“Balanced Budget” Amendment is a Bad Idea

The idea of balancing the budget sounds fine. It means the expenses do not, or are not supposed to, exceed revenue. Good accounting practice.
That idea has a lot of appeal. However, in the case of government, it is not a good idea. The best plan is to reduce expenses, so that increases in spending do not exceed revenue. In the case of the “balanced budget” practice and school of thought, it is far too easy to spend at will and increase taxes on citizens to meet the obligations.

In the case of government, elected officials have continual pressures to provide constituents with services that will lead to reelection. This is understandable, but it is also corrosive. Many expenses are not negotiable, but many can analyzed and successfully reduced.

Please read this letter from a CEO of a large hotel that was sent to the mayor of a medium sized city. Notice how necessary expenses are handled between the employers.

Then, after you have read the letter, let’s comment on it and try to figure out similar approaches for governments and agencies that we are familiar with.

Subject: City Budget - This is very enlightening from the CEO