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People who live in California know that Albert Hammond’s pop song “It Never Rains in Southern California” is complete fiction, and the past few weeks in the Golden State have proven that. Parts of the southern end of the state have received more rain in two weeks than fell on their parched parcels during all of last year. Gazing out the office window at the falling rain and watching the brown hills below the Hollywood sign turning green prompts other “rainy day” thoughts for me.
As many cities, counties and even the federal government all face giant budget shortfalls, one of the key reasons for the nascent calamities is clear. Hardly any of them have established “rainy day” funds, something that any responsible business owner or head of household would do. Over the years we’ve adopted the habit of referring to politicians as leaders, while in my opinion they’ve become followers and most are doing a poor job with even that simple assignment. Do real leaders habitually overspend, ask for more and create devious schemes to extract cash from their constituents? |
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From childhood on, most of us get a recurring and fundamental piece of advice from parents and grandparents: “be sure to put something away for a rainy day.” Just about any financial counselor would advise socking away 10 percent of what you earn each year. Let’s do some simple math. New York City has an annual operating budget of $58 Billion in 2008 and Oklahoma City’s budget is $758 Million. So, following sound financial planning principles, they should respectively put away rainy day money of $5.8 billion and $75 million. What if they had done that for the past 10 years? In other words, they would have cash and securities on hand equal to their yearly budget which would give them many options and lessen their need to lie to you about their inability to hire policemen and teachers without raiding your bank account. Even in the small town of Bristol, Rhode Island, they are scrounging for dollars, with $100,000 being a mighty big number for them. At least their Senator, Walter Felag, spoke fiscal truth. Walter Felag referred to escalating pension and benefits costs as one of the state's "biggest nuts that needs to be cracked."
Whether it is Bill Gates or your trusty, hard-to-understand Seven-Eleven owner, keeping something in reserve is business principle #1. Why do we let politicians get away with ignoring such a fundamental idea, one that is perilous to ignore? California is facing a $14 billion shortfall right now, and we know that our state is often the predictor of what is coming for those living east of here. Aren’t you tired of hearing that even with billion-dollar budgets, parks, schools and public safety programs are perpetually at risk? What the politicians hardly ever mention is any detail on how the existing money is being spent because that would not build our confidence in them. The Machiavellian part of my mind says that such large pots of rainy day money would have politicos spending so much time fighting for control of it that they wouldn’t have time to bother the taxpayers with their pet scams and schemes.
Yes, I am a fan of getting more business people into public office and love the idea of sound business principles being applied in government. My feeling is that we are nearing the end of tolerance for being financially pummeled by elected officials. In some instances they’ve made money promises to public sector employees that can’t be kept over the long haul. Most city halls and state houses are populated with people who haven’t even run a corner store, and we entrust them with hundreds of millions in tax dollars. It is sad that they won’t exercise the discipline of saving or cutting even when a financial disaster is hanging over them like a sharp blade. I’ll be watching the success or failure of upcoming ballot measures that call for fresh fees and taxes to throw money at the problems. Like daylight following darkness, we know there will be more rainy days.
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