Rob Douglas: ‘We’re going to have to cut things’
October 10, 2008
— “We’re gonna have to cut things that people like to have. There’s not a service we provide that some special interest or some group of citizens values more than anything else we do. It’s going to be very difficult.”
– Interim City Manager Wendy DuBord.
Of all the words spoken at this week’s Steamboat Springs City Council meeting, none were more apropos than those spoken by Ms. DuBord in reaction to the council’s decision to balance the 2009 operating budget by slashing $1.9 million in spending instead of further depleting dangerously low reserves.
In fact, no matter where we live in Routt County, we’ll all have to do without things we “like” from government as our communities confront a difficult economy for the foreseeable future.
A year ago this week, the S&P 500 peaked at 1,565. Yesterday, it closed at 910. That’s a drop of 42 percent, with more than half of those losses coming in the past 10 trading days. The Dow Jones and NASDAQ have suffered similar losses. That equates to more than $7 trillion having been wiped out of Americans’ pension funds, retirement accounts and investment portfolios in the past year.
Most significantly for the Yampa Valley, the international crisis in financial markets – already impacting residential real estate – shows signs of infecting commercial real estate along with all other sectors of the economy as consumer spending nationally grinds to a halt. There can be little doubt that timely redevelopment of the Steamboat base area is now in jeopardy, and the glut of commercial square footage coming online across the city could result in empty store fronts.
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And although it is correct to cast blame upon Wall Street and Washington – as was done in this space last week – the truth is we’re all to blame for the current fiscal fiasco.
Yesterday morning on CNBC, James Chanos, president of Kynikos Associates and one of the first to recognize Enron as a financial fraud, addressed the causes of the current crisis. He spoke about the “whole mindset of consuming more than you earn for years and years and years whether you’re a government, consumer or corporation.”
Mr. Chanos’ words ring as true here in Steamboat Springs as they do on Wall Street and in Washington.
For too many years, Steamboat has outspent revenue by providing free and heavily subsidized amenities citizens want instead of maintaining a balanced budget that provides what citizens need. And, as City Council President Loui Antonucci has been repeatedly warning, even if the city were to receive typical year-over-year gains of 3 to 4 percent in sales tax revenue, current spending levels still are unsustainable.
Fortunately, the City Council decided this week to end the profligate spending of the past and, in so doing, declared that all programs and services are on the chopping block. The council, recognizing that free and heavily subsidized city-provided amenities are jeopardizing the future ability of the city to fund essential services, will begin ranking by necessity every tax-funded service. Some services will be curtailed, some will be eliminated and, unfortunately, some city employees will see their jobs eliminated.
As the council works through this difficult period, there are a number of paths worth considering.
First, lead by example. Each member of the council should consider foregoing at least one month of their city salary – more if possible. If the council is going to ask others to sacrifice, they should, as well.
Second, while some city jobs may necessitate elimination, citywide furloughs should be enacted – an idea that council President Pro-tem Cari Hermacinski said the city is considering, according to a story on page 1 of today’s newspaper. If each city employee took two weeks of furlough in 2009, about $500,000 would be saved, along with many jobs.
Third, in times of difficulty, experienced hands on the tiller of government are called for. As such, the City Council should suspend the search for a new city manager and implore Ms. DuBord to accept the position for at least the next two years. Ms. DuBord has the skill set and institutional experience to lead the city staff through this difficult period.
Finally, those of us outside of government need to dig a little deeper and provide more for our neighbors who truly need a helping hand. Most of the human resource organizations that will receive fewer city tax dollars in 2009 also receive funds from our local United Way. If we each make an effort, we can ensure all our great local organizations still are fully funded.