What Do You Do With A Budget Surplus?

For good or bad, excessive spending has always been equated with drunken sailors and a whole sea shanty offers advice to answer the question, "What do you do with a drunken sailor?"  Some of the advice includes: "Put him in the long boat till he's sober," "Shave his belly with a rusty razor," and "Put him in bed with the captain's daughter."  Way-hay and up she rises indeed!

But there is no advice for what do you do with a budget surplus -- except keep those drunken sailors away.  The City of Philadelphia projects it will end the current fiscal year with an accumulated fund-balance surplus of nearly $170 million (nearly 5% of the entire operating budget).  Most of the city administration's plans for that money involve spending it -- spending some of it on expanded services, spending more of it on new initiatives, and spending even more of it by plunging the city further into debt so we can spend lots more today while our grandchildren get the bills.

Meanwhile, about 90 miles away, New York City projects a budget surplus as well (equal to about 6% of the city budget).  Mayor Bloomberg will spend some if it to pay down the city's long term debt and some to pay for capital projects upfront to avoid future borrowing (where Philadelphia simply plans to borrow more).  Bloomberg also plans to spend some to establish a fund for municipal retirees' health care (while Philadelphia's future health care costs continue to expand).  A recent budgetary commentary praised the approach:

Dealing with the underlying issues that constantly threaten to bring the nation's largest city to the brink of bankruptcy appears a thankless task - it is not as cool as cutting crime or as emotionally satisfying as promising to be the education mayor. That is precisely why Mayor Bloomberg deserves widespread thanks for choosing to take on this necessary effort. It may just be a businessman's common sense, but this is one badge of honor that should help define his political legacy for future occupants of the office.  (Full Commentary)

The New York City approach would seem to be much more in line with the advice given by the city's state-appointed fiscal watchdog agency, which offered a recent report warning of the city's growing debt problem.  It is certainly more fun to spend, spend, spend, but it is much more prudent to act now to reduce the need to spend in the future.  

Of course, that includes reducing our onerous tax burden now so we can grow our tax base and spend more in the future, but it also includes avoiding unnecessary debt and other costs.  That kind of spending is likely to get us into trouble in the future -- much worse than having our bellies shaved with a rusty razor.