Monday, February 6, 2012

Stop Spending and Cut the Budget

This last week has made it more apparent to me a lot of what is wrong with government, at all levels.  This really ruffles my feathers, because those of us in business and HR are trying to help keep/grow employment here in Illinois, sure have a lot of forces working against us.
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Last week started out with an article from Wall Street Journal on the best and worst run states in the country. Illinois was second only to California (49th out of 50) for poor financial performance.  While conventional wisdom would want to blame this on Governor Blagojevich (the latest governor going to jail), our current Governor Quinn has not done much to make matters better.  Governor Quinn was accused by an Illinois Senate Leader of being the emperor with no cloths, while being referred to as delusional by others as he made his State of State speech. He is proposing new programs with new spending, and cost reductions, while the state is rumored to be 180 behind on paying its bills.

Within the same week, here is Springfield our municipally owned and operated utility told the public that due to some issues that had built up since 2005, they now needed to ask the public for a rate hike 9.5%. In a meeting that I attended with the Mayor he explained to us this was due to the  management style of the previous administration.

Further, I will point out that they are doing the same thing in Washington DC, that is continuing to initiate things that we as a country can not afford. Take a look at the Federal Budget Deficit this grows by the minute.

One thing I have learned well in my lifetime is this.  If your financial position is digressing and it needs improvement you must cut expenses or raise revenue - that's it.  Government apparently can not ever cut expenses so they choose to raise revenue.  They do this for many reasons, but then it always turns into the new normal.

For example with our local utility, they undertook to build a new power plant.  They figured on selling power at $50 a megawatt hour.  The price when they undertook to build was near $70 a megawatt hour. Now the price is $30 a megawatt hour.   Their rate hike then is based on $30 power. BUT- what happens when the market returns to $70?  Then, we return to the good old days when funds are plentiful and we spend it- all, and this becomes the new normal. So when we have a minor rollback to $60 an hour it becomes problematic, and again rate hikes are needed.

Government, at all levels must learn how to REDUCE REAL SPENDING.  However, until we get politicians who have the intestinal fortitude to do this (and this will probably involve negotiating with the other party) we are destined to have failed government.   Want to move to Illinois for a job?

-Dave Ryan Director of Social Media ISC SHRM