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WHY CAN’T CITIES AND THE STATE BALANCE THEIR BOOKS – SMALL BUSINESSES DO
The summer of 2012 will be remembered as the summer of bankruptcies. At least three California cities have declared bankruptcy. Several others, and there are new ones announced it seems every month, are concerned enough to discuss bankruptcy, including the two largest: Los Angeles and San Diego. Elected officials and local city managers succumbed to local political pressure from their employee unions. They committed their cities to outrageous spending in salaries and fringe benefits, especially pensions and health care, as well as unchecked spending on civic improvements that could not be sustained when the housing crisis hit and revenue declined. The bad news doesn't stop there. For years, governors and legislators have spent brief revenue windfalls on permanent spending and also on tax cuts. They have passed budgets based on whimsy, ignored liabilities including pensions and retiree health care, and covered resulting deficits with ever more elaborate accounting tricks and borrowing. It is amazing that voters have watched all of this go on for many years and not exercised their rights and replaced their elected officials. Individuals are used to balancing their household budgets: when you don't have the money, you don't spend it. More importantly, small business owners, PCOC members, look at what is going on at the state and local government level and get very angry. Quite rightly. Small businesses have to operate on a budget. Small business owners on Fridays worry about whether there is enough money to meet the payroll. If there isn't enough money coming in, they cut...not spend. Our government entities in this state can learn a lot from the example that the private sector sets. It is up to each one of us to let our elected politicians know how the real world works! |
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