By Larry Baytos
The Naples Daily News recently reported an economist’s forecast of local housing prices. The forecast predicted that during the 2014-2017 period, home prices in the Naples-Marco metro area will increase by 37 percent!
This reminded me of similar rosy forecasts a decade ago that unfortunately contributed to the real estate bubble and an unwarranted expansion of both the private and government sector. (Just look at the number of half-empty strip malls around Naples-Fort Myers.)
My concern is that 37 percent home price appreciation prediction might once again prove to be a mindless extrapolation of recent data rather than prescient analysis.
Therefore, I was curious to see if the county manager and Board of County Commissioners had factored rosy forecasts of property tax revenues into their budget process. It was reassuring to see the approved fiscal 2014 budget expenditures are up only 2.1 percent over 2013. Furthermore, there are zero increases in headcount budgeted.
Devotees of small government should applaud such restraint. But was the BCC too stingy? During my four years on the County Government Productivity Committee (now defunct) we consistently urged moderation in budget growth. And now I find myself in the unfamiliar position of recommending that the BCC spend a bit more for two specific areas.
Construction is a pillar of the local economy. Nothing gets built (or modified) without a trip through the growth management departments on Horseshoe Drive. These departments are mostly funded by service fees (e.g., building permit fees). As a result of the collapse of the local construction industry, county permit fee income declined by 58 percent from fiscal year 2005 to 2009; painful staff reductions necessarily followed. Going through the permitting process on a 2012 renovation project for my community’s homeowner association, I was startled by the number of empty desks and darkened offices at the Horseshoe Drive government center. But now construction is in the midst of resurgence and I’ve heard contractors express concerns about a slowed response time on projects submitted.
The approved Growth Management budget for fiscal year 2014 is up only 7.5 percent from 2013. I applaud the county manager’s and BCC’s restraint, but this is one area where spending produces benefits. If the county can invest in a few more people, it will reduce the time it takes to get high-value projects under way and on the tax rolls at a higher rate. (Think of property taxes for a $100,000 lot versus $500,000 market value for that lot with a new home on it.) And there are multiplier economic effects of construction activity including employment of subcontractors and construction workers, retail sales, employment of service providers, etc. An analysis should reveal that some extra money for permitting related activities would be well spent.
Past expense reductions often required elimination of professional positions. When layoffs of knowledge workers take place, it usually means that jobs have to be combined; i.e., some individuals must do the work of two people, three do the work of five, etc. Because of budget restraints, the reward for the added responsibility may have been small or none.
Rather than splitting those jobs in two again (because the revenue will be available to fund more positions) consider keeping these enhanced jobs and rewarding the individuals for their greater responsibilities and contribution. During my own career I was assigned the duties of another individual while retaining all my previous duties.
While it was a stretch for me, the necessary work got done and it was one of the most innervating periods of my career. It’s a win-win; control expenses and enhance careers.
After many months of recovery, most private sector and government organizations have not matched staffing levels with revenue increases; the county manager and BCC are on the right track. Lean management structures are the “new normal.” Lean government can be effective and it certainly makes for happier taxpayers.