A Fresh Strategic Approach for Cities, Towns and Counties
Latest News
It would be an understatement to say the world of local government has changed in three years. Think about where we were throughout most of 2008. The financial world was pretty rosy. Credit was easy to come by. The construction and housing markets were still booming, and we couldn’t imagine a time when real estate didn’t increase in value every year. The national unemployment rate hovered around 5%.
Yes, we could see property tax caps on the horizon and anticipate some budget belt tightening – depending on your area’s economic circumstances. But for the most part we could predict our budgetary future based on what had occurred in the past.
Oh my.
Things did change dramatically – and not just because of the national financial crisis in banking, credit and investment performance. Indiana lost jobs to the recession – meaning that income tax collections were reduced statewide, and along with them the Local Option Income Tax (LOIT) you had planned to use to replace lost property taxes were reduced as well. Property tax revenue took a triple hit: 1) from the tax caps and uncollectible taxes, 2) the anticipated increase in Total Assessed Value (TAV) from trending didn’t materialize and 3) TAV actually went down in many places because of declining property values.
It is just a reality that when tax levies increase at a rate greater than assessed value, local governments will experience financial difficulties. This trend will not only continue, it will likely get worse for many of us over the next few years, even if the economy continues to improve.
Unfortunately there are no easy solutions. But there are sensible ways to approach the current circumstances.
In the next few issues of Footnotes, we’ll take a look at how one Indiana community followed a data-driven path to project its revenues from various sources, determine a new revenue mix, develop a financial plan, analyze its services and benchmark itself against comparable communities. In short, they strategically prepared their city for the new financial realities.
We think you’ll find it interesting to follow their journey.
As cities, towns and counties plan for 2012 – some of you with new administrations and others settling in for another term, this is a good time to take a fresh look at where you’ve been, gather and analyze data and begin a creative path to your community’s future.
If you have questions or need help with budgets, efficiencies or projecting revenue, please contact us at footnotes@umbaugh.com.
Give Article Feedback »
|
E-mail Umbaugh »
|
Print Article »
Information in this article was believed current as of the date of publication. As you know, changes occur frequently. The information presented is of a general educational nature. Before applying to your specific circumstances, please contact us at footnotes@umbaugh.com.