What Makes a Crisis?

I received a copy of an e-mail yesterday referring to the City’s current financial “crisis” and realized that I have not thought of our situation that way.  We have a financial problem brought about by personnel costs increasing faster than revenues over the past two years.  The problem is being addressed by cutting various, but not all, expenses and by reducing the size of our workforce.

Our current situation is not a surprise.  In a budget message I wrote three years ago, I made the following observation:  “I believe the most critical financial issue the City faces is a virtually fixed rate of growth for expenditures that exceeds the likely future growth rate in revenue in several of our funds.  My greatest concern is with the General Fund, where increasing personnel costs are pushing expenses up at a rate of something close to eight percent annually before new positions are even considered ….  We are projecting revenue growth in the General Fund of ten percent or more in this budget (2007-8); so the challenge we face is not immediate.  The problem will become serious when local construction declines.”  The action that was taken at that time increased the size of our General Fund reserves to over 20 percent of expenses, which is why, unlike many cities, we have largely avoided layoffs.

Many of the negative effects of budget reductions on employees have been and are being mitigated by voluntary retirements and unrepresented employees not receiving cost-of-living adjustments.  As I have stated and written on a number of occasions, my goal is to avoid layoffs and provide the best possible service to Albany residents with the resources we have.

It should not be surprising that almost any spending decision the City makes during a protracted recession will be questioned and criticized.  Inevitably, what some people view as frivolous, others see as essential.  We have long-established processes for resolving these differences, and we have the means to change processes we don’t like.

I can accept characterizing our current situation as a “crisis” if we acknowledge the Merriam-Webster’s Collegiate Thesaurus choice of the word “juncture” as the first synonym.  We are at a juncture that was anticipated several years ago, and we can positively influence what happens in the future with calm decision making today.  A crisis mentality that raises stress levels, sacrifices accuracy, and promotes suspicion or distrust serves no one’s best interests.