Last month, I examined the economic plight of Harrisburg, PA and the city government's attempt to dig the state capital out of debt by bringing in consultants. Back then, Harrisburg was strapped with a nearly $300 million debt burden—four times the city's annual budget—and officials turned to the public sector strategists at Novak Consulting Group to slash the deficit in a matter of months. Now in February that burden remains on the books, but as The Wall Street Journal reported yesterday, the consultants at Novak have produced their first-edition roadmap to salvation for the troubled community.
According to the Novak Consulting Group, the path to revival first requires the city to get back on solid financial ground. That's a sentiment Harrisburg officials agree with; the Journal suggests that the city is desperate to successfully make upcoming debt payments of $5 million and more. So, first up for Harrisburg is a serious reduction in spending (a good place to start would be with mayor Linda Thompson, pictured here bedazzled in muskrat fur and Louis Vuitton).
Julia Novak, founder of her eponymous consulting firm, has warned that spending will outpace revenue as early as March. To control it, she recommends a comprehensive reevaluation of operational costs. "Only expenditures that are essential to the health, safety and welfare of city residents should be approved," said Novak in a recent letter to the city government. The Journal also says that Novak "recommended the city freeze hiring and discretionary spending, restrict overtime, limit capital spending and review grants in order to conserve cash."
Lots of governments have had to make painful cuts in spending this year, in the face of a nasty recession and public outcry for balanced budgets. Perhaps Harrisburg should consider its expenses regarding the contract with Novak; surely, any public leader in America could have given the city the same advice (cut spending) for free. Instead of just recommending spending cuts, it's time for Julia Novak and Co. to develop an innovative strategy that focuses on generating more revenue for the once-proud capital.
We'll continue to monitor Harrisburg's (and Novak Consulting Group's) progress as the plot thickens.
For more information:
WSJ: Harrisburg Faces Cash Crunch in March
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