Wednesday, June 18, 2014

John's Corner: "What is a “Balanced Budget”?

In May, Council Member Mary Snider said that one of the reasons she supported next year's budget was that the budget was in balance.  I had to smile.  Per se: The fact that a budget is balance means nothing. Looks like Snider got it wrong again!

A balanced Oro Valley budget simply means that the town staff has identified the revenue that is available and matched it to the expenditures that the department managers want to spend that year.

So to Council Member Snider we say: The fact that a budget is balanced is no reason to approve it.  You had to look at where the funds are being spent, Mary, to make that determination.  You ask: Are the expenditures necessary? Are they prudent?  That is, what is the quality of the spending?  Making this assessment requires looking at the budget which, I suspect, Council Member Snider never did!  That would require investing significant time and effort. Which I do.

Why do you have to actually look at the quality of spending?

Let's take a personal situation as an example.  An individual looks at their take home income and estimates what their day to day expenses will be and tries to balance them with their take home income. If they are successful in doing this, there will be in mathematical balance (income = expenses). That's easy.

However, this same individual may have set aside an expenditure for $10,000 for a “dream vacation” in Tahiti instead of money for his children’s college education or his own retirement. So, in spite of the mathematical balance they may not be very prudent about expenditures.  In other words, the quality of their spending does not meet their needed objectives.

We have heard “Ad Naseum” that the Oro Valley Town Staff, Mayor and Council have always achieved an Oro Valley “Balanced Budget”.  This is not big deal.

In tough economic times, governments, like you and me, need to “tighten their belts” and not just balance the taxpayer revenue to meet taxpayer obligations. The government has a fiduciary responsibility to the taxpayer. We have seen our federal and state governments spend money without justification and ignore the taxpayer. We think that this coming year's Oro Valley budget is full of things like that.

There are many examples of Oro Valley expenditure money set aside in the so called 2014-15 “balanced budget” that do not have any justification or have questionable legitimacy. So, in spite of a mathematical balance in the Oro Valley budget, there may be many expenditures that the taxpayer would not agree or condone spending. However, the taxpayer or citizen has very little real input into the budget process.

Oh, and one more thing. Does anyone know where the Oro Valley Police get their funding for all those new Victory motorcycles? Lap of luxury, are those!

John Musolf retired to Oro Valley in 2003, moving here from Wisconsin. He has a B.S. in Economics/Accounting from University of Wisconsin and MBA in Computer Management from the University of Phoenix. He has taught Project Management at a number of Universities. He is a “Bucky Badger” and “Packer Cheesehead.” One of his married daughters went to college at University of Arizona and he and his wife visited her in Tucson frequently. John was a management consultant (accounting and computers) and traveled all 50 states as well as the world internationally. He was a political activist in Wisconsin and continued on in Oro Valley. He believes in traditional values. He is an old codger (1937) being a father, grandfather and great-grandfather. He will slow down when he becomes a great-great-grandfather. He has been married to his wife, Judy, for 54 years. His other interests include church activities and extensive reading and researching.

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