Estimated read time: 6-7 minutes
Editor's note: Curtis Blair is the president and CEO of the Utah Valley Chamber of Commerce. He describes himself as an entrepreneur and business alchemist. Over the past couple of years, Blair interviewed many of Utah County's C-Suite leaders about principles that helped make their organizations successful. He is sharing those principles in a series of 10 articles.
As far as financial advice goes, one principle stands as the cornerstone of fiscal responsibility: spending less than you earn. It is a fundamental tenet that resonates with our common sense — if your expenses surpass your income, long-term financial stability becomes elusive.
Gratefully, Utah has demonstrated prudent fiscal management at the state level. The governor's commitment to balancing budgets, controlling spending, and maintaining a stable financial foundation sets an example of fiscal responsibility for businesses and governments throughout the entire nation.
When Michelle Kaufusi became Mayor of Provo at the end of 2017, she gathered her department heads together to learn about the city, where it was financially and future goals.
One of those goals was to build out the Provo Municipal Airport within the next 20 years. She questioned the timing, knowing the population growth predicted had already started. She began a quest to see if the airport could be built earlier.
By November 2019 the city was ready to break ground on what would eventually be a 10-gate airport. For now, they would build it to four gates.
The city was able to do much of the infrastructure construction with city employees, saving hundreds of thousands of dollars. They also purchased concrete and steel, in bulk, saving even more money as prices were rising. That financially sound thinking proved to be the saving factor for completing the airport.
Little did city leaders know that an international pandemic would force supply chain issues and raise costs enough that construction may have been halted altogether.
"We're proud of the efficiency and cost-savings of the Provo Airport terminal. By being forward-looking, we saved taxpayers approximately $2-3 million through advance purchase of much of the building and construction supplies before the rising costs and supply shortages," Kaufusi said in a 2020 statement to a local newspaper. "In addition, nearly $2 million was saved by using public works employees to clear land, improve the access road and install remaining utilities."
On July 13, 2022 the ribbon was cut on the new airport. The best news was the airport opened debt free.
But what happens when a city, county or state ignores the principle of spending less than you earn? Consider Cook County, Illinois. In the early 2000s, with a population of over 5 million residents, Cook County experienced a severe financial crisis. The county government, led by various administrations, consistently spent more money than it collected in revenue. This resulted in a growing budget deficit and an unsustainable financial situation.
The overspending issue was driven by several factors including the county's public employee pension obligations. Cook County had promised generous pension benefits to its employees, but it did not adequately fund these obligations over the years.
Additionally, Cook County faced rising healthcare costs and other expenses, further straining its budget. The county government relied heavily on property taxes as a source of revenue, but the tax burden on residents became too burdensome. As a result, businesses and individuals started leaving the county, leading to a decline in tax revenue.
The financial crisis in Cook County peaked around 2007-2008 when the recession hit the United States. To address the long-term financial sustainability of the county, Cook County undertook significant reforms. The county government implemented stricter financial oversight and accountability measures. They focused on increasing revenue through economic development initiatives and diversifying the tax base. Cook County worked to reform its pension system, aiming to reduce the burden on its budget over time.
While the county still faces ongoing financial challenges, the reforms and efforts to address overspending have helped stabilize its financial situation. The experience of Cook County serves as a cautionary tale about the importance of prudent financial management and the consequences of overspending for local governments.
While the principle of spending less than you earn may seem self-evident, it is worth reiterating the importance of analyzing one's income, creating a tailored budget and exercising discipline to eliminate unnecessary expenses while avoiding frivolous debt.
However, sound financial management alone cannot guarantee a secure future. The rising costs of essentials, such as food, transportation, education, medical care and housing present challenges that outpace wage growth. To address this predicament, leaders must take a proactive approach to shaping communities and advocating for principle-based financial solutions that promote a heathy business climate.
Tim Larsen, a 43-year partner at Squire & Company, PC addressed the importance of safeguarding stable financial systems. "The state of Utah has experienced robust economic growth in recent years, outpacing national averages; and we have accomplished this amidst rising costs of essential necessities. Sound financial management alone is insufficient. We must advocate for principle-based financial solutions that foster economic well-being."
Utah Valley Chamber – Principle #2: Measure twice, cut once
The axiom "measure twice, cut once" emphasizes the importance of careful planning and preparation before taking action. It also encourages people to think, plan, test, measure, drive accountability, and learn.One essential aspect of community development is the construction of a greater variety of housing options. By supporting the expansion of affordable housing initiatives, individuals and families can have access to suitable homes that align with their financial capabilities.
Additionally, business and community leaders should lend support to the expansion of public transportation, facilitating mobility for all citizens while reducing the burden of transportation costs.
Furthermore, people need increased affordable access to essential services, such as healthcare and education. These vital aspects of life should not be viewed as luxuries attainable only by the privileged few. By advocating for policies that increase affordability and accessibility, leaders can enable individuals to improve their well-being, while fostering a healthier and more educated society.
While addressing these societal challenges, it is essential to foster a climate of economic growth that benefits all community members. One way to accomplish this is by promoting a free-market environment by empowering individuals and businesses to thrive through limited government intervention, allowing the principles of competition and innovation to drive economic growth and prosperity.
Jonyce Bullock, CEO at Squire & Company, PC said: "Creating a climate of economic growth that lifts our entire community necessitates embracing the power of a free-market environment. By empowering individuals and businesses to flourish with minimal government intervention, we enable the driving forces of competition and innovation to fuel economic growth and prosperity."
By adhering to the foundational principles of financial management and advocating for principle-based solutions, business and community leaders can pave the way toward a more prosperous future.
Increased access to affordable housing, essential services, and fair wages, coupled with a free-market environment that nurtures innovation and competition, will foster personal financial stability and bolster economic growth in our communities. Uniting behind these principles can build a brighter future and pave the way for boundless opportunities and shared prosperity for all Utahns.
