Today's headlines couldn't be worse economically. Price increases are hitting everyone, to the point that even P&G is raising prices. Comair is laying off 500+ employees. Even the casinos are struggling!
And people wonder why our County budget problems are so tough. (http://news.cincinnati.com/apps/pbcs.dll/article?AID=/20080709/NEWS0108/807090303/1169/NEWS#pluckcomments)
Quick summary of the problem. Outside of fees for certain transactions, we rely on four major sources of revenue to pay for the services we provide (through what is called our general fund):
- the sales tax (.5% goes to our general fund); (note: things like gas and food are exempted, so in a tight economy, where people are more limited to such basics, we get even less--which is exactly what we're seeing right now)
- the property tax (most goes to specific levies and schools, but we get some)
- a tax from the sale of property (property sales have tanked due to the housing market, so revenues are way off here)
- interest (interest rates are low, so we are also off by millions here)
Bottom line: the nature of this economic slump (lower consumer spending and higher prices, slumping housing market, low interest rates) is almost a perfect storm with respect to the revenue streams we rely on.
So despite a conservative 2008 budget where we made a lot of cuts and consolidations and forecast revenue increases conservatively, the revenues are still well below anticipated (more than $10 million).
The answer? We have to do what every other company and household is doing right now -- make the tough decisions to cut back on spending. Like everyone else, we simply can't spend money we don't have, and there's no way around this basic reality.
We're asking each department to live the rest of the year on a 6% smaller budget, and although it's fun for no one, I'm confident they will make the best decisions about how to provide the services they need to provide at a cost that our general fund is able to bear.
And long-term, the real answer is that we have to redouble our economic development efforts so we grow, grow, grow--creating jobs and increasing spending in our region and county.
If you have other ideas on where and how to save money, please comment below . . . .