It looks as if state legislators and the new governor will be facing a gap between anticipated revenue and spending of $1.5 to $2 billion. So what will they do to balance the state budget, which is required by the state constitution?

Two items should be required reading.

First, Agenda 2008, the Locke Foundation’s guide for effective and efficient state government. Agenda 2008 lays out very specific and practical actions that can guide the state out of its fiscal mess.

And second, the November 10 issue of Fortune magazine, which includes a profile of how General Mills cut its production costs for the Hamburger Helper product line by 10 percent without impacting quality.

A good deal of General Mills’ efficiencies came from weeding out duplicative efforts – something the state also desperately needs to do, as Agenda 2008 points out. Also key to the General Mills approach: listening to its employees and measuring its results.

From Fortune (emphasis is mine):

At the time the company sold 50 versions of the product, with 25 pastas ranging from wagon wheels to spirals. Executives researched the costs of producing the different options as well as how much consumers liked them, then eliminated half of them. They excised unimportant spice and cheese pouches. They shrank the size of the box while keeping the serving size the same. The upshot: Hamburger Helper now costs 10% less to make.

Margin management soon grew into a structured process at General Mills. Each division has a three-year savings goal, and virtually everyone meets once a week to focus on cuts. Ditching multicolored Yoplait lids, for example, saved $2 million a year. Factory-floor workers will point out when box sizes are inefficient for putting in trucks. And consumer researchers identify flavors that aren’t selling.