Public Policy Forum Blog

Will economic crisis breed government innovation?

The Forum's recently released report on the City of Milwaukee's fiscal condition includes a small section discussing how other cities are grappling with their recession-induced fiscal challenges.

We essentially found two camps: those looking to "ride out the storm" by implementing one-time savings opportunties (e.g. employee furloughs) and tapping into reserves with the expectation that revenues would rebound once the economy recovers; and those who were convinced their challenges were structural in nature and would dissipate only slightly in a recovering economy, and who therefore sought long-lasting budget solutions.

A cursory review of newspaper headlines in the past couple of days yields additional insights from three different parts of the country, all distinct yet all with potential relevance to local governments and school districts in southeastern Wisconsin.

  • In Phoenix, which recently cut 1,000 positions to bridge a $270 million gap in its budget that began July 1, a continued lag in sales tax revenue is forcing consideration of another round of mid-year cuts. While elected officials likely won't consider major budget fixes until early next year, city managers are getting started by asking employees to scour their own daily activities for savings. Examples include new policies on opening window shades instead of turning on lights, an intranet marketplace in which employees trade and recycle unused office supplies to avoid ordering new ones, and requirements that employees empty their own trash and recycling bins.
  • In Detroit, newly elected mayor Dave Bing is contemplating widespread privatization of services not deemed to be part of the city's "core" mission. According to the Detroit Free Press, Bing's definition of core services are public safety, water and sewerage. He says everything else will be on the table for potential outsourcing, including internal services like accounting and payroll, and direct services like trash collection and running the transit system.
  • In New Jersey, smaller towns and cities are considering consolidation of services to an extent few thought possible. Ideas such as consolidated police and fire departments, merged public health departments and joint trash collection are receiving serious consideration as a result of threatened cuts in state aids combined with state financial incentives tied to shared services.

Here in southeastern Wisconsin, we have seen some beginning rumblings of similar efforts, such as the potential moves to consolidate police services in Pewaukee and Jackson, and a Milwaukee alderman's request to city workers to identify savings opportunities. We also have seen some interesting new approaches to labor relations, such as West Allis' proposed deal with employee unions to tie pay increases to the city's overall revenue picture.

It is commonly said that crisis breeds opportunities for positive and innovative reform. As county, municipal and school district leaders get set to unveil budgets in the next few weeks, it will be fascinating to observe whether government ingenuity and innovation emerge as a silver lining of our long and painful economic downturn.

Rob Henken