POSTED ON DECEMBER 12, 2012:
Are You Listening, Mr. President?
How we avoided our own fiscal cliff
By now everyone has heard about what may happen to America if our federal leaders don't arrive at some resolution on the fiscal decisions that have to be made. It is described as the "fiscal cliff" to scare us about the consequences that will occur when people in leadership don't lead. It would be inaccurate to say that our federal leaders did not see this coming long ago because, in fact, they are responsible for putting us on the path leading to the cliff in the first place.
As historic as this moment may seem, cities across America have been facing their own fiscal cliffs for several years. Many have managed not to drive their citizens over the edge. It raises the question of what lessons can those in Washington learn from those who found a way to avoid sending their citizens over the cliff in their hometowns.
Some of those lessons which Washington can learn happened right here in Tulsa in 2009 and 2010. Think back to what was happening to our great city then: 70 percent of the highway lights had been shut off, creating death tunnels on our roadways; we had canceled our police and fire academies so we were not preparing to fill the voids left by retiring officers; we stopped mowing our public properties, stopped graffiti removal and pot hole repairs; we furloughed our employees and city leaders had reduced the city's reserve fund from $13 million to $2 million. The city's safety net was all but gone. The city had missed its revenue projections for at least 10 straight months and yet, with declining revenues, city leaders continued to adopt budgets of unsustainable spending.
This road to Tulsa's fiscal cliff is what greeted Mayor Dewey Bartlett on his first day in December 2009. Soberly, the city's finance director advised the mayor that if he did not cut $10 million in spending within the next 45 days, the city would be insolvent before June 2010. More than any time in Tulsa's history, bankruptcy was a real fear.
Unlike the federal government, the city of Tulsa cannot print money to solve its problems. Nor can any mayor or city council vote to raise taxes. There were few revenue options that could adequately avert the fiscal cliff. There was only one option: cut spending.
For too long, city government had been run like a government, not like a business. While some people squeal that government isn't a business and can't be run like one, most often these comments come from those who have never run a business or failed at it if they had. There are, in fact, business principles that absolutely can and must be applied to the running of government. There is no better time to do that than when government is in a crisis.
So what are the lessons that Tulsa can teach Washington about cliff avoidance?
First, know your mission, get back to your core business purpose, and fund those first. Every government has experienced "mission creep," where it is spending money way beyond its central purpose. Washington needs to remember and return to the core mission of the federal government. In Tulsa, through the nationally acclaimed KPMG audit of city government, over 200 funded services were determined to be way outside the core mission of city government, couldn't be afforded, and needed to be eliminated.
Second, if the majority of your government workforce belongs to an employee public union, you have to get control of the cost of these agreements. Unions are not and cannot be protected from the consequences that everyone else is forced to suffer in a bad economy. As hard as it is for unions to accept, everyone has to accept concessions or face the consequences. Those old enough to remember the Reagan years will remember when he fired members of the air traffic control union because they stood in defiance to what he knew had to be done. The city's unions were given a choice: take a pay cut and you don't go over the cliff. Don't take the pay cut and some of you are going over the cliff. Washington likewise needs to get realistic about cutting the size of the federal government workforce.
Third, like a business, make sure that if you are owed money, you make every effort to collect it. How many businesses would let people go months or years without paying a bill they owe? That was the case in Tulsa when it was discovered that as much as $8 million of sales and hotel taxes due to the city were not being collected by the Oklahoma Tax Commission in accordance with the contract the city had with the OTC. How much in taxes owed the federal government goes without being collected? For those of us who pay, why would we tolerate letting others not pay? Before Washington starts talking about new taxes, why not do a better job of collecting what is already owed?
Fourth, Washington should do what Tulsa did: take the "yellow pages test." If government is providing a service that you can find in the private sector, why is the federal or local government in that business? Why would government compete with the private market in providing services? To avert Tulsa's fiscal cliff, over 200 services were discovered to be provided in the private sector. If you let the private sector compete against each other for the right to provide these services, you can drive down cost and drive up efficiency. It's amazing how the profit motive can improve performance. Governments have no incentive to do that.
Finally, engage the private sector and the public in more partnerships. Government has little expertise in any areas of service. If you bring the intelligence of the private sector and the dedication of the citizens into the process of governing, the results can be amazing. Tulsa has seen that in its operation of the zoo, the Gilcrease Museum, city planning, and public safety efforts. The beltway in Washington is more of a wall that keeps out voices with solutions. These partnerships result in lower costs, less spending, and better run operations.
Tulsa avoided its fiscal cliff and has gotten back on better footing. It didn't take scare tactics to do it. It took gutsy leadership by those who were more interested in saving the city than saving their jobs. Washington needs to remember that.
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