Washington could learn from Florence

Monday, October 5, 1998

The Cincinnati Enquirer

The financial news last week seemed as murky as the bottom line of my unbalanced checkbook.

Asian markets in crisis. Stocks on a downward slide.

Then there was this shocker:

The federal government was operating in the black.

For the first time since 1969, the bureaucracy in Washington ended the fiscal year by taking in more than it spent. The federal government had a $70 billion surplus.

A couple days later, the city of Florence quietly reported its own surplus of $600,000.

While both are public governmental bodies pretty much operating under the same rules, Florence and Washington came to their respective surplus moments from very different paths. The trajectories of those paths dictate very different choices when it comes to disposing of the extra cash.

Florence can afford to wait and see what it needs to do to best serve the people. The federal government has no choice. Washington must act like a thrifty Greater Cincinnatian and not even think about spending money when it's in debt.

The need for fiscal responsibility in Washington hasn't kept that $70 billion surplus from burning a hole in politicians' pockets. Congress and the president are clamoring to take credit for the windfall and score points with the voters. They can't wait to spend it on pet projects or give it back in the form of a tax cut.

Federal politicians are to be congratulated on such an achievement. Seventy billion dollars is not chump change. But they might learn a lesson or two about real fiscal success by taking a closer look at Florence.

Surplus City

Budget surpluses are nothing new in Florence. The Northern Kentucky city has been in the black for 11 years. For the last five years, the city has been in the black by six figures.

"We've been blessed," said Diane Ewing Whalen, council member and mayoral candidate. The economy is good. Florence is a boom town. It is Northern Kentucky's retail hub. Subdivisions and shopping centers are racing to fill the city's available land. Nearly 85 percent of the city's latest surplus came from payroll taxes and taxes from insurance policies for homes and businesses.

Along with being blessed, the city's been smart, too. Ron Epling, Florence's finance director, told me the surplus funds are put in what amounts to a rainy-day fund, "which is very healthy," or spent on basic items such as firetrucks, ambulances and police cars. Part of this year's surplus could go to hiring more firefighters.

If Diane Ewing Whalen and fellow council member Dr. Ferd Metzger have their way, Florence won't spend the money right away.

"When times are rosy, government always seems to find new ways to spend money," Dr. Metzger said. "We should put some of the surplus aside and use the rest for a tax cut. Give the people some relief. Let them share in the good times."

Diane Ewing Whalen wants to keep the good times rolling. Florence has a new City Hall and a new maintenance building. Exact costs for future upkeep and staffing are unknown. The council member feels that money from the surplus could cover those costs. What's left over could be used, she told me, for hiring more firefighters or for a tax cut.

"We have to look ahead," she said. "We must think about future costs. We have to be responsible."

Big-time Washington ought to take more of a small-town approach with our nation's finances and look to a future with less debt.

Pay up

As of 2 p.m. Friday, the national debt stood at $5,514,320,166,623.24 or, in round figures, $5.5 trillion. About the time you read this column this morning, it will be up about another billion, as it's growing at $328 million per day. Annual interest payments on the debt cost us $275 billion.

Imagine what our schools could do with a spare $275 billion every year.

I have a suggestion for Washington: Keep the $70 billion. Put it toward paying off the national debt.

Don't tease us with the promise of a tax cut. At the rate the debt is growing, any pennies we save from a cut in taxes will be worthless.

Columnist Cliff Radel can be reached at 768-8379; fax 768-8340.