Renton is a growing city that is positioned well in this region to attract new development, industries and employers that offer high-paying jobs. I firmly believe in our future as a leading city in our region. But things will not return to the old ways of doing business. The current economic realities show that this is no ordinary recession and there will be significant changes as our economy begins to rebound.
People from all walks of life are tightening their belts. Every family knows what it means to make tough choices in these tough times. But people also understand the importance of making the right choices. They identify their most important priorities, and change their spending habits to live within their means. That’s exactly what local government must do.
For a number of years, local government has been headed for a financial crisis brought on by a structural flaw in our source of funding. Property tax, our main revenue source, is capped by the state at 1 percent growth on what we can collect. We have been living on revenue from the booming economy, one-time money that has allowed us to keep up with the rising cost of doing business. Our costs of providing services continue to escalate faster than the revenues we collect. The public has an inherent lack of trust in government’s ability to effectively manage tax dollars and at the same time many citizens expect government to solve all their problems, assuming they have already paid for these services.
Renton faces the same challenges as other local governments — rebuilding public confidence, prioritizing and reforming our way of doing business to improve levels of service and sustaining service levels that meet public expectations with fewer resources. We also have the challenge of effectively communicating to our citizens what we’re able to do with existing resources, as well as promoting our successes.
This economic crisis is also an opportunity for us to break free and reinvent ourselves. This is the time to develop and articulate a new vision for providing city services in the future for this growing community. We need to focus on building public trust in our ability to effectively manage local tax dollars, redefining our core services and introducing new ways of doing business that improves our efficiency with fewer resources, while still finding ways to enhance the quality of life for our citizens.
I recently read a report, authored by Richard Rumelt, a professor of strategy at UCLA’s Anderson School of Management. He refers to this financial crisis as a “structural break with the past” — the underlying structure has changed dramatically, so old ways of doing business no longer work.
He also stated, “A structural break is the very best time to be a strategist, for at the moment of change old sources of competitive advantage weaken and new sources appear. The wrong way forward in a structural break during hard times is to try more of the same.”
I suspect the same principle can be applied to how and what city services we deliver. It’s time to rethink the way we manage and how we will look in the future as a municipal service provider. It’s time to create a new business model for the city that will likely look different than what we are used to.
As a first step, this year we are taking a non-traditional approach to our budget process. We are using zero-based budgeting focused on establishing core city services that are valued by our citizens or are mandated, establishing key indicators to evaluate how effectively we are delivering these services and making choices on how we invest for the future. With zero-based budgeting, rather than building on a previous year’s budget, each city department’s budget starts at zero. Programs and activities are reviewed and ranked according to how they meet the city’s priorities. We are setting tangible goals and accountability at every level so we can measure our progress.
This process is challenging — in tough times we are forced to scale back and there is a tendency to focus on the short term rather than plant the seeds for the future. Yet this is the time for us to emphasize creative forward-thinking and foster an atmosphere of innovation. The recession will pass and by making the right decisions now, Renton can and will emerge stronger and more prosperous.