way government is moving to partner-ship have occurred in the U.S. Department of Education.

Through a program called “Goals2000,” the Education Department has estab-lished a set of challenging academic stan-dards for students to achieve by the year2000. Participating states create a plan toreach these goals, but instead of reporting

their progress to Washington, they report backto the people. For example, Maryland—one of eight states in the program—reports asmuch as a 52-percent leap in the number ofschools whose students are doing well at vari-ous grade levels since joining the program.And 40 percent of all students statewide havemet the state standards—a 25-percent gainover 1993.

Renewing Nat iona lConf idence

“We’ve done pretty well,” Clinton observed at the beginning of his second term in office.“The federal workforce is the smallest in thirty years and the deficit has been cut by60 percent. But this smaller, cheaper govern-ment is accomplishing more than ever. We’ve created more than 11 million new jobs. Thecrime rate is down four years in a row. So isthe teen birth rate….

“But there is a great deal more to do,”Clinton continued. “We must give Americansthe tools to make the most of their lives, torenew national confidence that we can solveour most difficult problems when we worktogether, and to advance America’s role as theworld’s strongest force for peace, freedom,and prosperity.”

Today, more than 600 federal programsare administered by states and localities.There is consensus that the old top-down,centralized governing approach is not flexibleenough to respond to rapidly changing envi-ronments around the United States. New part-nerships between federal, state and local gov-ernments must provide greater flexibility tocreate a government that works for the peo-ple. Observes Clinton: “These are big jobs for a smaller government.”

Issues of Democracy, USIA Electronic Journals,Vol. 2, No. 2, April 1997

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When the 13 North American colonies declared their independencefrom Great Britain on July 4, 1776,they recognized the need to coordi-nate their efforts in the war and tocooperate with each other generally.To these ends, they adopted theArticles of Confederation, a consti-tution which created a league of sov-ereign states which committed thestates to cooperate with each other in military affairs, foreign policy andother important areas. The Articleswere barely sufficient to hold thestates together through the waragainst England and, at the success-ful conclusion of that war, fell apartcompletely as the states pursued theirown interests rather than the nationalinterest of the new United States.

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American FederalismPast, Presentand Future

by

Ellis Katz

Since its inception more than 200

years ago, American federalism has

undergone tremendous change.Today,

all governments—federal, state and

local—play a greater role in the lives

of their citizens. Expectations about

what kind of services and rights people

want from government have changed,

and relations among the federal, state

and local governments have become

infinitely more complex. In this brief

essay, Ellis Katz, professor of political

science and a fellow of the Center

for the Study of Federalism at Temple

University, explores the origins and

development of American federalism,

its contemporary practice and prob-

lems, and the forces that seem to be

moving it in new directions.

The Orig in and Developmentof American Federa l i sm

To remedy the defects of the Articles (or,in the words of the Constitution of 1787,“to create a more perfect union”), GeorgeWashington, Alexander Hamilton, JamesMadison, and other nationalist leaderscalled upon the states to send delegates toa constitutional convention to meet in thecity of Philadelphia in May 1787. It was,of course, that convention that producedthe Constitution of the United States.

The framers of the Constitutionrejected both confederal and unitary mod-els of government. Instead, they based thenew American government on an entirelynew theory: federalism. In a confederation,the member states make up the union.Sovereignty remains with the states andindividuals are citizens of their respectivestates, not of the national government. In a unitary system, on the other hand, thenational government is sovereign and thestates, if they exist at all, are mere admin-istrative arms of the central government.In the American federal system, the peopleretain their basic sovereignty and they delegate some powers to the national gov-ernment and reserve other powers for thestates. Individuals are citizens of both thegeneral government and their respectivestates.

This brief history is important for two reasons. First, the American federalsystem is not simply a decentralized hier-archy. The states are not administrativeunits that exist only to implement policiesmade by some central government. Thestates are fully functioning constitutionalpolities in their own right, empowered bythe American people to make a wide rangeof policies for their own citizens.

Second, the framers expected thatthe states would be the principal policy-makers in the federal system. The powersgranted to the federal government are rela-tively few in number and deal mainly withforeign and military affairs and nationaleconomic issues, such as the free flow ofcommerce across state lines. Most domes-tic policy issues were left to the states toresolve in keeping with their own histories,needs and cultures.

The first 75 years of Americandevelopment (1790–1865) were marked by constitutional and political conflictsabout the nature of American federalism.Almost immediately George Washington,Alexander Hamilton, John Marshall andtheir Federalist colleagues argued for an expansive interpretation of federalauthority, while Thomas Jefferson, JamesMadison, Spencer Roane and their parti-san allies maintained that the Americanunion was little more than a confederationin which power and sovereignty remainedwith the states. By the 1850s, the debatefocused on whether slavery was a matterfor national or state policy.

The American Civil War (1860–1865) did much to resolve these federal-ism questions. The northern victory andthe subsequent adoption of the 13th, 14thand 15th amendments to the Constitutionended slavery, defined national citizen-ship, limited the power of the states in the areas of civil rights and liberties, and,generally, established the supremacy of the national Constitution and laws over the states. Federalism issues continued, of course, and during the first third of this century, the U.S. Supreme Court oftencited federalism considerations to limitfederal authority over the economy. Two

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developments, however, led to the expan-sion of federal authority, and, according tosome critics, brought about an imbalancein American federalism.

First, under the New Deal pro-grams of President Franklin D. Roosevelt,the functions of the federal governmentexpanded enormously. It was the New Deal that gave rise to Social Security,unemployment compensation, federal welfare programs, price stabilization programs in industry and agriculture, and collective bargaining for labor unions.Many of these programs, while funded by the federal government, were admin-istered by the states, giving rise to the federal grant-in-aid system. The U.S.Supreme Court legitimated this expandedfederal role, and since 1937 has prettymuch allowed the national government todefine the reach of its authority for itself.

Second, during the 1950s and1960s, the national government came to be viewed as the principal promoter anddefender of civil rights and liberties. In a series of very important decisions, theU.S. Supreme Court struck down state-supported racial segregation, state lawsthat discriminated against women, andstate criminal proceedings that violatedthe due process of law provision of the14th Amendment. Thus, people looked to the institutions of the national govern-ment (especially to the U.S. SupremeCourt) to defend them against their ownstate governments.

These two developments required a reconceptualization of federalism. Untilthe New Deal, the prevailing concept offederalism was “dual federalism,” a sys-tem in which the national government andthe states have totally separate sets ofresponsibilities. Thus foreign affairs and

national defense were the business of thefederal government alone, while educationand family law were matters for the statesexclusively. The New Deal broke this artificial distinction and gave rise to thenotion of “cooperative federalism,” a system by which the national and stategovernments may cooperate with eachother to deal with a wide range of socialand economic problems.

Cooperative federalism character-ized American intergovernmental relationsthrough the 1950s and into the 1960s. The principal tool of cooperative federal-ism was the grant-in-aid, a system bywhich the federal government uses itsgreater financial resources to give moneyto the states to pursue mutually agreed-upon goals. The building of the interstatehighway system in the United States dur-ing the 1950s and 1960s is usually citedas an example of cooperative federalismworking at its best. The federal govern-ment provided up to 90 percent of the cost of highway construction, gave tech-nical assistance to the states in buildingthe highways, and, generally, set stan-dards for the new roads. The highwayswere actually built and maintained by the states.

Three points about this sort of cooperative federalism need to be madeclear. First, the federal government and the states agreed on the goals; both wantedthe roads built. Second, only the federalgovernment and the states were involvedin the programs. Cities and other units oflocal government were not full partners inthe cooperative federalism of the 1950sand early 1960s. Third, the grant-in-aidprograms affected only a small number ofpolicy areas; most of the funding went forhighways, airport construction, and hous-

ing and urban development. As late as 1963, the total funding for all federal grants-in-aid was only about $9 thousand-million.

But this sort of cooperative federal-ism ended by the mid-1960s. UnderPresident Lyndon B. Johnson’s GreatSociety, the federal government sometimesenacted grant-in-aid programs in whichthe states had little interest, or to whichthey were actively opposed. Second, fed-eral funds were now often given directly to units of local government—counties,cities, small towns, and school and otherspecial districts. Third, while previousgrant-in-aid programs were limited to afew areas on which the federal governmentand the states agreed, the Great Societyreached almost every policy area—education, police and fire protection, historic preservation, public libraries,infant health care, urban renewal, publicparks and recreation, sewage and watersystems and public transit.

The consequence of all this was two-fold. First, the number of players inthe intergovernmental system increasedtremendously, from 51 (the states and thefederal government) to the 80,000 or sounits of local government that existed atthe time. Second, federal grants-in-aid,which affected only a few policy areas previously, now affected almost all areas of public life. This led to a number ofmanagerial and political problems (coor-dination, accountability, priorities, micro-management, etc.) that political scientistDavid Walker has summed up with thephrase “the hyperintergovernmentaliza-tion” of American public policy.

President Richard M. Nixon tried tofix all of this by the consolidation of small

categorical grant programs into larger bloc grant programs in which the stateswould have more discretion. By and large,however, his efforts failed. By the time he left office, there were more grant pro-grams (over 600) than when he started.The presidency of Ronald Reagan seemedto promise a solution. While Reagan sup-ported many of Nixon’s proposed solutions,his real impact was on federal spending,which has caused Americans to re-thinknot only federalism, but the role of gov-ernment itself.

Wanting a smaller role for govern-ment, especially for the federal govern-ment, Reagan successfully fought forincreased defense spending, tax cuts andincreased (or at least maintained) levels of Social Security payments. The resultwas that there was less and less moneyavailable for federal domestic grant-in-aid programs. While federal grant-in-aidspending crept upwards during the Bushadministration, and has remained fairlystable during the Clinton administration(over $225 thousand-million in 1996),Reagan’s strategy, by and large, hasworked—although it has created a new set of problems for state and local government.

American Federa l i sm Today and Tomorrow

American federalism was never merely a set of static institutional arrangements,frozen in time by the U.S. Constitution.Rather, American federalism is a dynamic,multi-dimensional process that has eco-nomic, administrative, and politicalaspects as well as constitutional ones. This is perhaps more true today than itever has been. Let me suggest six crucial

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issues that Americans face today:

Unfunded Mandates. With the shortageof federal money to support federal prior-ities, Congress, using its constitutionalauthority to “regulate commerce amongthe states,” imposed direct regulationsupon the states. Since these regulationsrequire the states to act but do not provideany funding to finance these activities,they are called “unfunded mandates.”Many of these regulations deal with envi-ronmental protection, historic preservationand the protection of individual rights, butthey all carry with them substantial coststo the states. The states rebelled againstthese federal requirements and, inresponse, Congress enacted the UnfundedMandates Act of 1995, which (with certainthreshold requirements) prohibits the fed-eral government from placing new require-ments on state and local government with-out providing the necessary funding. Itremains to be seen whether this law willeffectively limit the range of federal activi-ty, especially given how broadly the U.S.Supreme Court has interpreted Congress’authority.

Constitutional Issues. Since 1937, the U.S. Supreme Court has interpretedCongress’ power to spend money for thegeneral welfare and its authority to regu-late commerce among the states so broadlythat the national government can reachalmost any economic, social, or even cul-tural activity it wishes. Thus, national lawsreach such traditionally local matters ascrime, fire protection, land use, education,and even marriage and divorce. In its1995 decision in United States v. Lopez,however, the Court unexpectedly held thatthe national government had exceeded itsconstitutional authority by enacting a law

prohibiting the possession of hand gunsnear public school buildings. The Courtheld that the federal government had notdemonstrated any connection between thepossession of guns near school buildingsand Congress’ power to regulate interstatecommerce. It was the first time in 60 yearsthat the Court had seriously questioned a congressional exercise of its commercepower. At this time, we do not knowwhether the Court’s Lopez decision willsimply be the exception to an otherwiseunrestrained expansion of the constitu-tional authority of the federal government,or the beginning of a new jurisprudencewhich seeks to restore limits on federalauthority.

Public Finance. If more policymakingand implementation responsibility is left to state and local governments, then it islikely that we will encounter a mismatchbetween program responsibility and fiscalcapacity. During the late 1960s and early1970s, cities received very substantial federal funding to implement the GreatSociety social programs. While federalfunding has slowed, and in some caseseven stopped, citizen demand for pro-grams continues and even grows. Citiesand other units of local government stillprovide such traditional services as publiceducation, trash disposal, crime and fireprotection, and street repair and mainte-nance. In addition, they must satisfy largely unfunded federal and state man-dates in such areas as environmental pro-tection, race and gender-equal opportunityprograms, education of the handicapped,and land-use planning. Increasingly, thedemand for local services grows while the capacity to support them diminishes.This dilemma has forced local govern-ments to become much more innovative

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in how such services are provided.

Reinventing Government. Caught in this dilemma of rising expectations anddecreasing financial capacity, local gov-ernments have been forced to “reinvent”the way they deliver and finance services.Reinvention takes many forms. Citiesacross the country have experimented with greater administrative decentraliza-tion, entering into markets and competing with private service providers, redefiningclients as customers and attempting tohold government agencies accountable to them. Perhaps most interesting of all,privatization has taken many forms, rang-ing from contracting with private firms toproviding meal service at a public school,to turning over waste disposal or even theoperation of an entire prison to a privateagency. In addition, cities have beenforced to become less dependent on bothfederal aid and local property taxes andhave turned to charging realistic fees forservices. Creative financing and ways ofdelivering services appear to result in sub-stantial cost savings with no decline inquality. It is early in the process, however,and we will need to wait to fully evaluatethe full impact of “reinventing govern-ment” on public life.

International Trade. There is also a new international dimension to Americanfederalism. Agreements such as GATT and NAFTA will have a profound impactupon federalism. Most observers suggestthat the authority of the states will be further eroded as state policies on suchmatters as economic development, envi-ronmental protection and professionallicensing will be subject to the terms ofthese international agreements, as well asto the strictures of the U.S. Constitution.

These observers are right, but there is another aspect to these internationalagreements that might enhance stateauthority. Under NAFTA, for example, the American states are guaranteed at least a consultative role in implementingthe agreement. It will be interesting to see how the states that make up theAmerican, Canadian and Mexican feder-ations will be affected by this emerging“federation of federations.”

The States as Laboratories. Many yearsago, U.S. Supreme Court Justice Louis D.Brandeis wrote that the states were “sociallaboratories” in which we could experi-ment with a variety of solutions to socialand economic problems without puttingthe whole nation at risk. This view of federalism is more true today than everbefore. If the United States is to developinnovative and effective solutions to suchproblems as crime, education, welfare andurban blight, they will be forged by stategovernments working hand-in-hand withtheir local communities.

How effectively we Americans meetthese challenges and use these opportu-nities will shape the future of Americanfederalism.

Issues of Democracy, USIA Electronic Journals,Vol. 2, No. 2, April 1997

15

It is my honor to serve as the gover-nor of Utah, a proud and prosperousstate which has just celebrated its statecentennial. Governors, however, are notelected just to govern states. We have anhistoric role to play as stewards, entrustedby the founders of our country to be of sufficient voice to balance the interests oflocal government against the nation’s fed-eral or national government.

Over the past 50 years, the federalgovernment in Washington—the president,Supreme Court, and Congress—whetherguided by Democratic or Republican par-ties—has so expanded its ability to influ-ence local government that the Americansystem of three-tier government today is in total disarray.

Volumes have already been writtenabout why this has happened. There is nosimple explanation and plenty of blame togo around. But the fact remains, I stronglybelieve, that the system of checks and balances, so carefully constructed by the

C O M M E N T A R Y

Rebalancing the AmericanRepublicby

Michael Leavitt

Across the United States, public

officials seek relief from burdensome

regulations imposed on them by the

federal government. In the following

article, Michael Leavitt, governor of

the state of Utah, offers a plan for

retaining a strong federal government,

but one that focuses its supremacy

on only a few issues, and leaves the

states the potential to check the

growth of the government’s power.

16

Founding Fathers, needs rebalancing.In the context of history, the debate

over American federalism is serious andimportant. I would like to state clearlythree things in which I believe. First, without a strong federal government, theUnited States of America would fail. Weare and must remain “one nation underGod, indivisible, with liberty and justicefor all.” Second, it is my view that thestrength of our federal government isfounded on its supremacy. Lastly, I believeour nation’s government has been weak-ened by a well-meaning expansion beyondits purpose and logical application.

The Need for a Strong,but L imited, Nat iona lGovernment

Following their victory in the Revolution-ary War, the colonies became independentstates, loosely joined together under a document called the Articles of Confeder-

ation. And, while their hopes and aspira-tions were high, frankly, it was a mess. The national government was just tooweak. The country staggered under a $60million war debt. With no national tax system, there was no means of repayment.Three different states were claiming part of Vermont. There was no national courtsystem to resolve disputes. Trade barriersand a fragmented monetary system stran-gled the economy. To foreign powers, thiswas no nation, just a group of rebelliousarbiters not to be taken seriously. Some-thing had to be done.

In May 1787, a group of state legis-lators and citizens gathered in Philadel-phia, Pennsylvania, for a constitutionalconvention, to craft some type of workablesystem. With George Washington as chair-man, 55 delegates met for four monthsbehind closed doors, drafting what wouldbecome the U.S. Constitution.

From that meeting, two major issues

Above, the signing of the U.S. Constitution, 1787.

emerged: first, balancing the interests of both big states and small states. Thatwas resolved by the “Great Compromise,”which created two houses of Congress, one apportioned by population, the otherby state.

The second issue was more complex,but absolutely fundamental to the veryexistence of the republic. What would bethe relationship between the states and the national government? Would this newgovernment be dominated by states orwould a centralized national governmentbe superior, dictating to the states?

Most of the delegates knew the failings of a government dominated by the states. They had seen firsthand what a misfire the Articles of Confederation had been. But having just won their free-dom in the not-so-distant past, the dele-gates were wary of turning the regulationof their lives, fortunes and families over to a centralized national government.

This state-vs.-national issue almostbrought the gathering to the brink of col-lapse. But at the last moment, a brilliantsolution was produced. The delegates usedthe same common-sense approach mymother taught me when I was a child.

Mother ’s Rules

I grew up in a family of six boys. It wasnot unusual for a couple of us to fight overthe last piece of dessert. So, mother wouldsay, “Mike, you cut the pie and Dan (mybrother), you choose first.” I would cut thepie with scalpel-like precision, knowingfull well that if either of the pieces wasbigger, my brother would take it. We called that method “mother’s rules.” It was elegant in its simplicity, brutally fair and absolutely effective.

The delegates of the constitutional

convention applied their own version ofmother’s rules. They created two govern-ments. First, the national government, with a list of explicit, delegated respon-sibilities—things like national defense, foreign policy, interstate commerce, and coining of money. In those limitedareas, the national government would be supreme. All powers not given to thenational government—the overwhelmingmajority—would remain with the statesand the people.

If either the national or state govern-ments began to encroach on one another,or failed to perform, the Founding Fathersbelieved the other would immediatelyreact and the “people would be protect-ed.” In other words, they expected thecareful balance they had created would be self-enforcing.

Although there were a lot of skeptics,their brilliant constitutional craftsmanshiphas endured more than 200 years. In thattime, the United States has prospered. Ithas survived a civil war, conflicts with for-eign powers, and two centuries of dramaticchange. I believe, in proper balance, it isthe ideal form of government for the infor-mation age.

James Madison on Federa l i sm

Some time ago, I was inside the NewJersey governor’s residence where Iadmired a small table. It was obviously an antique and well-crafted. “JamesMadison made it,” said the manager of the house. As I touched the wood, I felt a deep respect for the man Americans call the father of the Constitution. Whatinsights Mr. Madison might offer about the United States today, I thought, if hecould visit with me and other state leaders

17

for a few hours. Undoubtedly, he wouldhave a lot of questions for us, the stewardsof the Founding Fathers’ legacy.

Madison’s first question likelywould be, “Are the checks andbalances between the legisla-tive, executive and judicialbranches working?” Inanswer, legislators wouldcomplain about the executive,and executives about legisla-tors, and we would all grumbleabout the courts. That would be all the answer Madison wouldneed. The plan is working.

“What about big states and smallstates?” Madison would say next.

“This is working, too,” would be our reply.

Then would come Madison’s toughquestion: “We worked hard to balance thepower of states and the national govern-ment. What has happened since we left?”A long awkward silence would ensue, andthen we would answer, “We have goodnews and bad news. The good news is westill have both state and national govern-ments. The bad news is you are not goingto recognize them.”

How would Madison react to the volumes of federal laws prescribing ingreat detail how every state, city, town, village and hamlet conducts the mostuniquely local tasks?

Madison likely would not be at allhappy about a federal government grownso large and inefficient. His greatest dis-appointment, however, would be with stateleaders and lawmakers. In response, hemight say, “Stand up states! You havegiven up your place at the constitutionaltable.You have left the people unprotected,not from tyrants or subversives, but

from the natural consequences ofunchecked power and political force

without resistance.”By this time, state policymakersmight all be feeling a bit defen-

sive. In their defense, one might say, “We do stand up. We meet together. We give speeches and write letters to our congressional delegation. We go to Congress and testify,

and lobby.”By now, Mr. Madison would

be aghast. “What do you mean, ‘We lobby?’” he would ask. “Are states

now nothing more than lobbyists, specialinterest groups, supplicants?” he wouldadd. “We did not create a master-servantrelationship. States are full constitutional partners in this republic. We left you with tools to ensure your proper place in a balanced system.”

Such a conversation with Madisoncould go on and on. The point is that stateleaders have violated the law of politicalgravity by allowing federal power to beinadequately challenged. Power uncheckedis power abused. Political force withoutcompetition unavoidably becomes a forceuncontrolled.

Along with societal trends, stateleaders bear a substantial blame for losingcontrol of the tools the Founding Fathersprovided to implement the state role in the federal system. When states did notrespond to economic, environmental andhuman equality concerns, citizens lookedto the national government for leadership.War, economic depression, and an indus-trial age society of top-down managementencouraged centralized structures.

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Above, President James Madison.

Looking at the Future

But today is an entirely new era inAmerican history, when states are fulfillingtheir responsibilities, when small flexible,networked units—whether government orbusiness—are outperforming their central-ized, bureaucratic counterparts. States areoffering dynamic leadership, fiscal respon-sibility, and innovative policy solutions inevery area of government.

Why, then, in a country as big and diverse as the United States, with asmany good leaders as there are in everycommunity, with so many resources andpluralistic values, do state leaders allowthemselves to be micromanaged fromWashington? Such dispersed power, which makes for effective governing, at the same time makes it difficult to com-pete with the concentrated power ofWashington. This is the challenge localleaders must meet in the ensuing years of rapid economic change in America.

In order to balance the Americangovernment as the Founding Fathers sowisely intended, leaders at the state levelmust ensure that they are heard on issuesof vital concern: agriculture, energy, environment, health and commerce, forexample. State leaders must use everylegal means available to them to make certain their proposals are heard and notlost in the overgrown maze of Washington’sfederal bureaucracy, the courts, and theforums of public opinion.

State leaders also need to use theirconstitutional tools to challenge what theybelieve is bad law or improper regulation.In so doing, the states will not weaken thenational government, but hold it to a stan-dard of responsible behavior and account-

ability. They will restore the healthy com-petition among America’s governing bodiesthat promotes efficient and responsive gov-ernment for and by the people.

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Alice M. Rivlin was appointed vice chair of the Board of Governors of the U.S.Federal Reserve System in June 1996. From 1992 to 1996, Rivlin served asdeputy director, then director of the WhiteHouse Office of Management and Budget.She has held other Cabinet positions andwas director of the Congressional BudgetOffice from 1975 to 1983. In 1992, shepublished Reviving the American Dream,in which she called for returning to stateand local governments many responsibil-ities and tasks that had been assumed bythe federal government during the previous60 years. Contributing editor Warner Roseasked Rivlin to discuss some of the ideaspresented in her book.

Question. Since the 1930s, the federal govern-ment has taken on many responsibilities andtasks previously left to states and localities. Inyour book Reviving the American Dream, you say that it is time to begin returning theseresponsibilities; can you explain this proposal?

Dividing Federal from State and LocalResponsibilities

An Interview

with

Alice M. Rivlin

21

Alice M. Rivlin

Rivlin. The basic thesis of the book is that we need a clearer division of laborbetween the central government and thestates and localities, in part to clarify incitizens’ minds where the responsibilitylies and which level of government theyshould hold accountable. That’s gottenvery confused in the public mind becauselots of powers have been moving toWashington.

So it would help the functioning ofdemocracy to make it clearer where theresponsibility lies. Then, the question is:What kinds of things must be done by the federal government and what kinds ofthings could better be done locally or atthe state level? Certain things have to bedone at the federal level to be effective.Obviously, anything that involves thewhole nation with the rest of the world,such as defense and foreign affairs, mustbe done by the federal government, just as things that move clearly across statelines, like the problems of air pollution, for instance, cannot be controlled by a single state.

But there are public functions thatprobably work best when citizens can real-ly see what’s going on and adapt the ser-vice to their particular needs in the com-munity. An example is education. There isthe perception that schools don’t work wellunless local citizens are really involved inthe school itself as parents, as communityleaders, working with the teachers andwith the whole community to have a goodschool. And there isn’t one blueprint thatworks everywhere.

I certainly wouldn’t argue that thereis no role for the federal government ineducation, especially higher education.But what should that role be? The nationalgovernment can participate by settingstandards or in cheerleading the commu-nity effort, but the responsibility has to be clearly at the community level. Peoplecan’t say, “Oh, well, that’s somebody else’sproblem. They will fix that in Washington.We should ask them to write a better law.”I don’t perceive that that can really changewhat happens in local communities andtheir schools.

There is no obvious bright line here,but services that need to be adapted towhat the community needs, and in whichcommunity participation and accountabil-ity of the managers to the local communityis important, seem to me to be candidatesfor handling at the local or the state level.

Q.What are some functions where the federalgovernment has successfully moved to turn more responsibility over to the states?

A. Let’s take housing, for instance. Weperceived in the post-World War II periodthat there was a serious problem with thequality of housing for low-income people.The federal government took on the task

22

of building public housing for low-incomepeople on a fairly uniform basis across thecountry, in big blocks of public housing. I think it’s now perceived that this was not a very good idea.

It didn’t work, and it didn’t work inpart because it was imposed from outsidethe community and not integrated into thecommunity itself. Now, it’s not that youdon’t need some outside resources in poorcommunities. You do. But the more hopefulperception, I think, is that communitiescan come together and improve theirneighborhoods and put less obtrusivehousing for lower-income people scatteredin mixed-income areas so that you don’tsegregate low-income people off to oneside in big federal housing projects. I thinkthat’s a very clear example of where thenational government tried to do somethingthat didn’t work very well.

Policing is probably another exam-ple. Americans are very worried aboutcrime, particularly in the inner cities, and it’s been much publicized around the world. The most successful efforts infighting crime have been so-called “com-munity policing,” where the local lawenforcement authorities have gotten backinto the neighborhoods very intensively,out of squad cars and on foot, and havebeen living and working in local neigh-borhoods.

Q.What about federal regulations and mandates,where the federal government requires that localgovernments do certain things, which sometimesare quite costly and intrusive. Supporters say themandates are needed, or state and local commu-nities might decide to allow inequities to fester.How should this issue be approached?

A. In a large country with a very diversepopulation like the United States, we have

to recognize that there is always a tensionbetween desires of local citizens for auton-omy and the sense that there are somenational values that have to be observedeverywhere.

We’ve made a lot of progress indefining those, I think, over the last fewdecades. One has been racial and genderequality enforced at the national level. I’m not proposing that we throw out theConstitution or go back to a situationwhere we didn’t have citizens’ rights thatwere uniform around the country. I’m talk-ing about how to get services that work andthat are responsive to what local citizenswant. Can those all be controlled from thenational level, or would they work better ifyou divided the list and had some thingsthat were clearly the responsibility of thelocal group? If people at the local level feltthey weren’t getting the services that theyneeded or that their rights were beingtrampled upon, they have democracy there,too, and the authority to vote out of officethose who aren’t providing the services.

Q.What about the inequality of resources amongthe different states and local governments?

A. There is the problem of unequalresources. I think one has to deal with that in any country, but certainly if one is proposing some reduction of centralresponsibility, you have to deal with howresources can be distributed more equallyacross jurisdictions.

The proposal that I have made is avariation of what we’ve called “revenuesharing.” We would have some taxes whichare common across states, in the sense ofcommon rates, but are then shared amongthe jurisdictions on a redistributive basis,so that poorer jurisdictions get relativelymore. A sales tax of some sort would be a

natural for a uniform levy across thestates. Almost all states do have salestaxes, but they are at different rates, andthat means there is some competition atthe border. The lower-tax state tends topull potential buyers across the border.

Q.Are systems like that workable?

A. Sure. The Germans do it. They have anational value-added tax which is sharedby the states on a redistributed basis. Andwe, of course, have redistributive grantsfrom the central government out of federaltaxes.

Q. But don’t states naturally compete with each other?

A. Well, I think that competition amongstates is not a bad thing, but what onewould like to see is for states to competewith each other for the excellence of theirschools or the excellence of their roadsrather than the low level of their taxes.

Q.What happens when local governments simply fail, such as by going bankrupt?

A. In the United States, local governmentsare the creatures of their states, so thestates really have to deal with that. Ofcourse, if it’s a big city—like New YorkCity—it becomes a national problem.

Q.What happens when the federal governmentisn’t performing its function? For example,California sued the federal government over certain costs caused by illegal immigration,arguing that the federal government was notenforcing national immigration laws.

A. That’s an issue to be resolved in thecourts. Certainly, national policies such as changes in the immigration laws affect

states differentially, depending on wherethey are. Because there are so many recentimmigrants in coastal states, particularlyin Florida and California, the impact ofany change in immigration policy or inother policies will hit those states the most heavily.

Q. In your book, you wrote that among the tasks the federal government should handle are the old-age pension program, Social Security,and health care.You advocated keeping healthcare costs down and making health care univer-sally available. Is this still your view?

A. Old-age pensions are a very good example of something that functions verywell at the national level, and almost noone would think about devolving them tothe states. It wouldn’t be efficient, and itwould be very confusing since we are afairly mobile society and people work indifferent parts of the country.

Health care is more difficult. Unlikemany other countries, we have never had a national health-insurance system here.When I wrote the book, we were having aserious national debate about whether weshould have one. Since then, the debatehas swung the other way, more towardsdevolving the responsibility for healthcare—particularly health of low-incomefamilies—to the states.

Q. Should governments that are currently intransition from authoritarian to democratic systems adopt federalism?

A. I think federalism is a very difficultsystem, in the sense that there is always a tension between the center and the con-stituent states. Power tends to move backand forth. It is my perception that we gotoff course not necessarily because we’ve

23

24

put too much power in the federal govern-ment, but that we did it in a way thatmakes it very unclear to citizens how theycould improve the services that they need-ed, in that the responsibility was so divid-ed between three layers of government—local, state and federal.

Q.What is the status of the movement towardgiving the states and local governments a biggershare of the responsibility?

A. I think the big dilemma now is thatmost of the functions that are very clearlynational functions, such as defense andforeign affairs—but also the control of the macro economy—are going very wellin the United States right now. We have a prosperous economy, we have highemployment, we are not threatened as anation by any outside power. So people arenot terribly worried about those things.

What people are worried about iswhat goes on in their local neighborhood.They are worried about crime; they areworried about education; they are worriedabout housing; and it’s very hard for thefederal government to figure out how torespond to those concerns.

On the one hand, people want to feelthat their national leaders are concernedabout what’s important to them. But asidefrom expressing concern, it is not veryclear what the national leaders can do to help that really makes a difference,because most of those things really have to be solved at the community level.

So I think we have a very seriousdilemma now for national politicians andfor communities. How do we energize that community effort that needs to comeforward without the appearance that thefederal government is preempting it or

taking it over or imposing a set of rulesthat don’t make sense in that community?That’s the dilemma.

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City employees in Hampton, Virginia, didn’t always do their jobslast year.

Instead of tending to her desk workas assistant city manager, Mary Buntingdug ditches with a city sewer crew.

The heavy construction team in the Public Works Department spent weeksdeveloping a new city park for anotheragency.

Donald Gurley, the chief housinginspector, put in time to organize an exhibition about city services for theNeighborhood College, the city’s trainingprogram for residents.

Kevin Gallagher, who runs the city’srecycling programs, helped street crewsclear away snow and ice

Most of the city’s 1,300 employeesparticipated in one or more of its 115 taskforces, advisory groups, self-directedteams, committees and councils—doingwork that was not their job.

Reinventing City Management A Dying Town Returnsto Life

byDavid Osborneand Peter Plastrik

The realignment of power and funding

between the federal, state and local

governments has often been accompa-

nied by a new emphasis on performance,

autonomy, accountability and change.

In the following article, David Osborne

and Peter Plastrik, co-authors of the

new book Banishing Bureaucracy:The

Five Strategies for Reinventing Government,

tell how a dying Virginia city brought

itself back to life.

Copyright (c) 1997 by Governing.

Reprinted by permission.

R E P O R T

Why did Hampton’s employeesbehave in these ways? In part it wasbecause Bob O’Neill, the city manager,wanted his assistants to know more abouthow various agencies really worked.Bunting says the field work changed herassumptions about city sewer employees.They were much more skilled and flexibleabout taking on new responsibilities thanshe had expected. The job rotation experi-ence also helped prepare her to run theagency temporarily when Ed Panzer, thepublic works director, retires.

Motivation was different for theheavy construction team. Under EdPanzer’s stewardship, they took on thepark development project when the parksdirector asked for help. Panzer knew thepark was a community priority.

Donald Gurley ran the exhibit for theNeighborhood College because, as he putsit, “I opened my big mouth.” Two yearsearlier, he had attended a NeighborhoodCollege session in which department headsmade speeches to attendees. “It didn’tkeep their attention,” Gurley says. “I suggested we do something like a careerday, letting people rotate around to workstations for each department.” Peopleseemed to like the idea. Gurley volun-teered to make it happen.

Kevin Gallagher turned up duringsnowstorms to help clear the streets for the simple reason that it needed to bedone. “My job description is recyclingmanager, but my duty is customer servicefor the citizens of Hampton,” he says.Gallagher enjoys working on teamsbecause it connects him to other employ-ees. “It lets me know who’s who in theorganization. I invite people into my world,and I dabble in theirs.”

Hundreds of employees seized thechance to work elsewhere within the city.The informal networking and connectingwith people “means we’re more than justorganization charts and boxes,” saysTharon Greene, director of humanresources. “A lot of us feel that by workingthis way we have a voice in where theorganization is going.”

In short, an extraordinary number of Hampton employees collaborated avidly with one another and routinely went the extra mile for citizens becausethey wanted to.

Hampton employees weren’t alwaysso flexible. City government used to be a standard issue bureaucracy: The citymanager was the boss. Assistant city man-agers told department heads what to do.The department heads protected their turf,hoarding decisions and information. Theycommanded middle managers and super-visors, who controlled the day-to-day workof employees.

Managers and employees focused on complying with detailed operationalprocedures. Communications followed the chain of command: up, over and down.Most people stayed in their institutionalboxes and worried about pleasing theirbosses. They waited for orders or permis-sion to act. The organization prized loyalty,stability, certainty and control.

Things began to change in 1984,when the mayor and council reviewed the city’s condition. Its population wasstagnant at 130,000. Taxes were amongVirginia’s highest. Home values and per-capita income were the lowest in the region. The budget was strained bydebt repayments. The city was losing business to nearby communities.

26

“The statistics scared us,” saysMayor James Eason. Hampton was dyingin slow motion.

When this realization sunk in, the politicians developed an aggressiveeconomic development agenda, includingthe acquisition and development of land,improvements in the city’s physicalappearance and tax cuts. To implement it, they needed a city government that was more responsive to the community’sneeds, innovative, flexible and action-oriented.

When the city manager retired,Eason and the council went looking for asuccessor who would change things. Theyfound someone right in town. Bob O’Neillknew the bureaucracy from the inside. A dozen years earlier, he had begun work-ing for the city as a young intern and risenquickly to the post of assistant city manag-er. But he was also an outsider: In 1979,

he had left government to work as a busi-ness consultant.

Although many people in city government knew O’Neill, they weren’tsure what to expect from him. The councilwrote him a performance contract thatspelled out specific goals for city govern-ment. It emphasized what Eason calls “the Noah Principle” of management: “No more prizes for predicting rain; onlyprizes for building the ark.”

O’Neill didn’t have a blueprint forthe ark he was supposed to build. The onlygrand plan he had was a belief that citygovernment had to anticipate and adapt tofuture changes. “The issue is whether onecan be excellent over time, not whetheryou can do it one time,” he says.

To make the organization moreadaptable, O’Neill would have to find thelevers that would fundamentally changecity government’s bureaucratic behaviors

27

and instincts.O’Neill began with what we call the

“control” strategy. He told his assistantcity managers to stop micro-managingtheir departments and to work instead onlong-term strategic issues, such as thecity’s relationship with the local schools.He gave directors full control over theiragencies.

Then O’Neill created a handful ofinterdepartmental task forces to focus onmajor common functions, such as physicalinfrastructure, public safety and citizenservices. He told his directors to buildcooperative relationships with those whocould support their department’s mission.Department heads decided who shouldparticipate in the groups and chairedthem. The task forces had the power toallocate resources across departmentallines.

For a while, employees weren’t sure what to do in the task forces. WhenO’Neill told department heads that theycould structure the task forces any waythey wanted, they hesitated. “They said,‘What’s the answer? Tell us what youREALLY want,’ “ O’Neill recalls. Hisanswer was to assign Assistant CityManager Mike Monteith to help the new groups but not to tell them what to do.

Eventually, the task forces evolvedinto problem-solving groups. “Someonewould say, ‘I’ve got a problem,’ and thegroup dealt with it,” O’Neill says.

The change in atmosphere wasnoticeable. When Walt Credle joined citygovernment as social services director in1990, he found that the task forces hadfostered a great deal of work across depart-mental lines and created an environmentthat was like nothing he had seen before.

“There’s no sense of competition, of hid-den agendas, of politics,” he says.

For Don Gurley, the change in con-trol was inspiring. “Information was filter-ing down to my section,” he says. “Theywanted my input. That wasn’t done before.I was becoming more involved with theprocess because I was being consulted on different things.”

The city government also beganpushing control out into the community.When city officials became worried aboutthe number of Hampton youths who werenot succeeding in school, they asked thecommunity what should be done. Theanswers surprised them. “We ended upwith a conversation about how the wholecommunity was part of raising a child,”says Monteith. “It was all about the importance of neighborhoods and family.”The city organized a community-widecoalition of parents, businesses, com-munity groups, youth advocates andteenagers. More than 5,000 people helped develop recommendations thatbecame part of the city’s strategic plan.

Again, when city leaders worriedabout the health of Hampton’s neighbor-hoods, they shared control of the city’splanning process with neighborhoodgroups. The planning agency also required developers to meet with neigh-borhood groups before they requested zoning changes and use permits. Then the city created a Department of Neighbor-hood Services, as recommended by thecommunity coalition, to meet the unique needs of each neighborhood. It providedsmall grants for neighborhood develop-ment, launched an institute to train neigh-borhood leaders, helped develop neighbor-hood groups, linked neighborhoods to eachother so they could exchange services, and

28

leaned on other city agencies to supportneighborhoods.

O’Neill also worked with the citycouncil to set clear goals. This is what wecall the “core” strategy. He put depart-ment heads on performance contracts thatspelled out the results they were expectedto produce, then tied their bonuses to theirachievements, using the “consequences”strategy.

These efforts began to change theculture. But O’Neill, Mayor Eason and the city council decided that employeesalso needed what the mayor calls “a com-pelling vision of a desired state of affairs.”Since Eason deems vision “the linkbetween dream and action,” he wantedHampton’s elected officials, city managersand public employees to share the samemental picture of the organization’s purpose.

O’Neill, the council and hundreds of city employees worked together todevelop vision and mission statements that described the purpose and role of city government. The final vision state-ment pledged that Hampton would become“the most livable city in Virginia.” Thenew mission statement said the city would“bring together the resources of business-es, neighborhoods, community groups andgovernment” in order to realize that vision.The mission embodied the council’s viewthat government should become a brokerof the community’s resources, not just aprovider of services and regulations. Thecouncil embraced both statements, andO’Neill used them to develop measurableobjectives and action plans for the depart-ments.

“ ‘The most livable city inVirginia’—everybody knows those words,”says Kevin Gallagher. They were hard to

miss when he started his first city job. Notonly were the words plastered in all cityoffices, they were “even on our paycheckstubs.”

The mission and vision statementswere the opening shots in O’Neill’s appli-cation of the “culture” strategy. The state-ments began to reshape employees’ think-ing about how to get their jobs done. Forexample, the city was under pressure tocreate community centers in several neigh-borhoods. But instead of building andoperating new centers (the old servicerole), the city brokered two centers intoexistence. In one case, officials enticed the YMCA to establish a branch in thewing of a closed high school. The YMCArehabilitated two gyms and the outsideathletic fields, then began raising moneyto build an extension with an indoor swim-ming pool. In a second neighborhood, thecity renovated a facility, then turned itover to the neighborhood to operate.

The overhauls throughout city gov-ernment created both anxiety and enthusi-asm among employees. Many were unset-tled by the new emphasis on performance,autonomy, accountability and change. “For a long time there would be lines ofpeople outside my door who wanted tocome in and say, ‘Is it OK if we do this?’”recalls Human Resources Director Tharon Greene. Others, including a fewtop managers, couldn’t survive in the new environment.

Most employees liked the changes,though. A majority, O’Neill reports, feellike they have been freed of constraintsand can finally do their jobs the waythey’ve always dreamed of doing them.

Nonetheless, as O’Neill’s efforts tookhold, employees raised all kinds of issues.They were, in effect, testing whether

29

the city was going to be consistent aboutbuilding a new culture. Some complained,for instance, that there was no way of recognizing people who did extraordinarywork over time. The city reacted by creat-ing a program that allowed each depart-ment to develop awards for employee innovations and productivity improve-ments. The agencies shared 10 percent of annual savings with employees and provided awards such as office equipment,dinners and premium parking spaces.

Employees also complained thattheir compensation did not reward themfor customer service. That’s when O’Neillinstituted an annual bonus based on citi-zen satisfaction surveys—a version of the“customer” strategy.

Each challenge employees threw at him O’Neill saw as an opportunity to reinforce the culture he was trying to develop. “Once you pass these testsenough times and people see things hap-pening differently, they build a commit-ment to the new culture. The way theythink about things and the way theybehave changes dramatically.”

By the mid–1990s, Hampton was a big success story. The city’s financialindicators remained strong even during therecession of the early 1990s. Downtowndevelopment had leaped forward. Propertytaxes, once high, were now among the low-est in Virginia. Debt payments had beencut in half. Mayor Eason had been reelect-ed three times, and his allies on the coun-cil had also worn well with voters. Citizensatisfaction with city government hoveredaround 90 percent. Employee morale,measured annually, was consistently good.Many employees believed a new culturehad emerged.

The drive to perform had, however,left the organization exhausted. Peoplewere getting tired of change. “People werefeeling wrung out,” says Tharon Greene.“We’d been doing more with less foryears.”

In 1995, O’Neill met with hisdepartment directors to talk about theproblem and to rally the troops. He toldthem he was just as worn out as they were and wouldn’t mind taking a breakeither. But their world was changing rapidly. If the city wasn’t prepared to stay in front of the curve, it would lose its edge. “As much as we’d like to take a break,” he told them, “it’s not doable.”

Then he launched a new wave ofchanges.

O’Neill had his eye on two chal-lenges. One was problems the city facedthat could not be solved within its perime-ters. A whole range of issues, such as airquality standards and employment, forinstance, transcended city boundaries. The other challenge was that Hampton’scitizens still didn’t think city governmentwas responding adequately to their neigh-borhoods’ needs.

The city was not well prepared todeal with either challenge. It didn’t havestrong connections with other entities inthe region, and its departmental structuregot in the way of creating healthy neigh-borhoods. “We had trouble getting depart-ment heads to buy into the fact that[neighborhood service] was their priority,”says Joan Kennedy, who ran the fledglingunit created to help neighborhoods. “Theyviewed it as an add-on to the regular job.”As a result, she spent most of her time“jumping organizational hurdles.”

In response to these concerns,O’Neill asked his department heads to

30

figure out the make-or-break issues thecity faced. They came up with five majorchallenges: creating healthy families,healthy neighborhoods, healthy busi-nesses, a prospering region and delightedcustomers. They recommended perma-nently dismantling the remaining wallsbetween departments and shiftingresources to these strategic goals. “We’re talking about department boundaries disappearing within a year,” says Greene.

No one knows where the process will lead. But in Hampton, this is notunusual. “It’s just the next big change,”says Assistant City Manager Monteith.“Given that we are continually looking for the better way to make things happen,this organization is going to keep onchanging.”

Issues of Democracy, USIA Electronic Journals,Vol. 2, No. 2, April 1997

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Boeckelman, Keith“Federal Systems in the Global Economy:Research Issues,” Publius:The Journal ofFederalism, vol. 26, no. 1,Winter 1996,pp. 1–10.

Borut, Donald J.“Aspirations and Accountability: LocalGovernment in the Era of Devolution,”National Civic Review, vol. 85, no. 3,Fall 1996, pp. 23–27.

Cammisa,Anne MarieGovernments As Interest Groups:Intergovernmental Lobbying and TheFederal System. Westport, CT:Praeger, 1995.

Dileo, Daniel“Likely Effects of Devolution on theRedistributive Character of Policy Agendas,”Spectrum, vol. 69, no. 3, Summer 1996,pp. 6–15.

Donahue, John D.“The Devil in Devolution,” The American Prospect, no. 32, May–June 1997, pp. 42–47.

Dye,Thomas R.American Federalism: Competition AmongGovernments. Lexington, MA: Lexington Books, 1990.

Eichenberger, Reiner“The Benefits of Federalism and the Risk of Overcentralization,” Kyklos,vol. 47, no. 3, 1994, pp. 403–420.

Elazar, Daniel J.Exploring Federalism.Tuscaloosa, AL:University of Alabama Press, 1987.

Elazar, Daniel J.“From Statism to Federalism: A ParadigmShift,” Publius:The Journal of Federalism,vol. 25, no. 2, Spring 1995, pp. 5–18, andInternational Political Science Review, vol. 17,no. 4, October 1996, pp. 417–429.

Elazar, Daniel J.“Opening the Third Century of AmericanFederalism: Issues and Prospects,” The Annalsof the American Academy of Political and SocialScience, no. 509, May 1990, pp. 11–21.

BibliographyFurther Readingson Federalismand Reinvention

D E P A R T M E N T S

Elkins, Stanley M. and Eric McKitrickThe Age of Federalism. NY: Oxford UniversityPress, 1993.

Galston,William A. and Geoffrey L.Tibbetts“Reinventing Federalism:The Clinton/GoreProgram for a New Partnership Among theFederal, State, Local, and Tribal Governments,”Publius:The Journal of Federalism, vol. 24,no. 3, Summer 1994, pp. 23–48.

Goldberg, Lenny“Come the Devolution,” The AmericanProspect, issue 24,Winter 1996,pp. 66–71.

Gunther, John J.Federal-City Relations in the United States:The Role of the Mayors in Federal Aid to Cities. Newark, DE: University of DelawarePress, 1990.

Hansell,William H., Jr.“A Common Vision for the Future:The Role of Local Government and Citizens in the Democratic Process,”National Civic Review, vol. 85, no. 3,Fall 1996, pp. 5–13.

Hays, Scott P.“Policy Reinvention and the Diffusion of Public Campaign Funding Laws,”Spectrum, vol. 69, Spring 1996,pp. 23–31.

Hovey, Hal “The Challenges of Flexibility,”State Legislatures, January 1996,pp. 14–18.

Kincaid, John“Values and Value Tradeoffs in Federalism,” Publius:The Journal of Federalism, vol. 25, no. 2, Spring 1995, pp. 29–44.

National Performance ReviewStrengthening the Partnership inIntergovernmental Service Delivery:Accompanying Report for the NationalPerformance Review.Washington:Office of the Vice President,September 1993.

Ordeshook, Peter C. and Olga Shvetsova“Federalism and Constitutional Design,”Journal of Democracy, vol. 8, no. 1,January 1997, pp. 27–42.

Osborne, David and Ted GaeblerReinventing Government: How theEntrepreneurial Spirit is Transforming the Public Sector. Reading, MA:Addison–Wesley, 1992.

Osborne, David and Peter PlastrikBanishing Bureaucracy:The Five Strategies for Reinventing Government. Reading, MA:Addison–Wesley, 1997.(The first chapter is available on the WorldWide Web at: http://www.clearlake.ibm.com/Alliance/books/bb/osbrnttl.html)

O’Toole, Laurence J., editorAmerican Intergovernmental Relations:Foundations, Perspectives, and Issues.2nd edition.Washington: CQ Press,1993.

Peterson, Paul E.The Price of Federalism. Washington:Brookings Institution, 1995.

Rivlin,Alice M.Reviving the American Dream:The Economy,the States & the Federal Government.Washington: Brookings Institution, 1992.

Rothschild, Michael“The Fear of Letting Go,” The AmericanEnterprise, March/April 1995, pp. 80–82.

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Thomas–Woolley, Barbara and Edmond J. Keller“Majority Rule and Minority Rights: AmericanFederalism and African Experience,” TheJournal of Modern African Studies, vol. 32,no. 3 September 1994, pp. 411–427.

Tolley, Michael C. and Bruce A..Wallin“Coercive Federalism and the Search forConstitutional Limits,” Publius:The Journal of Federalism, vol. 25, no. 4, Fall 1995,pp. 73–90.

Turner, John H.“Unfunded Mandates––A View from thePrivate Sector,” Spectrum, vol. 68, no. 4,Fall 1995, pp. 43–47.

U.S.Advisory Commission onIntergovernmental RelationsFederal Regulation of State and LocalGovernment:The Mixed Record of the 1980s. Washington: ACIR, 1993.

U.S. Congress. House of Representatives.Committee on the Budget Federalism. March 5, 1996.Washington:USGPO, 1996.

Waisanen, Bert“Demographic Federalism: Defining the NewFederal–State Relationship,” Spectrum, vol. 69,no. 4, Fall 1996, pp. 53–57.

Walker, David B.“The Advent of an Ambiguous Federalism and the Emergence of New Federalism III,”Public Administration Review, vol. 56, no. 3,May/June 1996, pp. 271–280.

Waren,William T.“State Authority: A Rising or Setting Sun?”State Legislatures, vol. 22, no. 7, July/August1996, pp. 48–53.

Weissert, Carol S. and Sanford F. Schram“The State of American Federalism,1995–1996,” Publius:The Journal of Federalism, vol. 26, no. 3, Summer 1996, pp. 1–26.

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The Council of State Governmentshttp://www.csg.org

The Council of State Governments (CSG) is aunited front of state leaders which works to evokechange in the federal government, such as the1995 enactment of the federal UnfundedMandates Act. CSG also strives to consider waysto restore the balance of powers between thestates and the federal government.

Governing Magazinehttp://www.governing.com/

Governing is a monthly magazine whose primaryaudience is state and local government officials:governors, legislators, mayors, city managers, coun-cil members and other elected, appointed andcareer officials, set policy for and manage the day-to-day operations of cities, counties and states, aswell as such governmental bodies as school boardsand special districts.

The Institute for Electronic Governmenthttp://www.ieg.ibm.com/

The Institute for Electronic Government is a globalresource for government leaders to explore,develop, and share strategies appropriate to ourtimes—public policy, cyberlaw, economic develop-ment, electronic commerce, delivery of services to

citizens, constituency relationships, and replacingindustrial-age institutions with the art of gover-nance—through digital age technologies and networks.

The National Association of Counties (NACo)http://www.naco.org

NACo is the national voice for America’s countygovernments, representing the American people ata grass-roots level. Member counties share impor-tant goals and concerns that impact the quality oflife in communities across the nation, acting as aliaison with other levels of government; improvingpublic understanding of counties; serving as anational advocate for counties; and providing aresource for counties to help them find innovativemethods to meet the challenges they face.

The National Civic Leaguehttp://www.ncl.org/ncl/

The National Civic League seeks to foster collabo-ration between citizens, government, business, andnonprofit organizations by promoting the princi-ples of collaborative problem-solving and consen-sus-based decision-making in local communitybuilding.

The National Conference of State Legislatureshttp://www.ncsl.org

The National Conference of State Legislatures(NCSL) believes that legislative service is one ofdemocracy’s worthiest pursuits. As a national con-duit for lawmakers to communicate with oneanother and share ideas, NCSL is dedicated toserving the United States, its commonwealths andterritories, through research, publications, consult-ing services, meetings and seminars.

The National Governors’ Associationhttp://www.nga.org

The National Governors’ Association providesdirect access to information on U.S. state gover-nors and shares the best ideas of the states. Alsoprovides assistance on state-focused problems,information on state innovations and practices,

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and a bipartisan forum for governors to establish,influence and implement policy on national issues.

The National League of Cities http://www.cais.com/nlc/nlcmain.html

Through the National League of Cities (NLC),mayors and city council members share informa-tion that strengthens municipal governmentthroughout the United States. NLC advances pub-lic interest, building democracy and community,and improving the quality of life by strengtheningthe performance and capabilities of local govern-ments and advocating the interests of local com-munities through influencing national policy andbuilding understanding and support for cities andtowns.

Public Works Networkhttp://www.publicworksonline.com/

Public Works Network is an online network ofresources dedicated to government entities, pri-vate firms, and individuals engaged in ensuring thatthe public’s infrastructure and basic services aredesigned, constructed, and operated in an effec-tive, efficient, and economical way.

Publius:The Journal of Federalismhttp://www.lafayette.edu/publius/

A journal devoted to the increase and diffusion of knowledge about federalism and intergovern-mental relations. At this website, you can browsearticle titles, both past and present, but you mustsubscribe on-line to view articles.

The United States Conference of Mayorshttp://www.usmayors.org

The Conference of Mayors aids the developmentof effective national urban policy, strengthens fed-eral-city relationships, ensures that federal policymeets urban needs, and provides mayors withleadership and management tools of value in theircities. Speaking with a united voice on matterspertaining to organizational policies and goals, eachmember-mayor contributes to development ofnational urban policy through service on one ormore of the organization’s 10 standing committees.

The Urban Institutehttp://www.urban.org/

The Urban Institute is a nonprofit policy-researchorganization that investigates the social and eco-nomic problems confronting the United States andthe government policies and public and privateprograms designed to alleviate them.The Institute’sobjectives are to sharpen thinking about Americansociety’s problems and efforts to solve them,improve government decisions and their imple-mentation, and increase citizens’ awareness aboutimportant public choices.

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Reinventing

AmericanFederalism

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