Are local governments preparing for their new reality?

The severity of our recent recession has forced local governments to respond in ways that they would admit are less than ideal. For example, the need for instant savings has produced furloughs, shortened work weeks, and even truncated school weeks - strategies that may stave off immediate crises but may not be sustainable in the future.

Unfortunately, while the worst of the recession may be behind us, the long-term outlook for government is far from rosey. A recent article from Governing Magazine warns that the next several years will be a “lost decade” for governments, where “revenues probably won’t recover until 2014, and will then take another two years or so to pay for deferred costs for public pensions, health benefits and the like.”

A key question, therefore, is whether the budget cuts seen across the nation are ones that can successfully endure as federal stimulus funds recede and local revenues remain stagnant. The International City/County Management Association (ICMA) cautions governments to choose proactive rather than reactive approaches. A proactive approach aims to stabilize on a long-term basis. A reactive approach, on the other hand aims to maintain the status quo and "often involves across-the-board cuts, ignoring differences in importance and priority, failure to deal with the fundamental sources of inefficiency and instability, denial of fiscal sustainability problems, and an organization-wide sense that simply weathering the storm is appropriate.”

It appears that several governments are realizing the need for large and lasting alterations. A survey conducted by ICMA in late 2009 asked 1,500 local governments whether or not any of the changes they had implemented in reaction to the economic downturn reflected a long-term, new way of doing business. Sixty-seven percent of the respondents answered in the affirmative. In fact, since the recession began, 52 percent of survey respondents have already revised their long-range strategic plans.

A possible silver lining to the recession is that governments have been forced to develop innovative ways of doing more with less. Such innovation takes many forms, including advancing intergovernmental cooperation. A recent forum held in St. Paul, Minnesota, for example, gathered roughly 40 Minneapolis metro cities to contemplate new possibilities for shared services.

Since a recession of this magnitude was thought to be extinct, grasping the severity and duration of its impact is not easy. However, governments have had to learn how to operate with significantly depleted funds and come to terms with new modes of operation. Sustainability lies in those governments that realize their new long-term reality and take the requisite strides to prepare accordingly.