When local governments suddenly face recessions similar to the ongoing pandemic, there are pressures to react swiftly.
Oftentimes, the reactions are based on cutback budget habits instead of careful management of the existing or expected budget deficit.
Northern Illinois University faculty recently took part in a discussion that focused on providing leadership during financial crises.
The presentation focused on three points to guide budgeting using research from previous recessions: leadership and management of cutback budgeting decisions, framing cutback discussions, and thinking about immediate and long-term strategies.
Kurt Thurmeier, chair of the Department of Public Administration, said throughout history, recessions last, on average, about 10 months.
“It is important for us not to panic,” Thurmeier said. “We don’t know how long this recession will last, but we know the average length, and that helps us plan accordingly.”
Thurmeier said it is important for local governments to dip into rainy day funds before making any type of budget cuts such as layoffs or eliminating capital projects.
Assistant professor Chris Goodman said there is a lag in data and distributions from state-collected revenues, so the full extent of revenue losses won’t be known until much later. He also said the recent employment report may alter the near economic future.
“The encouraging jobs report might lead Congress to not enact a Phase 4 for state and local governments and other entities, so there might not be any more federal help coming,” Goodman said. (