“Ann Arbor’s two city-run golf courses have lost a combined $2.25million over the past five years, requiring a sizable subsidy from the city’s general fund. The city’s plan to resolve the deficit is to eliminate the golf course enterprise fund at the end of the 2012-13 fiscal year and transfer golf operations to the general fund starting July 1. That means the golf budget will be included as part of the city’s nearly $80 million general fund budget that pays for core services like police and fire protection.”  -Ryan Stanton, annarbor.com

Golf courses can be problematic for local units of government as they typically require subsidies from other government funds to operate in the black and are ripe for state mandated “Deficit Elimination Plans”– which is kind of like being in the penalty box.

Is it realistic to think governments can run like businesses? There are many opinions – some say yes, many say no way! But is there a common ground somewhere in the middle?

1) The Ability to Scale

This is perhaps the first thing to debate: how governments and businesses differ in their ability to scale. If a manufacturing company sees demand for their product drop, they can almost immediately cut production capacity by slowing down the supply of incoming material, cut manufacturing hours or shifts, and even shutter plants. Government, on the other hand, is a services provider to their customers (the taxpayers), that must continue to provide a fixed level of services to a fixed geographic area with a fixed number of people no matter what the revenue stream. Obviously there are some ways to adjust, but lower revenue does not change the demand for services. Governments cannot make linear decisions on direct labor cost reductions like a manufacturing company can. Inherently, government will be slower to respond (or scale) to revenue reductions, but respond they must! In either case, raising prices (or taxes) is not a popular option for either sector.

Remember dancing to your favorite 45s,cruising to an 8-track tape or popping a cassette into the stereo? Seemslike a long time ago, doesn’t it?

That is because these all representtechnologies of the past. Even the once-mighty compact disc appearsheaded for extinction. One recent survey indicated more people are now streamingmusic rather than buying it.

Records, tapes and even CDs are just datastorage systems by other names – they’re just like file folders, zip drives andhard drives. All are yesterday’s news. Each system has its virtues, buteach has the same major limitation – each can only contain a limited amount ofdata and can only be accessed in one particular setting.

Not so with the expanding internet and cloudcomputing.

It’s all in the numbers and the simpler they are – the easier they are to understand. That is why Munetrix uses a single digit number as a barometer to gauge the financial health – or stress – of local governments and school districts.

We use Michigan’s single digit Fiscal Scoring System, augmented by our color-coded highlights. It makes for an eye catching display that is easy to understand. Financially healthy jurisdictions tend to have a smaller number, highlighted in green, while their stressed counterparts tend to have a larger number, highlighted in red.

This methodology allows for quick identification of those who may be taking a turn for the worse, highlighted in blue, while giving them enough time to avoid a problem. These data representations are a tool to help jurisdictions make educated, fact-based decisions about their finances. They also give a clear, concise financial picture to government officials and the people they serve.