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Time for state government to also ‘tighten its belt’

By Sandy Forstner

For months, the city of Austin and Mower County have been anticipating reductions in aid, due to the state budget crisis. Those reductions are now imminent as Gov. Tim Pawlenty plans to use his unallotment authority to balance the state’s budget.

Both the city and the county have prepared long lists of possible cuts in spending as well as possible increases in fees and taxes to offset the lost state aid. We encourage both bodies to balance their budgets without any increase in property tax rates or fees. It’s time for government to "tighten its belt" as so many taxpayers have already done.

The fact is government spending has risen dramatically in recent years, far exceeding the rate of inflation. State spending is up over $12 billion over the past decade (57 percent). In Mower County, property tax levies have nearly doubled since 2003 from $8.1 million to $15.3 million. The city’s levy has jumped from $2.2 million in 2003 to $3.7 million, this year, a 68 percent increase. The rate of inflation over that same period, according to the Bureau of Labor Statistics, was less than 16 percent. Even in good times, increases — such as we have seen in the cost of government — cannot be sustained.

Reductions in state aid are a direct result of less tax revenue, due to the current national recession.

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Simply stated, taxpayers as a whole are making less and spending less, and in the process are generating less tax revenue. A recent article in the StarTribune accurately summarized the situation: "The economy’s performance over the last two quarters underscored the grim toll the recession, which started in December 2007 and is now the longest since World War II, has had on the country. Businesses have ratcheted back spending and slashed 5.7 million jobs to survive the fallout. Financial firms have taken huge losses on soured mortgage investments. Banks and other companies have been forced out of business. Home foreclosures have soared."

Austin and Mower County are not immune to the effects of this recession. The unemployment rate for the city of Austin reached 8 percent in April, the highest recorded in decades; county-wide, nearly 1,600 people were without work. Since June 2007, the Mower County Sheriff’s office has conducted 252 mortgage foreclosure sales, an average of more than 10 per month. Businesses are less profitable; many have operated at a loss for more than a year. Dozens have closed. Scores of employees have seen their hours reduced and their wages trimmed.

At times such as this, it is not realistic or responsible to ask taxpayers to pay more. It is realistic and necessary to ask government to do with less. For years, government has been growing at an unsustainable rate. It is time to reverse the trend.

The process will be painful. Government cannot balance its budget by simply reducing services. The majority of costs in both the city (59 percent) and county (53 percent) budgets are devoted to employee salaries and benefits. Contracts are in place that will further increase those costs. Employees need to be part of the solution, and bargaining units should be asked back to the table to discuss options that will minimize job losses and delivery of services to the public.

Public input should also play an important role in the process. Once exact reductions in state aids are known, public hearings should be called to explain options under consideration.

These are difficult times. But our economy will improve. We need to hold costs down now and be prepared to grow in the future.

Government can help that day come sooner by looking for greater efficiencies, trimming costs and avoiding any increases in taxes or fees.

Sandy Forstner is Executive Director of Austin Area Chamber of Commerce. He wrote this on behalf of the Chamber Board of Directors.

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