RICHMOND, VA (WWBT) - In difficult budget times, difficult decisions have to be made. The inevitable down stream impact of revenue shortfalls has abruptly reached local jurisdictions.
The simple syllogism for policy makers is "if housing prices are down (appraisals and sales) and real property tax values are down (assessments), then revenue is down (income). You must cut programs, people, and plans.
The variables include: the amount, the rate at which the cuts must be implemented, the unintended consequences of one program on another, advocacy and politics. Skill must be used in analyzing each move and counter move to insure that the primary goal of the organization, in this case educating young people, is held up like a harbor light.
This week the Stafford County School board, under pressure from the Board of Supervisors, indicated it was considering using part of its health services fund, a reserve, to pay teachers and operate the school division.
While not an unusual move, it brings to light a major flaw in public, both state and local, budgeting. Most businesses, and prudent families, set aside funds for expenses that they know are coming.
Why then, don't schools and governments set aside money for vehicles, buildings, computers, and other equipment that is known to have a limited replacement cycle? Why not a reserve for healthcare or insurance?
The reality is, as demonstrated by the Stafford discussion, that any reserve is susceptible to a raid when difficult political decisions have to be made. The best business practices don't always apply in the public sector…but, one does -- don't use a saving account for day-to-day operations.