Revenues Are Up – Spend Them Wisely

The good news: As cities and counties continue to emerge from the Great Recession, many are seeing their revenues rise.

The bad news: there are still many more ways to spend those increased revenues than there are revenues themselves. Employees who haven’t had a raise in years want one, residents want services restored, and deferred costs like maintenance and technology demand attention.

As government leaders hash out where to direct funds, there’s a temptation to restore everything back to where it was before the recession. But while it can be hard to admit, some of the changes forced by the downturn were good for governments. Unnecessary layers were eliminated, departments adopted energy-saving equipment, and staff positions that were duplicative or low-value were trimmed.

The challenge now is to keep the good that the last few years have produced and operate from the new normal, instead of wishing for things to return to the way they were. By carefully choosing how to spend increased revenues, leaders can make their governments stronger and better prepared for the next recession.

Here are some ideas to consider when deciding where to spend rising revenues:

• Pay back any money you borrowed from restricted funds to cover the general fund first. That is a top priority.
• Next, look at vacant positions. Fill the ones that will directly improve the delivery of services; wait on others.
• Eliminate furlough days.
• Compare your organization to other local governments and increase salaries across the board if you’ve fallen behind.
• Increase salaries for positions that are experiencing high turnover or are hard to fill. Be judicious with the salary increases, though.
• Look at your strategic plan and update it if it’s been a few years. Nearly everything has changed in the years during and after the recession; chances are your goals don’t reflect that, and resetting them now would help align spending priorities.
• Create or update a long-range financial plan that is balanced at current revenue and expense levels. Don’t forget to include technology, fleet and maintenance needs, which have probably been neglected over the past few years but are necessary to service delivery.

If you have any funding left over, consider restoring cuts made in direct response to the recession. But don’t go overboard. Remember that we could be due for another recession as early as 2017. By preserving the positive changes that have come from the past few years, your organization will be more resilient and better ready to weather future storms.

Jerry Newfarmer is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.