9:20am | As mentioned here Long Beach has been awarded some $14.3 million in federal so-called “stimulus” funds to repair local streets and many, both on our Council and throughout the community, welcome and are roundly applauding the receipt of these funds.
It’s true that our local infrastructure is, in many cases, in terrible shape and getting worse by the day but I question the wisdom of addressing this public policy challenge in the way that we are.
Like so many other local governments, the City of Long Beach (the City) routinely spends more money than it takes in each year resulting in persistent structural budget deficits. We recently learned here that the city’s structural budget deficit is expected to increase by about 68% in FY 11-12, from $11 million to $18.5 million.
These deficits result in many adverse consequences in our city including hiring freezes, employee furloughs, reducing or eliminating various services and, more to the point of this column, deferring infrastructure maintenance and repair.
If we agree that in virtually all cases the best way to address entirely local public policy challenges is by applying entirely local solutions, then the best solution to our infrastructure repair and maintenance challenge would seem to be to simply further cut other local municipal spending while, at the same time, seeking longer-term and sustainable revenue sources that do not further burden the individual taxpayer.
Although the City has cut about $4 million in costs from the General Fund since FY08, fund losses continue to outpace these cuts ($16 million in the same period). The two biggest dips in fund revenue are in the categories of: “Revenue from Other Agencies” and “Other Revenues” both of which have lost about $4 million each since FY08. (City of Long Beach Department of Financial Management Data)
City Financial Management Director Lori Ann Farrell has said that she plans to ask City employees to offer cost-cutting solutions worth $11.3 million and the city will no doubt continue to cut costs in this and other areas as well but it has also chosen to apply, along with many other municipalities all over the country, for federal “stimulus” funds to help soften the blow.
While I understand the temptation to apply for and accept these “stimulus” funds, especially in these difficult economic times, I think it’s extremely unwise that we do so.
I’ll explain:
These so called “stimulus” funds didn’t exist before Congress passed ARRA and the President signed the law creating them. The $275 billion allocated for federal contracts, grants and loans (of which cities are currently clamoring for their cut) was not in our federal budget before this legislation. The money was not sitting in any account anywhere awaiting allocation. There were no spare pallets of gold bricks sitting in a musty corner of the Federal Reserve Bank. This money was plain and simply created from nothing and has nothing of real value to back it. Thus when Congress and the President created these funds they increased our national debt commensurately…a debt increase that all individual US taxpayers will now be paying on for generations. I suggest that this is not a fiscally responsible practice from either the federal or the local perspective.
“Our Liberty” practical application: The US should not keep printing money with nothing of real value to back it. Each time the US does this it: devalues the currency already in circulation; increases our national debt and; further erodes our nation’s credit standing throughout the rest of the world. When these occur, the federal tax burden for all of us, including those in Long Beach, increases commensurately and this, in turn, adversely impacts our personal freedom and individual liberty. Long Beach should not accept a penny of these valueless and indebting so-called “stimulus” funds.
Many if not most of the companies the City is spending these “stimulus” funds on are not Long Beach businesses and, in most cases, are not even near neighbors. On March 23rd, the Council awarded stimulus-based contracts to companies based in Wildomar and Corona in Riverside County and Brea in Orange County. Thus the grant funds the City is spending are, in most cases, not stimulating local business and are not “creating or saving” jobs for local residents. This is not a fiscally responsible practice from the local perspective.
“Our Liberty” practical application: If we agree that growing and encouraging local business and increasing the employment of local residents improves the overall health of our local economy. We, as a City, should do those things. Whenever possible we should award municipal construction contracts such as these only to local businesses who will, in turn, hire predominantly local residents. If the City’s current percentage preference for local businesses doesn’t accomplish this goal, then we should increase that percentage until it does.
Relying on federal handouts like these only serve to make our city more dependent upon a distant and ever more intrusive federal government; a federal government that is, itself, sinking deeper and deeper into a structural deficit of its own; a deficit that taxpayers will never be able to pay down so long as it continues to print money that has no real value behind it. This is not a fiscally responsible practice from either a federal or a local perspective.
“Our Liberty” practical application: As it expands in power and influence, our federal government costs more to maintain and goes ever more deeply into debt. The more dependent Long Beach becomes upon our indebted federal government to help solve exclusively local public policy challenges, the more local control Long Beach residents lose over their local government. The less local control we have, the more individual freedoms and personal liberties we lose.
So what’s the solution?
The City needs to spend less money in non-priority areas so it will then have the money it needs to meet its stated priority needs. Whenever the City overspends it should not go begging for grants of valueless money from the federal government which neither is nor should be to any degree responsible for underwriting the cost of paving a single square foot of a single local street in any city.
Let’s be brutally honest for a moment: I believe the City’s crumbling local infrastructure is a direct result and the reasonable consequence of our chronic fiscal irresponsibility. Unless and until we correct that particular fiscal challenge, we will continue to experience all of the other related fiscal challenges that we do.
Our local economy, especially in Long Beach, influences and is influenced by other economies in the region, state, nation and world. We do not exist in an economic bubble and it is not my intent to assert that our City’s income never increases or decreases based upon outside influences that are often beyond our direct control. Of course it does.
But if we know this we must then budget according to that reality…according to that uncertainty. We should budget knowing full well that an economic downturn elsewhere could adversely impact our own City income, in other words we must budget “conservatively.”
I’m not convinced that we do so or that we have done so in a very long time now.
Any number of City elected and appointed officials would no doubt respond with comments along the lines of: “What would you have us do? Our streets are crumbling and we don’t have the funds to repair them. This stimulus money is being made available and all we have to do to access it is meet the established criteria.”
My answer: “In almost all cases and at almost all times, I would have you resist the temptation to rely upon federal solutions to exclusively local problems; to spend more revenue than we earn; to apply short term, non-sustainable solutions to long term or ongoing public policy challenges.”
If properly maintaining our infrastructure is truly a City priority, then we must budget accordingly so that we can consistently meet that need. If it costs “x” dollars to maintain our infrastructure each year, then that’s how much should be reserved in our City’s budget to accomplish that adjusted, of course, for inflation. If that means that we then have less to spend on other non-priority local programs and services so be it. We set public policy priorities for a reason. If after setting those priorities we don’t truly budget according to them, then there’s no point in prioritizing in the first place.
We should have a “municipal infrastructure maintenance budget”. The funds in such a budget should not be diverted to any other uses for other than the direst of municipal emergencies (major disaster, war, etc.)
We must become more fiscally responsible at the local level. We must set public policy priorities and budget exclusively according to those priorities. If Long Beach can become more financially self-sufficient, we will require less State and federal funding support. If more cities would adopt this approach, our State and federal governments would be able to shrink back to more manageable sizes and then might actually start to get their own financial houses in order, costing each of us less which, in turn, would allow all of us to keep more of the money we earn through our labor and enterprise. Money we could then spend or reinvest or save as we, and not government, deems best.
Call this the “trickle down” theory of liberty. The more responsibility, personal freedom and individual liberty we reserve to ourselves, the less we will ask government to do for us. The less we ask government to do the less authority over our lives we will grant it. The less authority we grant to government and the less we ask it to do for us, the smaller, less expensive and less intrusive government will be and remain.
Thus our insistence upon reserving the most responsibility, personal freedom and individual liberty to ourselves “trickles down” and translates into precisely the sort of government that we allow to exist and that promotes and that serves, in turn, to guarantee those responsibilities, freedoms and liberties to each of us.
We must stop asking so much of our federal government. When we fail at the local level (as we have with our infrastructure maintenance) we must not then ask the federal government to hand us valueless money to help us correct our local fiscal mistakes. We do not need valueless federal money to succeed in Long Beach.
All we need to do is begin to be more responsible for ourselves.
I very much welcome your questions and your comments.