Thursday, August 13, 2009

Saving $$$ easier said than done
Earlier this week, the Associated Press distributed a story to follow-up on the proposal made in January by Governor Tim Pawlenty and Wisconsin Governor Jim Doyle that, as a budget-balancing measure, state governments in Minnesota and Wisconsin would work together to find and implement cost-saving efficiencies through sharing and collaboration. The governors estimated potential budget-savings for each state at $10 million. After months of number-crunching, official estimates of actual savings to be gained will be closer to $100,000--or one-tenth of one percent of projected savings for a single state. State officials went on to say that more time will be needed to fully realize savings benefits.

This is not to belittle what appears to be a legitimate attempt to gain government efficiencies during particularly tough economic times. There are a couple of things worth noting, though. When Governor Pawlenty announced his local government aid and market value homestead credit unallotment plans for 2009, and for the 2010-2011 budget cycle as well, he insisted with great indignation that city officials should have no problem compensating for cuts simply by trimming a mere five percent (though for some cities it may be as much as 15 percent) of their budgets through salary freezes, program and administrative cuts, seeking efficiencies, and so forth. Furthermore, in the first round of unallotment, cities were expected to accomplish this immediately--during the current budget cycle (2009 state aid payments were unalloted in December 2008).

While cities have been particularly active in pursuing cost-casing measures since initial local government aid cuts in 2003, the fact remains that realizing immediate cash savings with no service consequences simply from rapid consolidation of services or trimming so-called "fat" from budgets requires a much more thoughtful approach than critics of local government might have you believe. For a variety of reasons, even the most effective service-sharing agreement among cities, or any government entities, may take years to come to fruition. Looks like state officials are slowly beginning to realize that.

Moreover, the present-day reality for Minnesota city governments is that there is no more "fat" left to cut. Despite the best efforts of local elected and appointed officials, city budget cuts--due to unallotment of state aids and the lagging economy--will ultimately affect city services. It may mean streets that go unplowed for longer periods of time, or slower reponse times for police calls, or reduced library services. Or, there may be more visible consequences. Read more about what goes into preparing a city budget.