By Alan Rosen and Andrew Belknap

The Great Recession was an ordeal for local governments everywhere, forcing agonizing cuts and job losses in big cities and small towns. But there is a silver lining, and now that we’re through it, we can look to the bright side.

In the span of a few short years, local government leaders have made substantial changes in the way they do business. They have flattened their organizations by eliminating layers that were not necessary, switched to energy-saving systems and equipment, modified benefits, and reduced staffing by eliminating duplication and low-value processes.

The changes were often painful, but driven by economic reality. In local governments, budgets must be balanced. As local economies continue to recover and revenues rise, the first impulse is to return to the old ways. Indeed, managers know there still is demand to restore services, increase pay, and reinstate positions that were cut.

Smart leaders know better, for the truth is that some of those changes forced by the recession were good for organizations. The challenge is to preserve the positive changes and improve operations from the new baseline as revenues have come back.

It won’t be easy, of course, but by being intentional about how rising revenues are used, local government leaders can build organizations that are stronger than ever and better prepared to withstand the next economic downturn.

Here is a sequenced list of priorities to guide management decisions in response to the economic upturn.

 

1. Restore the financial base. If you didn’t have to borrow from restricted funds to help the general fund during the downturn, consider yourself fortunate. If you did, restore those accounts before doing anything else. Look at the positions you’ve held vacant and fill only those that are crucial to current service delivery.

2. Review employee compensation. If you’re still using furlough days, make an investment in morale by eliminating them. Provide a general salary increase if you’ve fallen behind other local governments, and provide increases for positions where you’re losing employees to other jurisdictions or you can’t fill vacancies. But keep tuned to private sector patterns and don’t overindulge.

3. Invest in a new or updated strategic plan with full participation by senior managers and, preferably, with council guidance and approval. So much has changed in the past few years that it will benefit your organization to agree on goals and the best way to reach them.

4. Create a long-range financial plan that is structurally balanced at current revenue and expenditure levels. This should include the spending required to support quality operations in areas like information technology, building maintenance, and fleet replacement. All of these areas were easy to neglect in the depths of the recession. Then, and only then. . ..

5. Evaluate additional spending that will improve services to the public or your staff’s compensation, along with the revenue sources to pay for them. Some local government offices, for example, were closed on alternate Fridays to save money. Put the customer first and consider opening the doors again!

 

“Never let a good crisis go to waste,” Winston Churchill advised. With the approach outlined here, you won’t. Instead, you’ll use the new normal to execute carefully sequenced planning for the future. It will benefit your community and your organization over the long term.

 

Register for the ICMA Annual Conference

Join us September 17-21 in Columbus/Franklin County, Ohio for the 2022 ICMA Annual Conference.

Register Today

Advertisement

JOIN ICMA TODAY!

ICMA provides the tools, resources and connections to help you become part of the international network of 13,000+ local government management professionals.

BECOME A MEMBER