11/30/09

Statement about budget issues read at Nov 30th budget workshop

The City Council is tasked with balancing the budget by the end of the year. This is never an easy task, but in lean years is made more difficult with decreased economic activity, fewer new home impact taxes. General budget advice includes the following five options:

• --Restructure existing entitlement programs
• --Raise base taxes
• --Borrow more money each year
• --Cut Discretionary spending
• --Enhance economic growth

In the case of the City of Washougal, we do not have the luxury of taking advantage fully of all of these options in part because of state and federal mandates.

There is only so much discretionary spending and many of the comments I have received from the public seem to target discretionary spending. For instance, the number one excessive item that is questioned is the sign in front of the construction zone of the pedestrian underpass. This is the sign that says we are spending 2.1 million dollars to improve safety. However such signs are required by the “free” money contracts and grants that paid for the project in the first place.

But even assuming that we did cut out all of the non-essential discretionary spending, there is a point at which that avenue is exhausted, and we still have too little money coming in to fulfill our mandates or other contingencies.

The thing I want to mention tonight is thank you to the department heads for accepting the pay freeze. I suggest that the Council also lead the way in accepting a pay decrease voluntarily.

Also, let us be mindful that our increasing dependence on state and federal grants means that we will have to solve one major issue: how do we cope with a failing dollar and decreased taxes? After World War II, England was in a similar position to the United States today. Their pound sterling was the world currency, and their empire depended upon it. England asked the United States for a loan, and we refused, thus ending England’s ability to hold the world’s reserve currency. The Untied States’ dollar then became the world’s reserve currency. Today, we are at the mercy of our international creditors. If they refuse to continue buying US dollars, overnight, our dollar will no longer be the world’s reserve currency.

It is our duty to begin preparing Washougal for this potential situation. I believe that next year’s budget is going to be even more difficult in light of this, and we should begin considering how we are going to meet that challenge.