Meeting the challenge of looming tighter government budgets

Local government budgets are still sluggish. The National League of Cities’ (NLC) newest “City Fiscal Conditions” report, due to be released soon, says, “cities are still recovering from the Great Recession and shouldering the country’s residual economic burden.”

The NLC report summary says local economies are growing, but local governments have had to make sizeable tradeoffs to balance their budgets every year. For example, the Hamilton County (Ohio) government has a looming $29.1 million deficit that could result in 17 percent across-the-board cuts to department budgets.

State aid to Ohio counties has dwindled over the past two decades. Hamilton County received $25 million from the state in 2000. In 2017, Hamilton County received $12 million, which was the lowest the county has received since the 1980s.

Hamilton County’s revenue will be slashed an additional $6 million in 2019 due to a federal policy change. A federal decree took away the county’s right to collect sales taxes on Medicaid managed care, which triggered the $6 million revenue reduction.

“I believe the public procurement profession is heading into another period of resource constraint,” says Marcheta Gillespie, who was director of procurement for 26+ years in Tucson, Ariz., and is now owner-principal of MG Procurement Consulting LLC.

“And, from my own personal experience, I can attest to the massive reorganizations and role realignments that many organizations are facing or have faced,” Gillespie says. She believes agencies will face today’s challenging times in different ways. “While some may need to focus on expanded uses of cooperative tools, others may need to focus on massive process re-engineering, while others may need to focus on modifications to policy (such as increasing competitive bid threshold limits).” Gillespie doesn’t believe there is one right answer on how agencies should address their many fiscal challenges. She adds, however, “The mindset of the agency and their leadership will be crucial to their ability to work through it.”

In these trying times, Gillespie says it is important that public procurement professionals be flexible and that they have multiple skillsets for multiple, dynamic roles. They, she adds, need to be capable of learning to do business differently.

Gillespie says purchasing pros should see these resource constraints and agency fiscal challenges as opportunities. “Bringing a positive and encouraging attitude will help successfully guide procurement staff through the obstacle courses they’ll face over the next five years.” She adds that one of the most important tasks any procurement professional can complete is to build their community–their professional network. “The rich and diverse procurement professional community is filled with answers, options, solutions, ideas and support,” Gillespie says.

Policy changes may help agencies get the work done with leaner public procurement staffs, says Mike Thornton, purchasing manager in Leesburg, Fla. (photo at right). One example he offers is adjusting spending thresholds. “Far too many government agencies have low spending thresholds that require legislative body approval. When setting these thresholds, agencies always look at what other agencies are doing instead of looking at their business and what thresholds would be appropriate for their agency.” Thornton believes increasing spending thresholds could help eliminate red tape related to formal bids and contract approvals for government agencies.

Thornton says procurement professionals have far more tools available for their use today than they did just 10 or 15 years ago. “We have to make an effort to look at those tools, review them and determine if any would allow us to be more efficient. The profession needs to be transformational and not continue with the status quo.”

Michael Keating is senior editor for American City & County and the GPN web site. Contact: michael.keating@informa.com

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