Karl Douglass: Hope alone won't fix it

December 14, 2013 

If I struggle with one thing more than most, it's optimism. I always believe that tomorrow will be better than today and that the things I need will be there when I need them.

Being overly optimistic makes for a great sense of well-being, but it's not the greatest approach to managing money. Believing that you will have the money you need is important. However, studying revenue trends, managing cash flows and controlling expenses are more practical ways of insuring that you will have the money you need.

At the final City Council meeting for the year, Mayor Tomlinson opted for a practical presentation about the city's finances instead of an optimistic one.

The Mayor's presentation showed the city budget has been designed with a deficit each year since 2008. In each case, the hole was filled by drawing down on the city's operating reserve. When the fund balance was at its high water mark of $57.2 million in 2007, capable of funding city operations for 130 days, that was an acceptable strategy. In fact, it probably made sense to draw the fund down. Even when the fund balance was at $44 million 2008, enough to fund 100 days of operation, using reserve funds to balance the budget was not a particularly bad idea.

Now that the fund balance hovers right $30.8 million, enough to fund 70 days of operation, the city is drawing perilously close to going below the 60-day minimum balance bond credit rating agencies like to see. When rating agencies downgrade the quality of bonds issued by the city, it triggers a series of consequences that ultimately end up costing taxpayers. So City Council should take adopting a deficit budget off the table for the upcoming year.

One of my business partners often tells me, "Hope is not a strategy." Regardless of my or anyone else's optimism about big growth in the property tax digest or a sudden spike in sales tax collections, the evidence suggests the city's revenue will not increase significantly next year. So, as a practical matter, the Mayor and Council must plan for cuts to balance the budget. No policymaker ever wants to do that, especially not in an election year; but it is the most prudent course given the circumstances.

In spite of the city's tough budget picture, I remain optimistic. I still believe that our city's tomorrow will be better than its today. Especially if we all agree that some sacrifice by all is better than complete sacrifice by some.

Karl Douglass, Columbus native and resident, is a frequent commenter on local, state and federal politics. Follow him on Twitter@KarlDouglass or facebook.com/karldouglass.

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