Tuesday, March 17, 2009

Editorial: Belt tightening good, but don’t squeeze too tight

Kenai Peninsula Borough Mayor Dave Carey is right in taking a cautious approach to the borough budget this year. Financial storm clouds are on the horizon — with a drop in oil prices affecting state revenue sharing, a decrease in sales taxes from the exemption of nonprepared food and a question mark over how much the borough will feel the deepening national financial crisis. Whether the storm amounts to a drizzle or a hurricane, it’s good fiscal policy to put sandbags in place now, before the rains come.

Carey has asked all departments to submit budgets with no more than a 4 percent increase. He’s looking at service areas and grants for ways to save money and avoid costly obligations down the road. He’s also instituted a zero-based budgeting approach to the nonprofit organizations the borough has funded in the past, meaning the organizations will have to justify why and how much the borough should fund them.

These are all sound financial practices, and Carey’s desire to lower the mill rate to keep more money in taxpayers’ pockets is an idea that’s sure to be popular.

That desire can be carried too far. Government’s role is to provide essential services on behalf of the people funding it. But when “essential” is defined too narrowly, it does a disservice to residents, even if it means they have some extra cash after tax season.

In the case of the nonprofits, they do a service to the borough far beyond the value of the funding they receive. They leverage local funding into much more on a state and national level, and do important work with it without the borough having to hire people or create programs.

There is a line that delineates what’s proper for the borough to fund and how much that funding should be, and this is a good time to examine it. If the mayor and assembly decide to cut, they should do so with their eyes open the full impact those cuts will have on these organizations, the services they provide and the revenue they bring into the borough.

Belt tightening is in order, but let’s not strangle ourselves in the process.

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