Managing Tight Budgets—California Style

This week, the IBM Center for the Business of Government released a report on how California’s budgetary experiences during the past several years can provide lessons learned and roadmaps for federal, state and local governments facing fiscal constraints.

In the report “Managing Budgets During Fiscal Stress: Lessons for Local Government Officials,”  Jeremy M. Goldberg of the University of San Francisco and Max Neiman of the University of California at Berkeley analyze the financial experiences of local government in California from 2007 to 2013 and make recommendations for managing agencies under budget constraints. Like many local governments across the nation, cities and counties in California were heavily affected by recent economic problems. The report examines what happened to government revenues during this period, how services were adjusted, how employee benefits were treated, and what innovations were introduced.

The report is based on a Web-based survey of 245 city officials and interviews with chief financial officers in most of the state’s major cities—Sacramento, San Francisco, San Jose, Oakland, Riverside, Pasadena and Los Angeles. The authors write, “There has always been much interest in the state with 12 percent of the nation’s population. The experiences of California provide les­sons for local governments across the nation as they seek to manage the continuing aftershocks of the Great Recession.”

The authors present findings in 14 different areas about the California experience and its applicability to all levels of government. Their recommendations include:

• Identify and address structural deficits in a finely grained manner, leaving no major budget category unexamined.
• Foster citizen engagement to encourage widespread dissemination of fiscal information to enhance the legitimacy of public policy choices.
• Improve the state/local relationship to reduce episodic, convulsive impacts on public finance.

This report continues the IBM Center’s interest in local govern­ment. In 2013, the center issued “A County Manager’s Guide to Shared Services in Local Government,” which addresses how government can save money by improving internal opera­tions. In their survey of local officials, Neiman and Goldberg found that more than 60 percent rate cost containment as a “very important” or “important” factor in reducing expenditures in future years.

(Image via larry1235/Shutterstock.com)