The budget axe to swing…very possibly in your direction.

The current Business Week notes that 32 (or about 2/3 of the US states) are facing budget shortfalls all the way from California (22.2%) to Vermont (0.1%), and an analogous study suggests a similar fate for private or private/public partnership economic development organizations.

Yet deep down you know that continued or expanded economic development efforts (and budgets) will not only provide jobs, tax revenues and income to your community but are also a major if not the major answer to widely-spreading world economic recession.

What to do?

During the past 48 years DCI has worked with about 400 development clients, and a number of them have shown sizable ingenuity and fortitude in pioneering ways to avoid the budget guillotine.

Here are six that might work for you:

FIRST, MAKE IT CRYSTAL CLEAR THAT ECONOMIC DEVELOPMENT IS AN INVESTMENT NOT AN EXPENSE.  Unlike diverse social programs development has a direct payoff that is as anti-recessionary as you can get: people in full time jobs that pay taxes and buy things.  No other budgeted program can so clearly or simply make that statement.

SECOND, BACK UP YOUR INTENTION WITH HARD NUMBERS: This is pivotal in convincing your Board, your legislative cluster, your donors, your influencers and your public.  The notion is to do what your private business brothers do, translate everything into a numerical Return-On-Investment.  For example, one of our clients is able to show that every $1.00 invested in his program yields annually $6.34 in documented community benefits, a more than 6:1 return on investment.

THIRD, HAVE YOUR PRIVATE EXECUTIVES SPEAK FOR YOU WHENEVER POSSIBLE:  As a top executive in your economic development organization, face it--you have little credibility and can easily be accused of self dealing.  Far more believable are business people who literally live or die by their respective ROI.  Often they are your Board members so use them whenever feasible.

FOURTH, CONSIDER TAKING SOME HIGHLY VULNERABLE ITEMS OFF THE BUDGET TABLE:  It’s astonishing but often 3-5% of an economic development budget can cause 95% of the trouble, and I’m talking here especially about the highly visible categories of “entertainment” and “travel.”  Some smart development groups have arranged that such relatively minor items be paid for by respected business individuals or groups providing greater flexibility of operation at very little cost.  If this just isn’t doable make sure such expenses aren’t subject to misinterpretation.  I recall an incident some years ago where a $24.50 lunch endangered and almost caused to topple a $700,000 e.d. budget.

FIFTH, ENLIST THE SERVICES OF THE LOCAL PRESS:  As you know, newspapers across the nation are in a terrible financial mess, but chances are your local or regional paper is still influential among people who count, and chances are also that the Editor(s) are looking for good subjects for their daily editorials.  One such topic might well be acceptance-without-change of your budget.  The basic message: economic development is the key to opening the puzzle of economic bad times.  And by judicious reprinting and distribution of the piece you can reach not only your local/regional decision makers but also their pivotal influencers as well.

SIXTH, IF ALL ELSE FAILS HAVE A “PLAN B”:  Hopefully these and analogous words of wisdom will help you keep your development budget safe and sacrosanct, but not always.  If the meat axe is aimed at everybody, you need to have a contingency proposition in your vest pocket.  Here my advice is to list items for the chopping block in reverse priority order with the least important first.  The reverse strategy—cutting off bone rather than fat or sinew—seldom works today and simply gets you in bad for good with the budget stranglers.

These six tips are in no way all-encompassing.  I bet at least some of you have developed other tactics to keep the folks with the green eyeshade at bay.  Click on the comments section below and tell us about them.  Or if you want to talk confidentially about your budget strategy in particular, don’t hesitate to give me a call at 212-725-0707.