GOVERNMENT SPENDING - Carlini's Comments

LOCAL GOVERNMENT SPENDING: CONSOLIDATE ASSETS FIRST

Filed Friday, March 27. 2009

The reality of the devastation in the economy is just starting to be understood by those in municipal and county governments.

Many state and local agencies are just beginning to wake up to the fact that revenues are down as they work on next year’s budgets. While this recession shouldn’t come as a shock at this point, many government agency administrators are having trouble balancing the budgets and want to do the same thing they do every year: just request more money.

Many government administrators as well as the state and municipal boards they report to are scratching their heads. They’re trying to figure out how to get more money rather than trying to figure out how to cut 5 percent or 10 percent off next year’s budget. Few municipalities or states are in great financial shape. It’s very easy to explain why.

People have lost jobs, companies have moved out or cut back productions and the tax base has eroded. If you have underemployment where someone eventually finds a job but is getting paid half of what they were getting before, they’re not buying as much and sales tax revenues have gone down. There is a downward spiral in both sales tax revenues and payroll tax revenues.

Hold the Line or Be Let Go

From sitting on a village board, you might hear this question: “Do we raise water fees, sewer fees or up the garbage collection fees? Let’s add another dollar to movie rental fees.” Some administrators say: “We can’t freeze wages. We can’t let anyone go. We must put the burden on the taxpayer again.”

Some municipal boards buy off on that. They don’t question or impose objectives to cut spending or at least hold the line on budgets. The same goes for state legislators.

It’s election time. Those types of boards and politicians should be voted out of office. Those types of administrators should be let go. It’s no longer a matter of voting Democrat or Republican. It’s a matter of voting for someone who’s going to apply the same measures you have done with your home and family: cut spending.

What if your state legislature said they’re cutting the state income tax in half because they found all the waste in last year’s budget? Where is the outrage in rewarding legislators and administrators with raises for not being able to cut budgets for years if not decades?

Many people have been outraged with the federal government giving money away for $165 million in bonuses to AIG, which is a private company that needed to be bailed out with hundreds of billions of dollars. Congress evidently was flooded with calls from both Democrat and Republican constituents saying that those bonuses were an outrage to the American taxpayer.

Congress acted quickly because they felt rage from both sides. Do we need to compensate the government differently when it comes to solving problems and failing?

New Approach For Capital Expenditures

With all the turmoil in Illinois’ budget deficit of $11 billion or so, has anyone thought of consolidating assets instead of expanding duplicate assets and raising taxes? While most government officials seem to be trained in expanding budgets, few if any could creatively cut their budgets by 10 percent if that’s the only option.

Raising taxes should be the last resort and not the first go-to option. Before asking taxpayers for more money, find a better way to maximize resources. Want a case in point?

I spoke with an administrator of a local community college who was looking for more money for expanding their library. I asked: “How many libraries do we need?” We have public libraries and the college’s presentation about expanding the school’s library as part of a capital improvements program seemed like a duplication of efforts (and, of course, tax money).

With the Internet, we can access any university’s library online. Why build a mediocre local school library when we can get access to university libraries like Harvard, Stanford and Carnegie Mellon not to mention in-state libraries like Northwestern and the University of Chicago? Is that too “high-tech” for traditional administrators to fathom?

Why not work with surrounding municipal libraries? Why not expand one and close down the community college’s library entirely? What if we could utilize the community libraries for the community college? This idea of “consolidation” is probably foreign to those who have always been on a separate funding mechanism, but at this point, more creative approaches are needed.

To take it a step further into the 21st century, why not build a better network infrastructure to connect to all those libraries rather than build one that’s nowhere near the capabilities of a combined approach? Take all the money that would have been spent on expanding the library and build a super high-speed network to access hundreds of libraries.

Bricks and mortar have given way to online capabilities.

This has been proven in the last decade by companies like Amazon.com, the online travel agencies and others. Let’s try to apply that concept to government agencies when we can. How many administrators and their boards have gone through a planning exercise that looks at every service function and ranks the service in one of three levels?

These levels are “critical,” “necessary” and “optimal”. Just doing this would provide a good delineation of projects in prioritizing how critical they are in getting funded. We need more creative approaches in all state and local organizations to maximize resources and not just keep doing the status quo where you think money is in unending supply.

Based on what we are seeing today, the money supply has stopped and the taxpayer is tapped out. Those who think the faucet has an unlimited supply of money better wake up and realize that it’s almost dry.

Carlinism: The government must make the same sacrifices as individuals and households.