|
Ever since I was involved with an organization that had a $2 million deficit in their budget and no good way to close the deficit.
A lot of the problem was that the previous administration knew about the pending deficit in month 3 of the fiscal year and decided not to do anything about it until month 9. Even then, they didn't want to do much about it. They just hoped it would all work out, making tweaks and talking about reducing the deficit in a few years while working on increasing revenues. The organization wouldn't have survived the second year--it might not have made it to the end of *that* year.
We on the board stomped our feet. We demanded action of the managers and ourselves. We found that instead of trying to save $2 million over 9 months, we had to save $2 million over 3 months.
So instead of reducing expenses by $250,000/month, we had to reduce expenses by $650,000 month. While we could find ways of mitigating some of the cuts by increasing revenues, increasing revenues by $50k/month would have been a lot more impressive in months 4-12 than in months 10-12.
The problem was that managers had autonomy. The top manager had autonomy. They didn't want to see their plans diminished, their goals thwarted, and so nobody had an interest in cutting their budgets or revising their plans. Everybody was dedicated to their mission. Even when it was obvious the organization was going to go under if nothing was done, everybody said, "I'm too important; cut everywhere else." Everything, it seems, was far too important to cut anything.
You see it now in Texas. Don't cut education. Cut ... something else." Transportation? Public safety? The judiciary? Health care? Welfare? But the health care folk are saying, "Don't cut health care. Cut... something else." But nobody wants to say, "Cut health care," "Cut transportation," "Cut welfare."
The fall-back is raising taxes. That's a stupid move. Yes, in principle it's progressive. But here's how it works: If I raise taxes by $15 billion a year because we have an economic downturn, when the downturn ends we'll see revenues go back up. The government will immediately find a compelling and pressing *need* for that money--all the people currently saying, "Don't cut my program" will suddenly be saying, "My program was always underfunded, we can't survive without that money." Every cent of the increased tax revenue will be dedicated. And, next downturn, they'll all be saying, "Don't cut my program." The pain then will be even worse, in terms of inflation-adjusted dollars, because a 10% cut in a state government that takes in 10% of the citizenry's income in revenues is bigger than a state that takes in 9% of the income.
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(511 posts)
Send PM |
Profile |
Ignore
