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David Reynolds: Baggage

It is difficult to move forward if you are carrying a lot of baggage. Most governments have baggage that is holding them back. As a result, current budget discussions will likely not bear fruit. Instead, we kick the can down the road until the next budget season when the same can will be found sitting in the middle of progress.

However, it is possible to clear away baggage and make budgets serve today, rather than yesterday. But it’s not easy to toss out all those frills and nonessential services which governments, just like people, tend to pick up over the years simply because they are “nice things to have.” Then one day all those nice things in your pack start to weigh more than essential food and water. And you stop moving forward.

That one day is today. Governments on both sides of the pond – and those right here in the valley – are in trouble. Our leaders are pilots forced to make emergency landings. Costly jet fuel must be dumped for a safe landing to take place. As a result, what was once considered essential becomes unnecessary baggage.

Allow me to pass on two lessons learned about how to get rid of such baggage. One was used in Georgia and later tried in Washington. While not totally successful, it set the tone for today’s budget cutters. The other lesson learned involves a world where every international currency trader must leave his ego at home before he goes to work. What you did yesterday, or just before lunch, is not relevant. The only thing that matters is the present.

First, the domestic lesson. A man from Georgia become the man in Washington. Jimmy Carter was able to take that journey because he had built a reputation for sound fiscal management in his home state. The new president brought in his old state budget director, Bert Lance, to implement Zero-based Budgeting at the federal level. Many say that it failed. I disagree. From 1977 to 2005, under both Republican and Democratic presidents, the federal government began to take the sanctity out of base line budgeting. Budgets were cut below the previous year’s amounts. Give Carter, and then Reagan, the credit they are due.

Unfortunately, most local governments, in Virginia and elsewhere, still worship the base line. Forget those “Everything is on the table,” public utterances. The table is not level. It slopes up. That’s because declining budgets tend to be associated with losers.

This brings us to a second lesson – one that can be applied to an individual’s investment portfolio, as well as to governments. At the World Bank in Washington new employees and contractors are given tours of the bank’s operations. It includes a visit to the trading room where untold amounts of international currencies are bought and sold. I remember the guide saying, “If we ever discovered a trader making a move based on what he or she did previously, that person would be let go.” In other words, one’s ego wasn’t allowed inside the trading room.

How many times have you heard in reference to whether or not to sell a stock — or a home, “All I want is to get my money back?” Too many. And how times have you heard, “I am cutting my losses?” Not enough. Yes, our biggest enemy is ourselves — our egos. Bragging rights can be expensive.

Let’s use the City of Buena Vista as Exhibit A and ask some questions about baggage from yesterday. What should be saved for tomorrow and what should be dumped.

– Would we build a public golf course today with golf a declining sport? If not, let’s get rid of the one built yesterday.

– If we can get by with three schools (the current superintendent says we can!), why have four?

– Should teachers pay 1-2% more for their share of retirement costs? Why not? Look at what happened in Wisconsin.

– Would Buena Vista have its own school division if the state did not pay 70% of its cost?

– If BV is truly an “independent city” why is it so dependent on grants and subsidized loans from elsewhere, such as $2,613,566 for the Dickinson Well Filtration Project and $510,000 to fix a school’s old heating plant?

–  What are the savings if the city’s classification is changed to second class? If the same Sheriff’s Office can serve both Rockbridge County and Lexington, why can’t a single office include Buena Vista? Ditto for the courts and the Commonwealth’s Attorney’s office.

– Is recreation, i.e., Glen Maury Park, a core function of local government? Why not shift emphasis from costly recreation to less-costly and higher priority land preservation?

– What’s wrong with being a town within a county? Glasgow and Goshen don’t seem to have any complaints with Rockbridge County.

– What are the economies of scale in consolidating common city and county administrative functions? Staunton and Augusta County have started doing it.

Just asking.