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Business Observer Friday, Dec. 17, 2010 10 years ago

The Budget Maven

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Donna Arduin's influence will likely be significant on the budget that Gov.-elect Rick Scott presents to the state Legislature in the New Year. Expect serious reforms to boost job creation.
by: Jean Gruss Contributing Writer

REVIEW SUMMARY
Who. Donna Arduin
Title. Head of Gov.-elect Rick Scott's economic advisory council; president of Arduin, Laffer & Moore Econometrics
Key. Explaining economics in everyday terms is the key to passing a pro-growth state budget.



Rick Scott's first act as governor in January will be to present a budget to the Legislature, but the person with the biggest influence on that document will be a woman known to very few Floridians.


Donna Arduin, 47, a soft-spoken woman from the Upper Peninsula of Michigan, isn't well known outside government circles. But she's on every Republican governor's contact list when they need budgetary nuts-and-bolts advice.


Arduin's been here before. She served as Gov. Jeb Bush's budget chief from 1999 to 2003, following similar stints with California Gov. Arnold Schwarzenegger, New York Gov. George Pataki and Michigan Gov. John Engler. Most recently, she's advised Florida Sen.-elect Marco Rubio and Meg Whitman, the former eBay President and CEO who lost her bid to become governor of California.


As president of Arduin, Laffer & Moore Econometrics, she has the credentials of conservative economists. Her partners in this consulting firm are heavyweights Arthur Laffer, who helped shape President Ronald Reagan's supply side, tax-cutting policies in the 1980s, and Stephen Moore, a member of the Wall Street Journal's editorial board and the founder of the Club for Growth.


Arduin has a track record of helping governors in their first terms turn state budget deficits into surpluses to fund their pro-growth agendas.


“We reformed the budget process in a way that brought more fiscal discipline,” says former Gov. Jeb Bush. “Her leadership in this key area allowed us to garner a AAA rating.”


Despite what her union detractors say, Arduin says she's not out to slash government spending for its own sake. “There's a size of government that the economy can afford,” she says.


But she's not afraid to tackle the big spending programs that will hamper Scott's agenda to boost job creation, insisting on tracking results and lowering barriers to producing goods and services. “In Florida, Medicaid reform is imperative,” Arduin says.



Translating economics


Arduin grew up in Michigan and Indiana. Her father taught business classes and coached basketball and her mom was an accountant. “Like a lot of people in my generation, I grew up in the belief that if we worked hard we could do anything we wanted,” she says.


After graduating from Jesuit high school in 1981, Arduin attended Duke University where she double-majored in economics and public policy. While at Duke, she spent a summer interning at the White House's Office of Management and Budget (OMB) during Reagan's presidency.


Arduin says she's always viewed her conservative economic philosophy as common sense. “We can explain economics in the things we do every day,” she says. “It's when you start hauling out the algebra and equations that you start losing people.”


This common-sense approach to explaining complicated economic problems is the key to translating a governor's vision to legislative success. “She's not an academic economist,” says Laffer. “There's no Larry Summers in her,” referring to Barack Obama's economic adviser and obtuse Harvard University economist.


Gov. Bush's budget was the first to be posted on the Internet, recalls Sally Bradshaw, who was the governor's chief of staff at the time and is now on Scott's transition advisory committee. Arduin, Bradshaw says, “put a great deal of emphasis on explaining the budget. It was a priority to explain the different sections of the budget and lay it out so that the public could actually access it.”


After college, Arduin went to work on Wall Street as an analyst at Morgan Stanley, including a two-year stint at the firm's Tokyo office. Patricia Woodworth, who had spotted a talented young Arduin at OMB, recruited her to help craft a budget for Michigan Gov. John Engler in 1991 when Wall Street was suffering from the recession of that time.


Arduin then followed Woodworth to New York, where the duo advised Gov. George Pataki, who was among the Republican governors who were swept into power in 1994. “They had a month to put a budget out,” Arduin recalls. “We just holed up in an apartment and wrote a budget.”


Arduin doesn't craft a budget to please legislators and she takes a longer-term view, carefully taking into account forecasts of the state and national economy. The key is to avoid the roller-coaster budget surpluses and deficits that create budgetary havoc, she says.


For example, when she crafted a budget for Jeb Bush, she says she considered the likelihood that he would face an economic downturn. “We planned a four-year budget,” she explains. “You take economics into account and growing the private sector to have government growth at a steady pace.” Once government reaches the level that the private sector can afford, there's no need for massive cuts in spending, she says.


Indeed, Laffer, who also is on the same Scott economic advisory panel, says he doesn't expect Arduin to recommend sweeping changes in Florida like she did for strapped states like California. “Primum non nocere — first do no harm,” Laffer counsels. “Take your time and do it really carefully, and that's where Donna is so, so good,” he says. “It doesn't have to be cut, shoot and kill. It can be scalpel surgery done very delicately.”



Solving Rubik's Cube


Scott can expect to receive unvarnished advice from Arduin, colleagues say. “She is not afraid to speak truth to power,” says Bradshaw. “There are people who are intimidated by elected officials; Donna is not.”


For example, Arduin helped Gov. Bush identify and veto budget items that weren't effective uses of state money in his first year in office. “They were hugely controversial because no governor had vetoed turkeys to the extent that Jeb did in his first year,” Bradshaw remembers.


“I think of Donna as a change agent,” Bradshaw says. “Some people want to maintain the status quo. That is not Donna.”


Crafting a state budget is like solving a Rubik's Cube puzzle, says Kathleen Shanahan, who also served Gov. Bush as chief of staff and is currently chair and CEO of WRScompass, a Tampa-based construction and environmental remediation firm. Shanahan is also on Scott's transition advisory team.


One of Arduin's biggest challenges will be to figure out how federal money flows into and out of the state budget, Shanahan says. “It's complicated if you're afraid of numbers,” Shanahan says.


“The state is going to have to deal with all kinds of mandates by the federal government,” says U.S. Rep. Connie Mack, R-Fort Myers, who worked with Arduin when Jeb Bush was governor. “Obamacare is going to hurt the state.”


But Mack is confident in Arduin's pro-growth goals.


“If you keep taxes low, if you keep spending low, if you reduce over-burdensome regulations, you create an environment where small business owners will take risks and create jobs,” he says.



Vision and detail


Arduin's strength is her thorough understanding of the numbers behind the budget and recall them from memory. “She has an uncanny ability to quickly process detailed information and come up with proposals and solutions for moving a state forward,” says Bradshaw.


“She doesn't say give me a week to get the numbers, she has them in her mind,” Laffer says. “She's responsive in a way that you dream people can be.”


But Arduin also thinks strategically, says Shanahan. For example, she can work through a budget and identify areas and programs of state government that can be consolidated or outsourced and where their funding comes from.


“She knows politics,” Laffer says. “She knows which committee chairman she has to go through.”


This combination of attention to detail and broader strategic vision may help explain her hobby remodeling homes, which require the same skills. “I'm building a house now, which is easier,” she laughs. (Married with a stepson, Arduin stays fit by swimming or power walking every day.)


“The budget became a means to advance policy,” Gov. Bush explains. “Donna is smart, intense and principled. As budget director, she brought a fresh perspective on the whole process.”


But as sharp as she is, Arduin's success will be judged by Scott's ability to sell the budget to Floridians.


“There's a reason I only work for governors in their first term,” she says. “In my experience, governors in their first year have the opportunity to propose significant reform.”

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