I speak often on the behavioral differences between various generations in America. It can be seen in the way they work, the way they communicate and even the way they eat. However, I’m not sure there is more of a stark divergence than how they consume media. Traditional forms of media such as newspapers, radio and TV are still the bedrock way people over the age of 50 get their news and information, However, these outlets are not as popular amongst younger generations that increasingly utilize digital formats such as social media, video streaming and podcasts to get their information. As such, the way in which I communicate has to evolve as well. That’s why last summer I started the Common Cents Podcast to get my message out to an even larger and more diverse audience.
Recently on that podcast, I interviewed Independence City Manager Zach Walker. During our discussion about his role overseeing the city’s budget, he shared several financial truths that I think are just as relevant to us as individuals as they are to other government executives. Today, I thought I would share a few of those with you.
Truth #1. Setting financial priorities is vital. When asked how you even start developing a working budget for something as large and complex as a city budget, he said you have to start with what is most important. He pointed out that elected leaders always have far more they want to do than is financially viable. He argued that the trick is to make sure all of the basic things are covered first. Streets must be plowed, people and property must be protected, electricity must be generated etc. Only after those things are taken care of, can you begin to consider more discretionary spending projects.
The same can be said for us and our budgets. Don’t even start thinking about vacations or new toys if the things you need to survive are not fully covered.
Truth #2. You have to be flexible and ready to pivot. One of the things we talked about in depth was how drastically the way in which tax revenues are generated has changed in the past few years. Historically, Independence relied heavily on retail businesses for much of its annual revenue. However, with the growth of e-commerce has come the decline of brick-and-mortar retail. This has resulted in a reduction of both sales tax and commercial property tax revenues the city receives from these businesses. He acknowledged that it has forced the city to shift its focus to attracting other industries such as distribution centers, and light manufacturing as well as others.
How many of us may be working in industries that are slowly dying? To be successful we may be required to consider changing careers to remain marketable as employees. This isn’t always easy, but it may be a necessary step we have to take as well.
Truth #3 Don’t spend temporary money on permanent expenses. Like seemingly everyone else, municipalities were infused with large amounts of cash during the pandemic. I asked the City Manager what his strategies were in using that money as effectively as he could. He pointed out that unlike many cities that used the money to hire or increase wages, the City of Independence used the majority of their funds on one-time expenses or clearing liabilities. The reason was simple. If one-time grants are used on things that are going produce additional expenses in the future there is a high likelihood those expenses will not be able to be paid for once the initial money runs out.
I found this particular perspective to be extremely wise, and told him so. In my line of work, I will sometimes see people who unexpectedly come into a sum of money. Whether it be an inheritance, legal settlement or some other way. Too often people in that situation use poor judgement in how it is spent. They often fail to consider the long-term ramifications of their decisions and the blessing those funds should have been become more of a curse.
The interview was really quite enlightening for me and I would encourage you to check out the whole interview online if you are interested. I think for me, the key takeaway I took from our conversation was, outside of the extra zeros behind every decision, managing millions of dollars is not that different than managing thousands. The same principles exist as do the same challenges.
Click here to listen on YouTube: https://youtu.be/x02QeDlDyM8?si=rIIgRvAQ2a5-fmnP
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)