Friday, October 24, 2008

It Is Our Responsibility Is To Live Within Our Means…

Several newspapers this past week have reported the concerns facing the strapped budget in South Dakota. If you take time to review the last 7 years worth of state budgets, you will discover, like I did, that we have been already borrowing millions of dollars from our reserves to augment a longstanding structural deficit. And this is not all due to recent financial frustrations brought on by the morose news from Wall Street.

Our state ‘balances’ its budget every year… or does it? Does balancing your budget refer to making sure you have money covering your expenses, no matter where it comes from? Or does it mean only using recurring revenue for recurring expenses, and one-time revenue for one-time expenses? What is our state’s fiscal policy to insure we are not spending beyond our means? When we ‘predict’ our revenue, are we being conservative, or is this a projection determined by how much we want to budget to spend?

The duty of the government of South Dakota is to provide valuable services to the residents of this state. Abraham Lincoln once said: “The legitimate object of government, is to do for a community of people whatever they need to have done, but cannot do by themselves in their separate individual capacities.”(Lincoln On Democracy p. 64) In my mind, this would relate to services and infrastructure we determine we need over time. The question we have to ask ourselves in state leadership is what should government pay for and what shouldn’t it pay for? When faced with tight budgets, tough decisions must be made. Will we be tough enough to make them in hard times, when we apparently weren’t disciplined to do it in the ‘good’ times? Will we be willing to innovate and be creative in our approaches to long term solutions for our state’s development?

Making tough decisions involves prioritizing and creating efficiencies first and foremost. And at the same time, strategic investments of effort and finances must be piled into education and economic development (education is economic development by the way, another story for another time). Much like a family budget, if you want to get ahead you have to reduce expenses and increase income. Strong fiscal management and aggressive economic development win at the end of the day. Some say that sounds idealistic and it can’t be done. Well, yes it can. You can begin by researching the spreadsheets of the City of Brookings to see how we came out of a recession with reverse growth in sales tax revenue to surplus budgets the last 5 years, including one projected for the end of this year: to the credit of our city council, our fiscal policy and staff administration. One example: our budget fiscal policy grows government spending at the consumer price index. That way it won’t outstrip the economy and you make hard decisions along the way, instead of when you are way over your head.

I don’t mean to be critical, but it is time we started to think differently about how we ‘invest’ our money in this state. Idealism never hurt anyone, when it is followed by a good plan. We need a strategic development plan that will grow our whole state and bold action by our state leaders to carry it through. A balanced approach; will we do it?

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