Everywhere we turn today, the headlines point to negative impacts of a shrinking economy. The Feds are printing billions of dollars to meet their commitments for the rescue. The State of California is pleading for a bail out. The State of Washington will balance its’ budget, but not without some serious cutting.
It is no surprise that Snohomish County government faces a crisis. The County Executive submitted a budget with a lot of grief. Shortfalls in revenue mean reductions in services and staff. If you are one of those casualties of a reduction of staff, you have a lot of grief.
In addition to a shrinking of the economy, County government suffers from a shrinking tax base every time an annexation is approved by the Boundary Review Board and a City council. Counties have mandates from the state to move urban growth into cities. It makes sense for the cities to be the urban service providers. The mandates don’t include corresponding methods to fund county-wide services after sales tax revenues have migrated to the cities.
I am most familiar with Snohomish County, but the problem is probably the same in most counties.
I have been critical of Snohomish County for aggressively promoting urban development in unincorporated areas. I believe that the Growth Management Act told counties to get out of the urban development business. I still believe that the reason we have a Growth Management Act is because of “out of control” county governments, but I have already beaten that horse in previous blog entries.
The budget crisis we face in our county comes in part from the fact that as the urban areas annex into cities, the sales tax revenue goes with it. Whether I like it or not, County government counts on that sales tax revenue to fund government services. If that revenue goes away, there are problems.
As residents and taxpayers in the county, we all need county-wide services like the Criminal Justice system which includes the Sheriff, the Jail, the Prosecutor and the Courts along with the Assessor, the Auditor, the Treasurer and the Clerk. We still need Public works and transportation departments in rural areas. And even though it is a separate entity, the Health District provides a vital county-wide service. I would include the Planning Department, but I could make an argument against the need for those turkeys.
Regardless of your political persuasion, County-wide services need to be funded. The issue about how the pool of money is divided amongst the departments is the small stuff. That is the politics of government at every level. How large that pool of money should be is the big question. Since the Assessor’s office jacked up our property values in an expanding real estate market to fund huge revenue growth during the past couple years, I hate to see what he will do when market forces tell him our property is not worth those big numbers anymore and at the same time revenue demands remain high.
A downturn in the economy is a good time to develop a budget strategy. If it is developed correctly, it will serve government in prosperous times as well.
All the years I was Mayor in Snohomish, Kelly Robinson was my City Manager. He told me he could prepare a budget regardless of the revenue, but that less revenue meant fewer services. He was keyed into the size of government. Since government services are predominantly personnel costs, he tied the growth in personnel to conservative revenue estimates to prevent big swings in hiring and subsequent layoffs. He was constantly aware of long term revenue commitments from expanding staffing. For many years, he was able to provide revenue for discretionary budget commitments because he was not totally committed to an inflated employee base. As economic cycles change, extra revenue in good times goes to fund projects and not staff.
The foundation of my own philosophy of government management is built on the lessons I learned working with Kelly Robinson. I think our county could put some of those lessons to use today. Where is Kelly when we need him?
In order to balance the budget in our county, we need to look for ways to reduce spending in places where everyone won’t suffer.
I have a couple ideas that would change how our government is run.
The first change. To the degree allowable by the County Charter, I would move control or oversight of the Long Range Planning Department to the Legislative Branch. Anything that has to do with developing the Comprehensive Plan and Land Use regulation would fall into a Council managed area. The Planning Department Director, an appointee of the Executive has too much control. The “policy development” elected officials need to have more control over what the Planning Department does. This would keep the council members engaged with what is happening in their districts.
The permitting and execution of the plan and regulations would stay with the executive department.
The second change. I would suggest that urban growth areas outside city boundaries should be served by city police departments rather than the county sheriff. I would support annexations that move that process along. All the deputies that are currently based within an urban growth area would be reassigned to areas outside urban growth areas. The size of the sheriff’s office could be reduced considerably. If we maintain the ratio of officers to thousands of population but applied in areas away from cities, the number of officers needed would be smaller. Providing police services in a rural environment only could clarify the mission for deputies and the public.
How many of us expect urban police services from the Sheriff today? Everyone should have an understanding about different expected levels of service from a sheriff’s deputy compared to a city police officer. The mission of the Sheriff’s deputy is not the same as an urban police officer.
The other services provided by the Sheriff’s office that are not patrol related would be evaluated and future service levels would be determined based upon new assessments of need. Special services provided by the Sheriff’s office might be paid with “fee for service” charges to the jurisdiction that requires the service.
Cities would have to step up to their responsibilities in providing police services in Urban Growth Areas just as the county has had to assume higher costs for jail, prosecution and court services for the whole county.
It could be that the whole issue of Criminal Justice funding should be viewed as a county wide cost and a method of funding the system be based upon population so that as the population percentage in the unincorporated moves into the incorporated, funding shifts from the county to the cities. At the same time, the cities need a seat at the table when developing Criminal Justice policies and budget development.
Snohomish County Tomorrow could become a relevant organization again if it is required that the county and the cities work together to address growth and criminal justice issues rather than giving the county all the power by itself.
It is clear that our county leaders don’t have a corner on smarts.
Can the extra services provided by the Sheriff’s office be tied to a levy? Can the voters decide to tax themselves for higher levels of service not provided by existing tax revenues? Can there be dedicated revenue sources for Criminal Justice? For other government services?
Can we restrict the size of government to some economic factor? Prohibit growth in government spending by law?
Even though I don’t particularly care for Aaron Reardon’s style and approach to government, I cannot fault him for filling in the void of leadership left by the County Council. I think that if council members had their own agendas and campaigned for them like Reardon does during the whole term, the taxpayers in our county would be better served.
Solving our county’s budget problems is not a task for the faint of heart. Our elected officials need to have courage to battle for things rather than against. We need council members that can stand toe to toe with Reardon and give as good as they get.
No Loss for Words 
Am I “Wall Street” or “Main Street”?
by Steve DanaLet me see if I understand what is happening. The banking industry demonstrated questionable judgment by making poor loans that put their businesses in jeopardy of bankruptcy. In some cases the mortgage companies and/or banks did actually go bankrupt. Isn’t that what happens when we get careless? It happens to consumers every day. How is this situation different?
So I have some questions. Did all this happen because the housing market failed to continue its unreasonable meteoric growth rate? What drove that meteoric growth? When the market was exploding upward was anyone concerned that the real value of the underlying assets was much lower? Was everyone seduced by the unreal returns? Since we all know the cyclical nature of the real estate market didn’t some smart guys see the end coming in time to raise a warning? Who is supposed to be listening for a warning? Is there supposed to be someone looking for warnings?
Then when the housing market crashed, weren’t there safeguards built into the regulatory system to soften the landing? Aren’t there safeguards in the system? What should reasonable safeguards be? Where should they be imposed? Is this a State or Federal issue?
Is this whole thing a failure of government or the private sector? Should government be the “Black Knight” and let the failed institutions fail and let the market take care of it or should the government be the “White Knight” and come to the rescue?
The crisis became a catastrophe when we learned that most of the major financial institutions were infected with the disease. Could that be characterized as massive corporate greed? When it was just a crisis, we let the individual institutions be swallowed up by scavenger investor institutions. Isn’t that just the way of the world? Then when it became a catastrophe, the stakes were too high to let the banks go under. There must have been too many failing banks for the “big boys” like JPMorgan Chase, Wells Fargo and the Bank of Americas to step in and rescue (steal) with infusions of capital. When Warren Buffet put up $5 Billion to prop up one of those fat cats, he didn’t do it without demanding a pound of flesh with an equity stake.
Since Fannie Mae and Freddie Mac were privately held public corporations how should they be treated in all this mess? If they hold trillions of dollars worth of mortgages that are performing and a couple hundred billion that are not performing, what are they worth?
In the end, if you had your retirement funds invested with one of these major financial institutions you pretty much lost it all. In the case of Washington Mutual, the company was taken over by JPMorgan Chase for a fraction of the capitalized value of the shares. Everything that made that company worth investing in was gone along with the value.
If the government is stepping in to prop up “Wall Street” so we can save “Main Street”, what are share holders whose IRA’s and 401K’s are invested in those companies, “Wall Street” or “Main Street”? If the home owners are the “Main Street” part, how exactly are they to be helped? If your retirement account has been destroyed because you invested in financial stocks how are you saved? If you borrowed more money than you can repay, why is the government stepping in to save you and not the folks who saved enough to invest and now face the loss of their retirement investments?
There is no doubt that the executives and boards of directors of many publicly traded companies are responsible for this debacle. By not providing the proper amount concern about the downside risk, they put the shareholders in jeopardy. There is nothing wrong with taking advantage of good times, but we now know if you don’t prepare for the down turn, you might be left holding the bag. Let this be a warning to little investors; if the directors of the companies in which you own shares are not looking out for your interests, can you afford to invest in that company?
In light of all this corporate failure there has been a lot of conversation about executive compensation. Some opinions suggest that there should be limits to executive pay. I can’t support that any more than I would a limit on profit. Share holders hire executives to increase share value. Confidence in a corporation comes from smart executives who develop management policies and efficiencies that produce goods and services for a profit. When it is working, things look pretty good. If investors are willing to pay a hundred times earnings, should anyone be concerned? You cannot limit executive pay any more than you can a movie star or a ball player. Super stars command high salaries.
Free market advocates have now seen that there is too much greed and corruption for that system to work the way it is supposed to, but at the same time, most of us are not interested in a Socialist State either. We are looking for a “modified free market system”. For many years the system seemed to work, what changed? Can we shove this thing back into the box?
I sure hope we are making a list of lessons we have learned and formulating some plans for rebuilding the regulatory system to safe guard consumers from predatory lenders and share-holders from irresponsible corporate managers. As for every formidable task, we will have to eat this elephant a tiny bite at a time. If we put a lot of hot sauce on this rotten meat, we can get it down.
I suspect that it will be easier to protect consumers than share holders, but in this difficult time we need to be working on it.
I still haven’t figured out whether I am “Wall Street” or “Main Street”. I could use a bail out.
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