The next recession

The Reno City Council was distressed when it got its first look at City Manager Andrew Clinger’s recommended new budget. It provided for no new police officers, which was the one thing councilmembers wanted. It does not provide for beefed-up code enforcement, which is Mayor Hillary Schieve’s pet project.

We were pleased when the mayor said, “I want this to be a council-driven budget and not a staff-driven budget.” There is a great hazard in government today that staff and agency chiefs get into policymaking that is the function of city councils, county commissions, and the legislature.

Having said that, we hope the councilmembers will listen more closely to what Clinger has to say.

There is a reason that the economic climate we are in is called a recovery of the rich. It is very fragile. As Reuters has reported, “The subpar recovery of the rich world from the credit shock, ’Great Recession’ and euro crisis of the past seven years has left households uncertain, unequal and unnerved. For governments, central banks and investors, the headline rebound has barely masked the legacy of high unemployment, spare capacity and a persistent threat of deflation. With high debts, slack demand, low inflation and near-zero interest rates, theories abound on everything from a ’new normal’ or ’secular stagnation’ for years to come. Looming pressures from aging and retiring baby-boomers only add to the gloom.”

Consumer spending is not something this society can count on yet, and its weak revival could vanish in a few days, as it did a decade ago. Nevada and its communities are particularly frail because of the state’s sanity-challenged heavy reliance on the sales tax.

Four times in the last 35 years, Nevada and its municipalities have been caught surprised and unprepared for a recession. Each time, services the public had paid for in good times were cut because of sharp revenue limits and so were not there for them in hard times. Each time, when recovery came, governments failed to prepare for the next recession, assuming that there is no way to do so. There is. And it is more important to do this time because this particular recovery is so weak.

Clinger is not proposing a Spartan starvation budget, but it is a cautious one. It pays for expected expenses and pays down debt while setting money aside. He is doing what was not done in 1983, 1993, or after the turn of the century.

Sparks City Councilmember Julia Ratti once said that she went into city government expecting to build and instead found herself spending most of her tenure on the council “dismantling everything.” For local officials who have looked forward to the time when they can get back to building up their communities, it is no doubt a disappointment to hear that there are also other priorities. Every governing body must always keep in mind the next recession, whether it is in sight or not.

The city manager was state budget director when the Great Recession got underway in 2007, and his experience should not be taken lightly. It’s good to know this council is in charge, but it should not dismiss wise counsel.