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Tuesday, January 13, 2009Starting point
Here are staff recommendations for a 15 percent budget reduction.
They hurt. You'll want to keep in mind that these recommendations are just a starting point. The next round of all-day sub-approps committee meetings will be on the 21st.
posted by The Senate Site at 4:04 PM | Link
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9 Comments:
The damage may already be too late to be undone, but I beg you to consider the impact of your words and actions on the psyche of the people of Utah.
While searching for efficiencies in government is always healthy, scaring people who are already freaked out by screaming disaster headlines every day adds to a self-reinforcing negative feedback loop. Think of it as throwing fuel on the fire of financial fear.
Although some people like this because it provides an opportunity to reduce government, please consider that your actions do not affect only government - it bleeds through to the entire economy. I personally am aware of private sector jobs that have been eliminated because of the actions of Utah government over the past few months.
I own a little restaurant and even though we're surviving (so far), since the financial crap hit the fan in October our business has fallen quite a bit. People are scared. Some of this is probably good because people are closer to living within their means. But if it gets worse....
We live in tough times and as senators you have a tough job. But please consider the effect of both your words and actions in how you approach the task before you. You say to focus on the end point, not the beginning point in budget discussion. But please consider that the publicity of your beginning point may lead to a more difficult end point than it would otherwise would have been.
Thank you Anon. That is an excellent point.
I agree with anon that it's unwise to spread unnecessary worry, but we must face reality here with these cuts and realize that even this dramatic draft of a 15 percent cut may be conservative. Is it not a good possibility that the cuts end up being in the 17-18 percent range? (I am of the belief that the ultra-worst-case-scenario 30-percent cuts are not going to happen).
Ric, we posed a couple of follow up questions for you over on our blog, but I'll understand if you're too swamped to respond, particularly at this time of year. Could you point us to where the full proposed budget is online? (Is that how it works, the legislature works off of Huntsman's initial proposal?)
P.S. I hope the sentiment of fiscal conservatism remains after the economy recovers. Boondoggles (a pet peeve), invited lawsuits that cost millions, etc., all cost in the long run - that money could be put into the rainy day fund. But then again, I guess it wouldn't be used at all then...
Relating to my earlier fuel to the fire comments.... www.sltrib.com/business/ci_11445338. This is a Utah (not US) index of small business confidence. The index is similar to my experience. Again, please be careful with that gas can you're holding close to an already growing fire.
One other question I was thinking about. When you cut programs such as road construction that fund private sector jobs or lay off government employees, when you figure how much that saves in the budget do you take into account increases in unemployment insurance claims, less tax collections, higher social program costs, and so forth? If so, what sort of multiplier do you use? Or do you only account for the saved contract or salary cost?
Steve C.
It is great to see so many comments on a blog. Thanks for the discussion.
I did consider the danger of announcing the impact that a possible 15% reduction in revenue would have on specific budgets. It was not pretty, but I felt it was needed to let legislators see early on what such numbers mean to existing programs. This will give legislators time to analyze all the options. It also lets the public know how serious these revenue reductions are. We favor transparency in government and if we had tried to hide this information, the news would only be more damaging.
This process puts agencies on notice to begin the reductions as soon as possible. Every day they wait, the reductions will be more difficult. We will likely reward agencies who can find new ways to provide services at lower cost. That way we all benefit.
The telling information will be the updated revenue figures that will be released in mid-February reflecting the year-end sales and latest unemployment level. We have held in reserve various funding options to reduce the impact of these shortfalls until we see exactly what we are dealing with. If the reductions in revenue continue, the public will be pleased to see we still have some tools to address the cuts. If the revenues are steady, we can use some of the options to soften the impact as Gov. Huntsman did with his budget recommendations. If the fill-in to reduce cuts in programs will have a positive impact on the business climate and hopefully help end the slide.
Sen. Hillyard,
Thanks for your response. It's good to know that senators pay attention to public comments.
If you really are going to cut 15% (on top of the amount you already cut), I think it's definitely good to start early. But if you really only think some lesser amount is what you're actually going to need (10%, for example), but you threw out the 15% number to get people's attention, you may actually end up at 15% even though without your actions you would only have been at 10%. Sorry for the wordiness, but I hope my point comes through. This happens because you scare not just government agencies but the larger public into retrenching even further.
Economics is all about expectations and people's expectations have been dramatically revised lately by headlines. State and federal government reactions can have a major impact on the downward cycle of expectations.
Steve C.
The fiscal analysts for the legislature calculate the need for 15% budget cuts based on no bonding, no money being taken from the rainy day fund, and no federal money from the fiscal stimulus program that will certainly pass on the federal level. I've tried assuming a new Ferrari in my driveway but that doesn't work either.
Someone, please, explain for me how those assumptions are warranted to any degree? The Governor's budget proposal takes into account modest use of the rainy day fund and modest bonding. Add to that even a very conservative estimate of money the state will get from the federal stimulus package and you have much lower percentage cuts than the Governor, much less the legislative leaders, proposes. So do we simply have a "smaller government" ideology pushing ahead at all costs here?
Keep in mind, budget cuts that result in state agencies laying off employees likely will not correlate to a meaningful degree with getting rid of unproductive employees. My understanding is that most state agencies are reducing their employees on a "last in first out" approach. Mid and upper level management dead wood isn't going to be culled out by these budget cuts.
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