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Employee Development – Investing in the Future

Posted on February 10, 2010 by Dr. John Luthy

Declining revenues due to economic woes have had another detrimental effect on state and local government – employee layoffs are at new highs and the depletion of key programs is having a huge impact on service delivery. While there are some who point to government ‘bloat’ as a causative factor in recent and projected layoffs, data suggests that the reduction of government chub began to occur long ago. And, recent cuts have done nothing but eviscerate important capabilities that will again be required as populations grow and demand escalates.

As a proponent of lean government, I can also say I am a proponent of the dual dynamics of data-driven performance management and employee development. As state and local workforces shrink, greater demand is placed on those left behind. Retirement of Baby Boomers is also weighing heavily on local programs that rely on deeply experienced workers to chart a course through these difficult times while providing adequate, if reduced, services.

Due to the changing nature of government jobs and the fact that training and development is typically the first organization element to be cut, we are facing a growing gap in the skills required to manage and provide services. Populations are still predicted to grow. And, compounded by the growing number of poor and disadvantaged, expanding infrastructure needs, the potential for escalating crime, and the general trend toward deferred maintenance, state and local government agencies will be taxed far beyond their ability to meet public needs and expectations. This is in addition to public education, which is seeing staff and services eliminated to the point that mandates and missions cannot be achieved. Is there an easy fix? No. There has been such a huge increase in government programs over the past forty years that constituents feel entitled to their continuance. Unfortunately, balanced budget statutes trump public demand. Certainly, the future holds interesting opportunities for debate and conflict.

Job gains may be slower than originally predicted because many companies and public agencies will first rely on automation and knowledge-centered jobs to satisfy demand. However, basic skill development is needed in many critical but traditional positions, including fire, police, waste treatment, water treatment, solid waste, administrative services, public health, building inspection, recreation, assessment, engineering, surveying, and literally dozens of essential public services. Without adequate planning for future needs and commensurate professional development, the skill gap will be enormous – and not easily overcome.

The oldest Baby Boomers turned 60 in 2006. According to the Social Security Administration, close to 80 million Americans, equating to 10,000 per day, will be eligible for social security benefits. While many are delaying retirement (a recent survey by Watson Wyatt Worldwide indicated that 44 percent of respondents 50 or older plan to postpone retirement and half of those will delay three years or more). Bottom line, we will be losing some of the most experienced and talented technicians in many areas of federal, state and local government and few agencies are equipped to counter this trend. Without remedy, look for operational efficiency, productivity and quality to decline. While the ‘Net Generation,’ i.e. those who have grown up using the Internet, can assume jobs requiring information and knowledge acquisition skills, they will be unable to compete for more technical positions and few will have naturally occurring leadership or management skills.

The American Society for Training and Development cites the fact that 79 percent of surveyed organizations say a skill gap currently exists in the organization. Various sources cite multiple reasons why skill gaps persist – retirements, lack of training dollars, inability to attract talent, and the specter of instability.

For every segment of government there must be a vision for the required workforce. That is not to encourage the build-out of large employee bases, but merely to advocate matching the realities of predicted demand with necessary skill sets.

Cowlitz County, Washington has recently approved the development of an employee and professional development curriculum. The Futures Corporation will be ‘framing’ the curriculum and helping to develop the internal capability to provide ongoing training services. After working with state, city and county government for so many years, one of my greatest frustrations has been the lack of quality employee development and training. This is now catching up to those who eliminated training services. The pace of change and technological advancement, especially in technical fields, will quickly surpass current knowledge and skill levels once Boomers retire. Without organized and formally supported training, many government agencies will not be able to sustain basic services and will see a corollary reduction in response capability, program quality and efficiency, and employee productivity.

Leadership and management development coupled with technical training holds a very important key to preparing for future challenges. Unfortunately, those challenges are not in the distant future. They exist now. What level of support does training and development have in your agency, state, city or county? Done well, employee development and training services need not be expensive. But it must be organized, formal, supported by decision makers, and have a place at the budget table. This one element of public management can have a profound impact on lean but capable government.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures)

Filed under: Preparing for the Future | Leave a Comment »

2010 – Predictions and Ruminations

Posted on January 25, 2010 by Dr. John Luthy

As we enter 2010, my greatest concern is that decision makers will continue a unilateral focus on the near term when a longer view is needed. Stressful and chaotic times bring myriad threats and opportunities – typically more threats than opportunities. The U.S. is experiencing a predictably slow economic resurgence, with persistent high unemployment, job loss, poor balance of trade ratios, reduced industrial productivity and general malaise in many communities. People just don’t know how to cope and most were totally unprepared for challenging times.

Elected officials and professional public managers are expected to solve problems and produce clear answers. People want quick and understandable remedies; citizens want an elusive ‘return to normal.’ As noted many times in this Blog, our research over 25 years indicates that people/ communities gravitate to four things during challenging times: Clarity, Direction, Truth, and a dignified and harmonious Leadership Style. Venting frustrations is fine, but ultimately no one wants blaming, empty rhetoric, or spin. Today and for the foreseeable future, leaders had better work two tracks – the short-term operation of efficient/ effective government, and a long-term plan that will support a new economy and an evolving society. Few are doing this. Many are trying, but most are in survival mode.

As discussed last week, oil and the economy are huge factors that are shaping the American landscape. Jobs will emerge when this country dedicates effort and money to building an infrastructure appropriate for a new economy. This does not mean we neglect traditional structural elements of society. It merely means finite dollars must be dedicated to projects that simultaneously build the future and energize the present. Sooner or later, this Country must invest in high speed rail, at least between major hubs; it must upgrade the national power grid to encompass solar and nuclear energy; fragmentation of the Nation’s telecommunications infrastructure must end and Internet access and speed must increase dramatically; and, the southwestern region of the U.S. must face water issues that could greatly inhibit  future economic development in Arizona, Nevada, and parts of Kansas, Oklahoma, Texas, New Mexico, and California.

Predicted Areas of Concern

Infrastructure – I wrote an article for Public Works Magazine some time ago, citing the need for close to a trillion dollars of new investment in roads and bridges. The infrastructure is deteriorating eight to ten percent faster that it is being repaired – faster in many areas. In its 2009 Infrastructure Report Card, the American Society of Civil Engineers (ASCE) gave the U.S. infrastructure a ‘D,’ stating that $2.2 trillion is needed over the next five years to bring America’s ageing infrastructure to safe and reliable performance standards (an estimated 1/3 of U.S. roads are in poor or marginal condition and 26 percent of the Nation’s bridges are either structurally deficient or obsolete – and virtually no change has occurred in the past 5 years). The 2009 stimulus bill (American Recovery and Reinvestment Act or ARRA) dedicated only $135 billion to infrastructure -$27.5 billion for roads and bridges, up to $150 million for air traffic control, only $6 billion for water systems, $4.5 billion for electric smart grid development, and $8 billion for high speed rail. Airports, ports, drinking water and waste water systems, waterways, public parks, dams, schools and hazardous waste disposal are all underfunded and will continue to accrue a HUGE future cost if deferred maintenance continues. The predictions are dire…we are on a slippery slope that will bring enormous consequences and I don’t see much movement toward sensible remedies in 2010.

Water – The EPA reports that drought and population growth have left 36 states facing the prospect of drinking water shortages in the next five years. Predictably, those populations will see higher drinking water rates, more required gray water recycling and more attention paid to the link between water and economic stability and growth. A major issue is that small municipalities cannot afford costly repairs and system expansion and the federal government just doesn’t have the money. This dichotomy will continue and worsen.

Air Traffic Control System – This national system is sadly out of date and will continue to contribute to flight delays until public outcry escalates or serious accidents occur. Last year, nearly one in four U.S. flights was delayed.  System overhaul costs are expected to exceed $35 billion over the next 15 years; the American Recovery and Reinvestment Act  / stimulus has only pledged $150 million – far too little to keep problems from escalating.

Smart Electric Grid – There are over 200 different standards that apply to technology in the smart grid and up to 60 or 70 that only apply to ‘smarter’ appliances. There is little national coordination and this will continue. The ARRA set aside $4.5 billion for grants that will improve the grid but far too little project coordination exists. Some organizations, like Boise’s Inovus Solar, have invented a new type of solar powered streetlight that ties to the grid and returns energy to it, or can operate totally outside the existing grid to offer light in any venue – regardless how rural.  The problem is getting its product recognized as a next generation improvement that can make a huge contribution to electric power reliability. While more focus will be generated on the Nation’s smart grid issues, it will remain too fragmented in 2010.

Merging Metro Areas – Consolidation will continue to gain momentum. Even though human nature drives the tendency toward local control and self determination, the practical side of consolidation will attract more attention. As of last year 38 regions across the nation have created some form of consolidated government. In 2003 Louisville and Jefferson County Kentucky created the new Louisville Metro government. Merging cities and counties is not new and has worked well is many venues (New York City, San Fransisco, Nashville/ Davidson County, Indianapolis/ Marion County to name a few). It will gain more favor as community leaders realize the economic value of mergers and that local control is not lost. In fact, greater control can be gained over a broader area, which, if done correctly, can produce greater efficiency, more effective programs, and higher productivity levels.

Outsourcing and Partnerships  – Information Technology, ambulance and emergency services, jails and prisons, human resources, employee development (training), and a variety of other services will be more closely examined for potential outsourcing. It has been proven that government can do some things very well and, if moved to the private sector, costs go up due to the inclusion of profit margin. Once services, such as printing, move ‘outside’ there are no checks and balances to future printing costs. Custodial and grounds keeping services are notorious for cost escalation once moved to a private supplier. Economies are available, however, and the trend toward outsourcing and partnering will grow in 2010.

A variety of 2010 trends will hold true from 2009 – unemployment will remain high, gas prices will grow somewhat as oil grows to $75-$85 per barrel, and new building permits will remain slow – but will pick up from 2009 levels (building permits were down 37% in 2009). We’ll see GDP around 3% in 2010, with more gain in Q3 and Q4. Business will pick up as the economy begins to slowly recover, with a gain of around 1 million new jobs. This is not nearly enough for a robust recovery, but stages the country for a stronger 2011. Inflation should be relatively tame at around 2%, down from 2.7% in 2009.

To avoid a massive, long-term depression and promote a more rapid recovery, the federal government allocated huge sums for the stimulus – much of which is not yet spent. Government spending is now at 25% of GDP – well above its recent historic level of around 20%. Entitlements will wreck the country if something is not done. The political theater is totally out of control – virtually nothing is being done to address serious, truly catastrophic fiscal issues while the two parties vie for control. This has become highly toxic…and is not party specific. Members of BOTH parties contribute to the rhetoric, earmarks and nonsensical spending. No one seems to want to take the lead to solve the most serious problems – all of which will take public sacrifice. The annual deficit now equals about 10% of GDP – the highest since WW II. The federal public debt now stands at $7.8 trillion and, at the current pace, will equal two thirds of GDP by 2014. At that rate, by the end of this new decade interest payments will be $800 billion annually – 16% of the total federal budget.  Add defense and Medicare and we have a mountain of compounding obligations without associated funding. When will there be the political will to address this issue? The cost of borrowing will increase, the rate of Treasury bonds will escalate, and the U.S. stands to lose its top credit rating…which in turn increases rates and reduces negotiating power and global economic influence.

In general terms, 2010 will not be a bad year. But it is a year in which we must begin to pose workable remedies to deficit spending and pay more attention to rebuilding the fundamental elements of American enterprise, innovation, and infrastructure. So far, there is no demonstrable or collective political will to undertake the necessary actions. Governors, mayors and commissioners are up against the wall. They must balance tight budgets while operating lean agencies that still provide decent and adequate services. We are finding a new center, both economically and with regard to levels of service. The road ahead is challenging and filled with temptations. But it is the road to a stronger America and it is the only road that matters.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. Founder and President of The Futures Corporation  and an innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

Filed under: Predictions, Preparing for the Future | Leave a Comment »

Predictions for 2010

Posted on January 18, 2010 by Dr. John Luthy

After some weeks gathering mountains of data to support various predictions it became apparent that there is enough information for several discussions. My predictions pertain primarily to local government but relate to the broader society. In particular, I am deeply concerned about state and local government – and our communities where we live and work and, for the most part, where leadership decisions have immediate impact. Let’s begin with two major interrelated concerns- oil and economic recovery.

Oil – We cannot continue to avoid discussions about the realities of peak oil and how the relatively rapid decline of oil reserves will impact society. Even though it is a platform for daily life, economic vitality, and industrial progress, few seemed inclined to address and plan for the impact of declining reserves or the hoarding that accompanies every decline in a precious resource. This cannot continue. The good news is that, according to Jad Mouawad in his New York Times article (9/24/09), over 200 discoveries have been reported in dozens of countries by huge oil conglomerates (Exxon Oil, ConocoPhillips) as well as by smaller players (Tullow Oil). Oil prices have stabilized at around $70 per barrel after falling to $34 in late 2008. Oil companies have stated that prices must be above $60 a barrel to support development of existing and new reserves. I believe that oil prices will continue to meander upward toward $85-$90 a barrel as exploration and oil field development continues. Per gallon cost will increase but will support supply and production at a level that may extend peak oil predictions another two to three decades. Because there have also been new discoveries of natural gas coupled with amazing new extraction technologies, price escalation will also be moderated as supplies remain stable. This will allow time for technology to provide greater vehicle efficiency, alternative energy sources, and much more emphasis on conservation.

Economic Recovery – It has been said before and needs to be repeated – economic recovery will be slow and just because citizens want and expect good times to return quickly, it just won’t happen. There are too many ‘converging variables’ that mitigate rapid recovery – personal and corporate savings are still far too low; people and too many businesses are overextended financially and have too much debt; global financial markets are afraid of the huge U.S. federal debt; the foundation of trust so critical for healthy financial markets has been eroded and is not likely to surge back any time soon; overall income, sales, and property taxes will be lower and will create Catch-22’s as local governments try to balance stressed budgets while sustaining service levels. Entitlements are not being addressed by elected representatives who will continue to squabble over earmarks and political agendas while the U.S. digs itself deeper. Social Security, Medicare and Medicaid are especially onerous and are looming as disasters-in-waiting. Unemployment will continue to remain high, perhaps drifting below 9 percent by 2011 but close to 10 percent through 2010. I see high unemployment for several years- it might be 2013 or 2014 before we see unemployment drop below 7 percent. There just isn’t the right mix of economic development opportunity, future vision, international trade, natural resources, new markets, etc. to generate a lot of new jobs. Will some growth occur? Yes, but in most communities job growth will be stagnant and the impact on municipal commerce will be very negative.

GDP will grow about 3 percent in 2010 with perhaps one million new jobs. Consumers will open up a bit, with approximately 2 percent more spending, after contracting to 1 percent in 2009. After falling to around 600,000 in 2009, housing starts should exceed 700,000 – and perhaps will exceed 800,000 if banks become more cooperative. This is still far below the 1.5 million new housing starts we have grown to expect, but a new beginning. Generally, traditional businesses enter 2010 in a hyper conservative mood; spending will be careful and major expenditures will be delayed as long as possible. This, coupled with reduced federal government stimulus spending, will dampen any opportunities for rapid growth and accelerated spending. (Significant amounts of the $787 billion stimulus program will continue to be spent, but several elements – tax breaks for home buyers, extended jobless benefits, additional food stamps, COBRA subsidies, and other special programs will expire in 2010.)

Many state governments are in dire straits. Budget shortfalls already total in the tens of billions and should grow. California alone has a $42 billion deficit and projects the elimination of close to 60,000 jobs. This is in addition to already furloughing 238,000 jobs to reduce its deficit. Well over 50 percent of the states are struggling to balance budgets – and all of this will impact municipal government as funds are cut and programs reduced.

Infrastructure should receive more funding – up to $50 billion more for infrastructure spending, which will target airport, mass transit, water systems, and waste treatment construction projects. There is also talk about another form of stimulus – around $100 billion to create or save jobs. This should have bi-partisan support as mid-term elections draw near.

The auto industry is in a major transformation and the reality of its ‘recovery’ is not widely discussed. In actuality, auto sales declined from a historic annualized 16.5 million vehicles to between 9 and 10 million in 2009. While ‘recovery’ is an optimistic term, this industry in fact may never return to more than 12 million vehicles in annual sales. Between 1950 and 2008 the U.S. increased from 49 million to 250 million vehicles on the road. However, in 2009, 14 million cars were scrapped while around 10 million were sold, shrinking the fleet by 4 million vehicles. If this trend continues (which I believe it will), the U.S. could have fewer than 225,000 cars/ light trucks on the road by 2020. Light rail, express bus systems, and other transportation modes could very well converge to further shrink the auto industry – reducing this key industry’s contribution to GDP.

2010 is a transformational year. In my new article, The Tyranny of Normal, I discuss the tenacity with which people hold on to what they consider ‘normal.’ We expect shopping malls, great highways, ample drinking water, clean streets, waste treatment, and a host of other services. Public demand has never been higher and, as services are stressed or reduced and their quality or breadth diminished, there will be a clash between expectation and reality. I am concerned for our communities as they continue moving through a very difficult transition. Mayors, Councils and Commissions will be petitioned to provide ‘normal’ service levels when that is no longer impossible. How will they respond? What will they say? How can they prepare? Are their communities moving fast enough and in the right direction?

More predictions and discussion on the ‘new normal’ in my next Blog…

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at www.futurescorp.com).

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Competing for the Heartland

Posted on January 4, 2010 by Dr. John Luthy

Back in November I wrote a Blog titled ‘Best in Class,” citing a Forbes article that listed the Top 10 best cities in America to build a business. Review of that article and its rationale for selection into this elite class encouraged more consideration of Richard Florida’s superb book Who’s Your City, which describes characteristics that generally attract young talented people and new business enterprises. Florida’s premise is fairly straightforward – if you want a vibrant, growing and competitive city, it must have the ability to attract the best and brightest.

As I was developing predictions for 2010, I found myself more interested in the questions surrounding out- and in-migration of people, why they choose to leave (or stay) and what might prompt a talented person to pull up stakes and search for a new city. For those of us who spend considerable time working on economic development and building efficient communities, this seems a central question.

For those elected officials and professional public managers who have not read the new book by Patrick Carr and Maria Kefalas, it is a must-read. Hollowing Out the Middle: The Rural Brain Drain and What It Means for America is a marvelous book about the motivations and heartache that accompanies hard decisions related to abandoning a nurturing rural community. Journalist Nick Reding has captured similar sentiments and causative factors in his equally powerful book, Methland, which documents the new economy, changing social structures and the corrosive polarity that exists between the communities celebrated by Richard Florida and those he, Carr and Kefalas describe.

Let’s be clear – the U.S. landscape is changing. And it is not a slow, passive trendline. Current economic forces are accelerating the evolution of many communities. Young and mid-career people who cannot find work are leaving for larger, more dynamic cities. While those cities are and will continue to prosper in the New Economy, communities that do not evolve quickly will slowly fade. While this accelerating trend has been well documented, remedies have also been proposed. Unfortunately, far too many communities have not responded or waited too long to mobilize resources.

As I return to my predictions for 2010 (out next week) I encourage you to think about the status of your community, your department, and your citizens. Is there magnetism that can be used to attract new business and talent? What is the mood of the community? Is there a reasonably high level of ‘can-do’ spirit? What are out-migration trends among both employees and residents? Are you seeing new residents choosing the community and asking why?

Communities must be more Prepared For Challenge than ever before…and must develop a plan. Take time to pick up the books mentioned above. They may provide insight and encouragement, if the depression doesn’t get you first.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures)

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Ruminations on Oil

Posted on December 20, 2009 by Dr. John Luthy

Some months ago I commented on the issue of ‘peak oil’ and its impact on national security, economic development, and the prospect of balancing growth with quality of life. Powerful books such as The Long Emergency (James Howard Kunstler, 2005), have warned that drastic changes will occur in every community in America as oil becomes less abundant. Mobility is an intrinsic element to our way of life- it is part of our DNA and at the very core of American independence. When we read of gas prices reaching $5 to $6 per gallon as it is in some countries, it is easy to imagine the impact on every family, business and community. Transportation and travel is only a small portion of the challenges brought by declining oil reserves and growing reliance on petroleum products. The Earth Policy Institute has warned that agriculture will be one of the industries hardest hit by oil prices, due to rising fertilizer, transportation, irrigation and operating costs. Far into the future escalating food prices will be tied to the rising cost of oil.

The United States consumes 20.6 million barrels of oil per day. China, Japan and Russia are the 2nd, 3rd, and 4th leading oil consumers at 7.5, 5.0 and 2.9 million barrels per day. Even with strong economies and relatively mobile societies, India (2.7 bbl/day), Germany (2.5 bbl/day), Brazil (2.4 bbl/ day), and Canada (2.3bbl/day) are all far below the U.S. in oil consumption. To admit we are dependent on oil  seems a bit understated.

Unfortunately, the U.S. does not have enormous oil reserves. It currently ranks 14th in oil reserves (behind such countries as Angola, Kazakhstan, Nigeria, Libya, and Venezuela) with 22.4 billion barrels (for perspective, Saudi Arabia has 262 billion barrels, Canada has 178.9 billion barrels, Iran has 133 billion barrels and Iraq has 112 billion barrels). So, why does this matter?

In February 2005, lead author Robert Hirsch and a team of collaborators published a report entitled, Peaking of World Oil Production: Impacts, Mitigation, and Risk Management. Commissioned by the US Department of Energy, it provided a series of observations and recommendations that emphasized the importance of action in consumption and supply/ production if economic chaos is to be avoided. Since that time, and especially in 2009, renewed efforts on the supply side have resulted in many new oil field discoveries that could alter previous timelines for price escalation and supply decline. According to an article by Jad Mouawad in the New York Times (9/24/09), over 200 discoveries (some quite large) have been reported in dozens of countries by huge oil conglomerates (Exxon Oil, ConocoPhillips) as well as by smaller players (Tullow Oil). Oil prices have stabilized at around $70 per barrel after falling to $34 in late 2008. Oil companies have stated that prices must be above $60 a barrel to support development of existing and new reserves. The best bet is that oil prices will continue to escalate toward $85-$90 a barrel as exploration and oil field development continues. Gasoline costs will increase but revenue will support supply and production at a level that may extend peak oil predictions another two to three decades. This will allow time for technology to provide greater vehicle efficiency and sensible alternative energy sources as the global community begins to embrace conservation.

With global oil consumption at 31 billion barrels annually and growing rapidly, the discovery of new reserves merely delays the inevitable. With local government’s focus on current economic challenges it is difficult to turn attention toward the longer view. My feeling is that gas prices will increase in 2010 and escalate more in 2011 to support development of new oil fields and to buy oil that will cost more to produce and transport. Scenario plans should factor in escalating costs well into the future…gasoline will eventually cost $4, $5, or $8 per gallon – and it’s not far off. While gasoline won’t cost $12 to $20 per gallon any time soon, it will be costly and, along with water, become Earth’s most precious commodity.

In some ways, I’m relieved. The good news is that we’ll have enough oil to serve global needs as the economy transforms and we work toward stability.  Unfortunately, this respite may cause many to disregard the fact that oil is a finite resource and cannot last forever. Peak oil will be recalculated but even a cursory review tells us that consumption is rapidly drawing down reserves. While it may not be the immediate crises reported over the past few years, its long-term significance is huge. Local communities, state agencies, and the federal government must plan for higher costs associated with oil and petroleum by-products, and that covers a lot of territory. The sign says, Beware of Inflation Ahead…

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

Filed under: Preparing for the Future | 1 Comment »

Speculation for 2010

Posted on December 7, 2009 by Dr. John Luthy

Speculation abounds regarding how 2010 will turn out, based on the not so stellar ramp-up we’ve experienced in Q4 2009. While economic factors are certainly more favorable than earlier in the year, unemployment stands at 10.2 percent, new housing starts are rare, commercial and residential inventories are large and growing, and hiring is lackluster. Not an indictment of 2010’s promise, but not the launch we had hoped for.

Economists have long cautioned the public to not expect employment to keep pace with stock market gains or industrial productivity. Yes, the U.S. is experiencing a remarkable resurgence in the Dow Jones, S & P 500  and NASDAQ, but the dollar faces ‘crosswinds,’ 130 banks have failed, and more financial bubbles are foreseeable.  The cautionary tale here is to go slow and make wise decisions that will carry forward as things shake out.

The Institute for Supply Management has reported that employment has expanded for the second straight month and manufacturing activity has now grown for four straight months; new orders and exports have grown slightly over the past two to three months. Certainly a good sign but a short gust of activity that may or may not portend continued growth into 2010. So…will next year be decent? 

From what I see, there are signs of slow but steady growth, with some occasional neurotic fluctuations. Globally, industrialized nations want stability, harmony and reasonable opportunity. While greed remains in play in many financial institutions, most institutional elements within the world of business are focused on avoiding stupid moves that produce catastrophic outcomes. In other words, it will be a conservative world as re-centering continues.

For state and local government, care must be taken to understand those forces and factors that will continue to impact economies. Communities are grappling with huge losses of personal wealth, generations may be just beginning to really compete for available jobs as more senior employees postpone retirement, and the necessities of triage create entirely new discussions about annual budget priorities. Not every area of the United States will experience recovery and the pace of recovery will have huge variations. Like an investment portfolio, diversity is the key. Regions having diverse economic bases or are blessed with industry fundamental to the New Economy (health care, for instance) will recover faster. Those without naturally magnetic communities and buttressed economic foundations will struggle… unless serious change occurs.

Here’s a tip: Economic policies founded on ‘no new taxes’ are flawed. Healthcare inflation coupled with the triple entitlement threats of Medicare, Medicaid and Social Security is significant enough to cripple long-term recovery. While there will be no short-term crises, a return to the swashbuckling economic days of yore are doubtful without facing the arithmetic. Recent cuts to state and local government budgets have moderated the impact but are incapable of reducing costs enough to balance reduced economic vitality. If there was political will, insight and courage (which it appears there is not) the retirement age for Social Security and Medicare could be raised, and funds wasted on dreadful highway projects and a variety of senseless agricultural subsidies could be trimmed. Consumption taxes are being heralded as a means to raise revenue through more elective participation.  Congress must find the will to enact laws that reduce spending, shrink federal government, and generate adequate revenue to provide a reasonable public service framework.

2010 will see a resurgence of innovation – some subtle, some predictable and some driven by remarkably creative approaches. I am not talking about new inventions. Some of the greatest innovations will come in the form of new methods of providing public services. Some will be fueled by public-private partnerships; others will be forged through new collaborative arrangements among cities and counties as they seek to serve communities through efficiencies that were overlooked or discarded in more affluent times. More than ever in the Nation’s history we will see, in 2010 and for years to come, more cooperation, joint planning, resource sharing, mutual support, and regionalization.

The questions are, ‘Where will your community be in this emerging equation? Will you be calling the meetings and creating collaborative agendas? Will your community’s elected officials be willing to share resources, methods, and insight? Will your community lead, follow or attempt to remain independent?’

As stated before, we are in a transformational time. The ‘Good Old Days’ are not coming back – they are hopefully ahead of us. Are we ready to embrace them and forge a new future beginning in 2010?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

Filed under: Preparing for the Future | Leave a Comment »

Best in Class

Posted on November 18, 2009 by Dr. John Luthy

Earlier this year, Forbes reported its ranking of the best places for business and careers. While the report did not go into great detail, for me it raised questions regarding how cities and counties can transform themselves into places like those mentioned.

In Who’s Your City, Richard Florida cites several characteristics that tend to attract the best and brightest people, along with their inclination to innovate, start businesses (and spend money on various ventures), and participate in community activities. It would appear that the cities listed by Forbes might have many of the characteristics listed by Florida – a welcoming community atmosphere, reasonable living costs, an acceptance of new concepts and perspectives, tax incentives, sensible real estate prices, good schools, local colleges and universities, good transportation, and a mix of creative, artistic and innovative organizations. Certainly, it is helpful if the locale is in a beautiful setting, but some of the cities listed by Forbes might not be on the list of the most beautiful places in America. The top ten were:

  1. Raleigh, NC
  2. Fort Collins, CO
  3. Durham, NC
  4. Fayetteville, AR
  5. Lincoln, NE
  6. Asheville, NC
  7. Des Moines, IA
  8. Austin, TX
  9. Boise, ID
  10. Colorado Springs, CO

As local communities struggle to balance budgets and seek creative means of growing their economies, it seems wise to assess what attributes these cities have that make them so magnetic. Each has its own idiosyncrasies but there appear to be inherent common themes. Cities that are mobilizing to broaden their economic platforms would do well to determine what magic the listed cities possess.

Bright, innovative people who are prone to taking risks prefer to do so where that risk can be moderated. North Carolina boasts four metro areas with the lowest business costs. But it is more than cost of doing business or living that attracts commerce. People who work hard want to live where they can have a ‘life,’ which means short commutes, a vibrant downtown, a collaborative community spirit, parks, good schools and plenty of recreational options. Anyone who has lived with long commutes, high costs, and a feeling of disconnection are delighted with Boise, Lincoln, Colorado Springs, and Austin.  Mostly, it is the feeling one gets when visiting and working in these communities. The cities are well managed and the people are warm and gracious. In Florida’s words, they are nice “places to be.”

As economic struggles continue and a broad re-centering occurs, cities and counties must break old patterns. They must boldly transform into communities with attributes that people want and are attracted to. Many are now seeking new locales that re-center their families much like our grandparents and great grandparents did when leaving Europe or the eastern U.S. 80 or 100 years ago. What are they seeking? What can your community provide?

If Boise had a rainy, stormy climate, would the development of a new public transit system make it more attractive? No. Lincoln’s StarTran public transportation system is well managed, practical and very community oriented. If it had three times as many routes would it make Lincoln a better place to live and grow a business? No. For both cities, it is the mix of attributes that make them attractive. I continue to encourage economic development professionals to shed old thought patterns and embrace broader perspectives when formulating community development programs. Understand the mix of ‘attractors’ and assess what is already available and others that can easily be developed. Many take little new money but require budget reallocation and THAT can become a challenge. Remember, for decision makers, the central questions always come down to, “What future do you prefer?” and “What constitutes the kind of community people want and businesses need?”

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.  www.futurescorp.com  (public futures)

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Numbers Please

Posted on November 8, 2009 by Dr. John Luthy

During a program presented at a corporate planning conference last week, I again stressed the value of first seeking a variety of data, then engaging in collaborative analysis to determine meaning and potential impact. Data by itself is merely information. We place values on it and determine its positive or negative impact on enterprise, program, or community. Like most aspects of strategic thinking and planning, the process is typically more valuable than the product. Merely getting together to review data, establish parameters, and calculate probability will pay enormous dividends. Unfortunately, far too many public leaders and government agencies neglect this intrinsic management activity.

 Let’s talk numbers. I encourage state and local leaders is to seek the best possible sources to gather data that is central to an issue. Once gathered, convene subject matter experts who focus on the community, believe in the common interest, and have the capacity to collaboratively develop remediation strategies. Below are just a few examples of numbers (there are thousands of data reports that can be used to generate thoughtful conversation). For these I offer neither analysis nor interpretation. Many don’t need much thought…they need action.

 Today, during the Meet the Press panel (Ed Gillespie, Rachel Maddow, E.J. Dionne, David Brooks) it was noted by New York Times columnist David Brooks that the federal government has had “tax revenues for the past decade of 18 percent of GDP.  That’s just the level.  We’ve had spending of about 20 percent.  After all we’ve been through in the past year and after healthcare reform, it’s going to go up to 25 percent.  We’ll just have this gigantic gap between 25 spending, 18 revenue.” Now, IF that is true and those numbers are accurate, what does this mean to future funding for state and local programs?

 Each year there are 79 million more people who need to be fed worldwide and approximately 3 billion people on the planet are consuming more grain-intensive livestock products. This is happening at a time when world grain consumption has grown from approximately 20 million tons annually to over 40 million tons and ethanol production has escalated – creating competition between fuel and food for growing populations. What happens when food AND oil prices soar and availability declines?

 Compounding the above, data from the Earth Policy Institute reveals that China and India are the world’s two largest wheat producers (the U.S. is number 3) and also dominate world rice production (Viet Nam is the number two rice exporter). Glacier melt is the principal water source for rivers in both China and India and both the Himalayas and Tibetan Plateau are losing their glaciers at an astounding rate. Viet Nam is facing epic flooding due to rising oceans whereby only a 3 foot rise in sea level would destroy half the rice fields in the Mekong Delta and over half the rice fields in Bangladesh. What will this mean to global and local food availability and prices? And certainly, to the health and well-being of a billion people?

Since 1981, oil extraction has exceeded by a significant margin the number of new oil fields discovered. The latest 2008 figures indicate that the world used nearly 31 billion barrels of oil but discovered new deposits equating to only around 7 billion barrels. As noted in a recent Blog, Christopher Steiner’s new book, ($20 per Gallon, How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better), provides fairly stark but enlightening data on why gasoline prices will rise and the potential impact on American society.

 In 2008, around 7.9 billion tons of carbon were emitted from burning fossil fuels and another 1.5 billion tons were emitted through deforestation – a total of 9.4 billion tons. Since the global ecosystem can only absorb around 5 billion tons into the oceans, soil, and various forms of vegetation, the rest stays in the atmosphere and escalates CO2 levels. An untold amount of CO2 is being released from melting permafrost (Arctic and close to 9 million square miles of northern latitude soil contains more CO2 than is currently in the atmosphere), pointing to the phenomenon of ‘dynamic acceleration’ as the planet heats and frozen latitudes begin to release both methane and CO2 faster.

 We have evolved into an urban species. In 1900, only 150 million people lived in cities; a hundred years later, 2.8 billion people live in cities – over half of the global population. 2.5 billion people lack improved sanitation facilities; the EPA estimates that 680 billion gallons of potable water is lost per year  through leaky municipal water systems; half of all water in American homes is used for showers and flushing. Costs for water extraction, transport and treatment make water a critical element of every community plan. Certainly, water availability is central to economic development, health and overall quality of life.

 Much of the above is derived from the Earth Policy Institute – a non-profit organization formed to provide data and encouragement for changing the planet. Richard Florida (Who’s Your City) and Richard Register (Ecocities: Rebuilding Cities in Balance with Nature) have written extensively about the need to transform how we evaluate, plan and develop new communities. The ‘pleasure-pain’ principle is active in this Country…we resist change until the suffering is too great. Unfortunately, with the pace of change today, if we continue this course, it will be too late. Good data will inform decisions. I have found that an insufficient number of elected and appointed officials, no matter how dedicated and well intentioned, gather enough data to be 1) properly informed, 2) able to inform their communities, and 3) able to use data to drive critical political and program decisions. The admonition “Confront Reality” is appropriate. A lot is happening locally, regionally and globally. Know the numbers, discuss the potential impact and calculate probability. Then create AND implement plans to transform your communities. Those who do so will be Prepared for Challenge and will be the celebrated leaders of tomorrow.

 NOTE: Look for other relevant data in Plan B 4.0, Mobilizing to Save Civilization, by Lester R. Brown, the Earth Policy Institute

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

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What Constitutes Quality of Life?

Posted on October 28, 2009 by Dr. John Luthy

A city manager once told me that the only goal established for his community is ‘To Achieve Quality of Life for all Citizens.’ While a commendable vision, in my view it is hardly a strategic goal that belongs in a strategic plan. I didn’t win many points when I asked him to list the criteria the city had established to measure quality of life or to mark when the desired level was achieved. In essence, the answer was something like, ‘We’ll know it when we see it.’

Megan McArdle has written a great article in the November 2009 issue of The Atlantic that addresses one element of the quality of life question. Titled Misleading Indicator, the article addresses the national fixation on Gross Domestic Product (GDP) as the fundamental measure of America’s progress and well being. While GDP is the accepted measure of the Nation’s total annual production (goods and services produced annually), it has virtually nothing to do with the more basic question, ‘How are we doing?’ As McArdle notes, “It counts the dollar value of our output, but not the actual improvement in our lives, or even our economic condition.”

In communities across America, questions abound about how people are faring during this transformational era. With a re-centering economy that is grappling with rising energy, food, healthcare, and infrastructure costs, is it still possible to have a great life? In middle urban and suburban America can families and individuals achieve happiness, fulfillment, joy, harmony, and security? Do these ingredients comprise a quality life?

If one poses the question: ‘Are you better off than you were five years ago?’ there is the ever present slippery slope associated with the common response, “Based on what?’

Local government leaders must attend to much more than local productivity, job creation, economic development, and preservation of tax revenues. Is it possible for a local community to experience a reduced population, an out-migration or decline of business, revenue shortfalls, and more restricted service levels and STILL be a great place to live? Can quality of life be achieved and sustained without consistent growth, renewal, and development?

Certainly, it is a matter of balance but the primary question relies more on philosophical than analytical perspectives. During difficult times, do we pursue the illusion that the community will return to its glory days and that good times are just around the corner? Or that growth is the great panacea? Is it more essential that we maintain public transportation, decent parks, serviceable water and wastewater systems, adequate public safety and good schools while promoting broad-based collaboration, shared resources, private-public partnering, and a sense of community?

 Quality of life questions are best defined by individual communities. As McArdle noted in her article, much of the progress in important, high-value areas of life are invisible to most people. What is essential to some is irrelevant to others. People want stability and predictability. Stable, communicative, honest government at all levels is precious and will become more critical in future years.

Though I have raised the question in prior Blogs, I would again ask, What are the elements of a community that are essential for stability, harmony, and a collaborative spirit? I have seen these characteristics in seemingly poor communities with minimal services, marginal infrastructure, and struggling businesses. In such places, cohesiveness and collegiality are common attributes. Does stability, harmony, and collegiality equate to quality of life? Perhaps. At the very least, they matter as much as GDP, productivity, cost of living, and new housing starts.

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

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League of Wisconsin Municipalities Program

Posted on October 19, 2009 by Dr. John Luthy

On October 14 I had the great pleasure of addressing the opening session of the Wisconsin League of Municipalities annual conference on the subject of Leaving a Legacy. The program’s full title – Leaving a Legacy – A New Age of Change, Challenge, and Strategic Leadership, has become my ‘flagship’ program since 2000, when I first began developing the Leaving a Legacy series for cities and counties.

It must first be said that Wisconsin is a remarkable state. I noted during the program (with apologies for mild pandering) that no matter where one turns in Wisconsin, every scene is suitable for a picture postcard.  I first visited as a 14 year old, and it is as beautiful as ever.

 Of greater importance was the response to several recommendations and gentle admonitions. During the programs I noted that in local communities…

-  Retirements are claiming much of the institutional memory that has taken years to accrue

-   Recruitment to and retention in local government is difficult when top talent tends to gravitate to business (although more people seem to now be seeking the stability of government as the economy struggles)

-  The work of local government is becoming more complex, with greater demand and more public scrutiny that ever before

-  Workloads are growing, budgets are shrinking, staff is being reduced, and pay for those remaining is often substandard

-   Morale issues abound as more people embrace a ‘bunker mentality’

-   Training and professional development is often the first to be cut yet is perhaps the best investment to gain new efficiencies and high productivity while ensuring quality services

 Local government is under siege and is struggling to provide basic services while budgets grow less capable of supporting the historic levels required to maintain health, safety, transportation, economic development, and a social network. It is apparent that Wisconsin mayors, city councils and city administrators are grappling with emerging challenges and are aggressively pursuing innovative and collaborative solutions. Among those I talked with, there is a deep commitment to cooperation and mutual problem solving that would be envied in many other states.

 I emphasized that there exists an “Action-Foresight Dichotomy” among many decision makers. By this, I mean that there is insufficient attention being paid to the future. Attention is typically paid to current operations – trying to get through each day, week or budget cycle with little activity being planned to build the kind of future desired by the community. The central question was, “Are you prepared for the kind of future you see for your community?” I also asked, “What makes a community, department or program relevant and consequential – now and in the future?” Measured relevance stems from impact; every department and program must be able to prove it has positive impact.

 For all local communities, the key question is, “What changes are you willing to make to ensure relevance in the future?” Change will occur no matter what we do, so we might as well plan for a desired future.

 The elected leaders I met in Wisconsin are a dedicated, resilient band of professionals. It is a state that has the tools and traditions to successfully address most critical challenges. For those who have not visited, it is a great place. I was honored to have the opportunity to share thoughts and hope to return soon.

 

With over three decades working in and with federal, state and local government, John Luthy understands public agencies. Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. An innovative and dynamic conference presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges. He holds both the MPH and MPA degrees as well as a doctorate in education.

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