I would like to rebut Mr. Cheatum’s LTE “Budget Philosophy” dated July 15, 2021. This is an attempt to educate on the proper way to balance a budget, and to give the people of Pocatello a better understanding.
According to the Government Finance Officers’ Association (GFOA.org) there is a big difference in fulfilling a state mandate to balance a budget and working towards and achieving a structurally balanced budget. To fulfill the mandate, a municipality may use reserve funds, or excess reserve funds, as advocated in the LTE. This is tantamount to having a household income of $1000.00 with a total amount of bills due in the amount of $1500.00 per month, and dipping into one’s savings account each month to cover the $500 gap. At some point, that savings account will be at $0 not just because one’s been dipping into it, but because the expenses are far more than the income, there is no ability to save any money.
According to GFOA, a structurally balanced budget, which is the true responsibility of those in governance, is one in which the income to expenses ratio is at least equal if not greater. This is the type of sustainable budget that governments should be working towards.
The model espoused in the LTE is exactly the opposite of sustainability, according to the GFOA. So I have one question. If the GFOA defines this as a best practice, then why am I, Councilman Bray and Councilwoman Stevens being vilified for advocating for it?
Pocatello City Council member