Now is time for restraint
As I was sitting in City Hall during the recent swearing ceremony of the new Whitefish City Council, I found the public comment to be the most interesting. For the most part, the comments represented a summation of the issues that have challenged Whitefish last year, to include the controversial street-widening project, the extension of Seventh Street, and concern over the tone of the last election. What was not addressed, however, is the need for fiscal restraint to reflect the state's most recent economic forecast.
According to Terry Johnson, the state's legislative fiscal analyst, revenues at the state level have dropped more than $270 million below from what was projected at the end of the last session. Johnson now predicts that the fund balance for the period ending in June 2010 will be just $16.9 million out of a $3.7 billion dollar budget. If the drop in revenues continues and the economy continues to stall, legislators walking into the next session could be faced with a shortfall of as much as $500 million. This is a significant turn-around from the surplus-rich economy that was fueled by high farm commodity prices, strong oil and gas revenues, and low unemployment.
As some might recall during last session, many legislators supported keeping the spending throttles open, believing that the state had an endless supply of revenue. Faced with a split house and a slim majority in the senate, it was a battle to keep government growth down to even single digits.
The session ended with what I thought was a prudent $250 million in reserve and a structurally-balanced budget where revenues appeared to match expenses. That was then, this is now. The bottom line is that the state faces a budget that is spending more than it is receiving in revenue.
Fortunately for our children, our state constitution does not allow the state to endlessly borrow money, so the choices are narrowed down to two options — cut spending or raise taxes. I favor the former.
No matter the outcome, however, what is certain is that there will be less money in the state coffers to fund county and city projects. Counties and cities will be asked to either increase matching funds for projects or simply do it on their own. The governor's office has already called upon his departments to begin planning for budget reductions. Whitefish would be wise to follow his lead.
My call for fiscal restraint is not a criticism of the leadership of Mayor Mike Jenson or any previous council member. For the record, I respect and support Mayor Jenson and am grateful for the contributions of the outgoing council members. While many may not have agreed with every vote, I am confident that every vote was cast with the best interest of Whitefish in mind. To me, Whitefish is more important than politics.
As a member of the Senate Finance and Claims Committee, however, I strongly encourage Whitefish to place a temporary moratorium on new spending until a zero-based budget review can be conducted to determine the type and level of critical services that are required.
Since Whitefish has exhausted its ability for additional bonding, any unforeseen spending or drop in revenues would have to be funded by either raising taxes (or fees' or cutting services.
To that end, it is better to hope for the best but plan for the worst. I believe it to be fiscally responsible for Whitefish to develop a contingency plan for budget cuts up to 10 percent from the current budget of around $20 million.
Sounds tough? It will be. Zero-based budgets are painful at best and made even more difficult by service contracts and other complex contractual obligations. A bottom-up budget review will take courage and thoughtful consideration, but I am optimistic that the present council has both the ability and right balance to lead from the front.
Sen. Ryan Zinke, R-White-fish, represents SD 2.