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January 8, 2009
Letter to Editor - Crisis
Presents Opportunity for Positive Change
There is no substitution for
innovation and a sound fundamental business approach for City
government even during a crisis. Now, more than ever we need
fresh approaches to help us manage more efficiently, responsively
and creatively in every aspect of our government. We must manage
with greater accountability and oversight. Limited fiscal resources
need not automatically diminish the quantity and quality of services.
Instead of being paralyzed with fear, we should embrace the opportunity.
We need a new budget structure
in place to reverse bad habits, some of which we picked up out
of necessity and others unnecessarily. Using one time monies
to fund operational costs that repeat each year won't cut it
over the long run. We can no longer ignore potential new money
streams just because there is an initial startup cost. New residential
subdivisions bring in new growth monies to the City. A large
percentage must be put aside to address anticipated municipal
costs, such as increased school enrollment and
public safety costs, instead of spending it immediately to cover
unrelated costs. We should always be shovel-ready with an updated
capital improvement plan for infrastructure (e.g. buildings,
roads.)
As the economy continues to slow,
the need for a sound fundamental budgeting process increases
exponentially. The current line item budgeting process practiced
for decades is largely a bean counting exercise that focuses
on one-year at a time. The Mayor tallies up the number of workers
and their associated costs, capital outlays (e.g. new roof) and
expenses (e.g. supplies) in each department and presents it to
the City Council, without ever identifying the high priority
services, performance goals, and the measured results to date.
Instead the cart is put before the horse; the resources are presented
without reference to performance goals and measured results.
How can we responsibly determine where to make cuts using this
approach?
We must incorporate a business
approach similar to the City of Somerville, which has incorporated
a performance-based budgeting process, also known as a program
budget. It puts the horse before the cart. Somerville starts
its budgeting process by first determining the high priority
services to provide citizens. Next, it determines the performance
goals for each service (e.g. minimum emergency response time
to neighborhoods for Police and Fire) and measures the results
against the performance goals.
The measured output can then
be tied to performance and benefit. For example, if $750,000
per year is being spent on street cleaning but public surveys
indicate dissatisfaction, then the city can review how the money
is being spent. This can be accomplished by determining if the
goals are appropriate, and then assess if similar communities,
with equivalent spending are getting better satisfaction. Haverhill
can then make a smart fiscal decision if more money is required,
or if the goals need to be changed, or if fundamental changes
in how street cleaning is done are needed to get better performance
out of this portion of the DPW budget monies.
Then, Somerville determines the
resources needed to meet the performance goals for the high priority
services. The next step is to refine performance goals to match
the available resources on a priority basis, since resources
are a key limiting factor.
Now, the Mayor and City Council
can start budget deliberations by identifying the high priority
services and the performance goals, as well as reviewing the
measured results before addressing the needed resources. And
they will now have a sound basis for making cuts responsibly
when crises hit such as now. This same approach can be incorporated
here in Haverhill and I believe this will take Haverhill to the
next level of professional management and leadership.
A performance-based budget will
allow for focused understanding of progress at routine checkpoints
(e.g. quarterly), and if additional focus or investment is required,
or if the investment is not meeting goals. Further it will encourage
innovation; we will always be seeking better ways to solve problems
at lower cost and higher value. This includes sharing services
and costs with neighboring cities and towns where it makes sense
to do so, leveraging group rates, such as those offered by the
state's Group Insurance Commission, and working with state officials
to reform the pension system for new employees. Further, we must
continuously seek new monies that repeat year after year, including
a proactive marketing campaign to attract industry.
It is important for a municipality
to understand how constituents' money is being spent, and how
this investment is for the benefit of the community. Especially
now when our citizens are making sacrifices to survive in an
economic downturn. Then, we can responsibly decide on cuts.
John Michitson
119 Kenoza Street
Haverhill, MA
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