Wednesday, June 14, 2006

LEARN TO SAVE IN TIMES OF PLENTY

There has to be some incentive for ASG departments to save money instead of spending every penny in their annual allocations. Asking agencies to save money every chance they get, while still achieving their performance goals, allows them to be proactive rather than reactive to budget cuts. Departments currently work under the expectation that if they don’t spend all the money in their budgets, they’ll be punished by smaller budgets next year around. Moreover, if agencies don’t overspend then they will have no justification for asking for more money as well. To address the first issue, the ASG should implement revolving funds, which would allow agencies to use money saved in one fiscal year for the next. As for the second issue, budgets should focus on the agency’s efficiency and performance goals rather than on the previous year’s level of spending. Being thrifty in the good times helps you prepare for the bad. Let’s be the ant not the grasshopper in this story.

1 Comments:

At 1:11 AM , Blogger Stuart K. Hayashi said...

Hey r. Tali Mon, Tali Me Banana, ;-)

You wrote that American Samoa's government "should implement revolving funds, which would allow agencies to use money saved in one fiscal year for the next," and that "budgets should focus on the agency's efficiency and performance goals rather than on the previous year's level of spending."

Terrific suggestions, particularly the first!

When you say that the amount of money put into the government agency's budget should be determined by the extent to which the government agency reached its performance goals the previous fiscal year, do you mean that, the closer the government agency comes to reaching its performance goals, the more money it should get, and that, the farther it is from reaching those goals, the less money it should receive?

For many people, especially in Hawaii and on the U.S. mainland, such a proposition is counterintuitive. If Hawaii's school system was even farther away from reaching its performance goals in A.D. in 2005 than in 2004, most people reason, then this indicates that the school system should receive even more money for 2006 than it did in 2005.

Why? Because a government agency should never be allowed to go defunct and then close, thrusting its employees out of their jobs. The government agency's purpose is too important to allow the government agency to close.

If some dude's private, for-profit gourmet restaurant closes, then it's no big deal; there are plenty of other restaurants out there. But if the only government-controlled elementary school in Mililani loses all its money and closes, then where are Mililani residents supopsed to send their kids aged 5 to 12, huh? What happens to the school employees now out of work?

The same goes for fire stations, city libraries, and dozens of other "public goods."

Are your readers in America Samoa, Hawaii, and the continental U.S. to believe that any peaceful public service agency -- from garbage collection to firefighting to waterworks maintenance -- should be allowed to simply go out of business? If the garbage-collecting government agency goes bankrupt and closes, then who's going to pick up everyone's trash?

 

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