Coping with Revenue Shortfalls
Coping with Revenue Shortfalls
Making big decisions is not easy; in fact it might be one of the most difficult things we ever have to do. The tendency is to postpone decisions as long as we can and put of the pain. Deciding to not make a decision is a choice in itself. This particular case study is a problematic one, because there are many concerns to think through when trying to improve a budget
Issues
Kimu County’s economy is weakening due to reductions in federal and state grants, disapproved court decisions to increase spending on county correctional facilities, business failures, and rising unemployment. Two apparel factories closed creating five hundred unemployed workers and a five percent reduction in the county’s taxes. As a result of all the failing businesses and rising unemployment, the budget analysts are predicting serious revenue shortfalls.
To measure the magnitude of the county’s revenue deficits, the board of commissioners held a meeting with Tom Liki and Rachel Timons to get an update on the revenue projections for the next fiscal year. Timmons noted that her office expected a shortage of $1.5 million for the next financial year if no additional revenue were raised. The Budget stabilization account that has help provide a cushion for Kimu County in the past, will not be able to cover the expected insufficiencies during the next fiscal year.