Ups and downs in growth part of normal cycle

It is dangerous to assume that economic growth will be continuously strong, even for a rapidly growing area like Yuma County.

That is what the county officials are finding out as they look at revenue projections for the fiscal 2007-2008 budget year. County Administrator David Garcia told the county supervisors at a recent meeting that expected revenues will be less that the planned expenditures. That means there could be a budget shortfall of more than $4 million.

Of course, there is an easy way to fix the problem by simply reducing planned expenditures and that is what should happen as county officials go through the budgeting process for the coming fiscal year, which is in its early stages right now.

The problem is not that Yuma is not growing, but rather that it is growing at a slower pace. We have perhaps become spoiled by the last few years when the area experienced unusually strong growth, as seen in the housing boom and the development of retail areas like the Yuma Palms Regional Center.

With this growth has come significant increases in sales tax revenues for local governments. Garcia noted that sales tax revenue was up more than 15 percent for the county last year but for this year it is up only about 5 percent.

It is hardly surprising that there will be ups and downs in economic growth and tax revenues. Such cycles are an expected part of the economy and to think otherwise in foolhardy.

Unfortunately, government officials like to remember the good years and seem to forget the less stellar years. In doing so, they base their spending on unrealistic expectations. This is a phenomenon that crosses all levels of government.

Our state suffered a particularly painful lesson in this overly-optimistic outlook a few years ago when drastic state spending cutbacks became necessary to deal with falling tax revenues. As soon as the tax revenues began increasing again, state officials immediately forgot the hard times and started spending lavishly again, sometimes at the insistence of unwise Arizona voters.

This selective memory on economic conditions is detrimental to good government.

We are glad to see that county officials are monitoring the balance of revenues to spending to ensure more drastic measures are not forced on them later. It is far better to make the cuts by choice rather having them forced on them.