Los Angeles Could Go Broke By June 30. Wilmington, North Carolina, May Have To Raise Property Tax, Introduce Pay Cuts. Flint, Michigan, May Borrow More Than $13 Million To Fix Economic Woes. Washington State Considering Raising Beer Tax. Waynesboro, Virginia, Considering Layoffs, Public Safety Cuts to Reduce Budget. Tucson, Arizona, City Manager Proposes Sales Tax Hike. Fairfax County, Virginia, Supervisors Discussing Fee Increases. Montana’s Governor Announces $40 Million in Spending Cuts. White Plains, New York, Proposing “Highest City Tax Increase in 20 Years.” Monroe, Michigan, Proposing Eliminating Police, Firemen to Fix Budget Woes.
The paragraph above is made up of headlines from a daily report I receive from the International City-County Management Association and represents a single day of many similar reports over the past year or two. I listed this information to illustrate that state and local governments across the U.S. are struggling to maintain service levels in the same way many businesses are trying to stay afloat by cutting expenses, raising prices, or both. I don’t recall a time over the past 25 years when financial stresses were so widespread among local governments, although I do remember when New York City was on the brink of bankruptcy in the 1970s.
Government, like virtually every household and business, will always experience some level of financial strain because there will never be enough money to satisfy everyone’s desires. My experience also suggests that the more government delivers, the more people expect. Even in “normal” times, policy makers have to make difficult decisions about what gets funded and what does not. The job is complicated by countless rules allowing some money to be spent for “nonessential” purposes while “more important” services are perceived to be underfunded.
The City of Albany is responding to current financial stress by doing many of the same things other cities around the country are either considering or implementing. We are already in the process of reducing service levels by cutting the size of our workforce through attrition (retirements, etc.) citywide and limited layoffs. I am hopeful that as the economy recovers we can avoid further layoffs, but I expect we will have vacant positions in most departments for several years. Our financial health as a city depends on calibrating our expenses to a sustainable revenue stream. When many Albany citizens are unemployed or working in lower paying jobs, our revenues will be constrained and our expenses should be as well. We will know the community is becoming more prosperous when unemployment declines and the total assessed value of properties in the city begins to rise as the result of new construction.
There are a number of positive signs that economic prospects are improving. Several local employers are adding jobs in manufacturing and distribution, and retail sales appear to be increasing. Building permits for new homes and commercial structures are well below where they were three years ago, but not far from historic averages. Albany, in short, is doing better than many places around the country; and, with some short-term sacrifices, the City should be able to maintain core services at a time when they are most needed.