Monday, October 19, 2009

Good Article

In today's Wall St Journal, there is a good article entitled "Governors Try to Convince Voters That Budget Woes Are Theirs, Too".

The best paragraph in the whole article reads 'The recession will force big changes, not all of which have materialized. "We have yet to see the public sector adapt in the way the private sector has," said Mr. Klepper-Smith, also the chief economist and director of research for DataCore Partners LLC. "We can't tax our way out of this problem. Many in local government have yet to appreciate the structural nature of this recession. The cuts have been superficial." '.

How true. Here at ACHD we've made some cuts, pushed projects into the future and used some accounting gimmicks to help cash flow, but we really have never spoken about anything structural in the organization. I think most everyone just hoped things would get better before tough decisions became necessary.

The State of Idaho is seeing a fairly large downturn in it's revenues which for now is $151 million or 3.6%. ACHD shares in the Highway Distribution fund - ACHD receives about $20 million/year. The gas tax makes up a large part of this fund in addition to registration fees, title fees etc. Fuel consumption is down because miles traveled are down and unemployment is up, yet ITD anticipates only a 1% decrease in money flowing to the Highway fund.

If it is a 1% reduction, then that is only $200,000 to ACHD. However, if it's 5%, then that is $1 million.

We would have been better prepared if we had actually taken note of the economic indicators this summer.


At October 20, 2009 at 4:39 PM , Anonymous SGS said...

Yeah, it would be better if you start planning for a several worse cases, rather than to turn a blind eye toward the economic turmoil, and hope for the best. It is unfortunate that your fellow councilmen and women do not want to do anything, not even to talk about the possibility that our economy may not be recovered for the next few years. Just because you have some back-up plans, or even talk about them, does not necessitate their execution. I appreciate your keen attention to the financial state of the populace in the county, and for your effort to bring this to the conscience of the rest of the board. Thank you, and do keep up with this.


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