Appearantly, Margarita Prentice already has decided to spend the state’s rainy day reserves, before revenue numbers and a review of the budget are even complete. Here is the story
I personally think we should try to reduce the size of the state government first, through prioritizing and attrition reductions in staff (the way we are handling things in Renton). Only after that, if we can’t maintain basic services, should we look at spending rainy day funds.
Randy, can you define what basic services are. I think medic one would be included yet we had to take a loan (bond) out to fund it. I’d like to know what you think.
Mark
Great question Mark. At the risk of significantly oversimplifying the complicated state budget, I would recommend taking a department by department approach that would prioritize work projects within each department or service provider, but not drop whole departments at one time. In other words, if medic one is getting reduced revenue, they should look to deferring addition of new employees, keep their existing aid cars in service a year or two longer than normal, defer any new facilities, require that people assisted hire private ambulances for non-emergency transports etc, but I would not advocate cutting them.
I would ask each department within the state to do the same thing…defer hiring of new positions, keep equipment in service longer, make do with existing facilities, use overtime instead of new-hires to replace retirements, etc. None of these actions could be done for more than a couple years, but they might collectively make up a 10-20 percent shortfall and get us through a rough two years.
After that, if we need to we could tap rainy day funds perhaps. hopefully it would never come to that.
This is the approach we are taking in the City of Renton, and I think it will work well.
I guess that’s why you’re a councilmen and was just an applicant to fill a vacant seat. I’m sure your insightful answer draws upon year of experience. However, I’m not sure you answered my question. I gave medic one as an example as what I believe to be a basic service that should be funded from a general fund.
What I’m trying to understand is, what departments do you make cuts from only as a last resort. For example, the city/state funds roads, police, and education. We also fund low income housing repair (I actually use this service when I got out of the Marines, very helpful), art projects, and summer events in the park. Do you stop finding to art projects before you tell the police not to hire or make a needed road repair? This is assuming there is not rainy day fund. Also some things are funded mainly by the state.
I’d like to think public service is in my future and I’d like to gain some insight.
Mark
I think all departments might have to see cuts,, but some definitely more than others. I don’t think any of the cuts would have to put citizen safety at risk, however.
This is because a fair percentage of the budget of any organization with stable funding is building for the future. This is the part that needs to be reduced in a downturn.
For instance, while I’m not studied up on all the financial the details of Medic One, I suspect that they are buying some new aid cars on a regular basis to allow them to retire their oldest ones that cost more to maintain. In a normal year, they may retire everything older than seven years, to keep the fleet relatively young. But in a tough time, it might make sense to allow the cars to get up to nine years old before they are retired; this requires a little more money for maintenance, to make sure the vehicles are ready when you need them, but saves a bundle in capital expenditures over the next two years. Once the economy returns to normal health, we could go back to the original replacement schedule.
The same holds true for facilities, equipment, and training. All of these may be reduced in the short term without putting anyone at risk. Over a period of several years however, these cuts would hurt the efficiency of the organization, so full budgets should be restored when they can be.
Art programs, and other non health and safety related services, would even be better places to reduce spending (as you have stated). Over many years, such cuts might take a toll by reducing the quality of life in our state….but short term, we could handle it.
On any given year, about five to fifteen percent of state employees can be expected to retire, move out of state, seek alternate employment, or reduce their hours. Since the state budget is in the neighborhood of 23 billion dollars, of which most is labor, we could save billions by holding off replacing these exiting workers. In some ares, such a public safety or roads, we may choose to replace some of them, but many areas we might be okay without (at least in the short term). This will require that each department make a forward-looking prediction of who is expected to leave, and how the might cover the loss without replacing the worker.
I would make a strong effort to avoid layoffs of state employees, as layoff cycles often cause the most needed employees to leave right along with those getting layed off–layoff the least experienced 10%, and watch your top 10% follow them out the door…it’s a strange– but frequently observed–effect.
If after all possible equipment and facilities are deferred, and attrition reductions are made, and other savings are examined on a department by department basis and we are still unable to maintain public safety– then, and only then, would I use the small rainy day fund that we started accumulating a couple years ago.
My reason for making this post was that my impression was that last year the legislature thought things were pretty rosy, and programmed an expanding budget with new programs, employees, and spending. For some of them to now announce, before they even meet, that they will make they budget work by raiding the rainy day fund gives the impression they are not even trying to do the work or balancing this years and next years budget. The entire rainy day fund amounts to two weeks of state spending at the current rate. If we spend it now, it won’t be there when we need it more desperately later, and we will still be forced to balance the budget ultimately.
The state has about three percent of annual spending put away in a rainy day fund…while the city of Renton has closer to 20%. And Renton is not talking about touching any of our rainy day fund (at least not yet) to balance our 2008 and 2009 budgets. Instead, we are asking all of our departments, including fire and police, to help us find short-term savings while keeping service levels acceptable.
Great questions!
Thanks for the long and post! It’s very well reasoned, as a Rentonite, I’m glad that you’re able to make difficult decisions like this while keeping a long term view at the same time.
Keep up the good work!
spending is out of control in olympia….someone needs to take control of this NOW.