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Optimism

There is an interesting connection between the passive ‘this too shall pass’ approach to life and the ability to embrace a life energized by relentlessly positive self-fulfilling prophecies. While there is historic credence in the ‘what goes up, must come down’ view, there is also value in accepting the responsibility to change things for the better. These are not countervailing visions. Because the plot always turns, there are bound to be periods of uncertainty, decline and recalibration. But every new challenge introduces opportunities to explore, innovate and evolve.

The current year represents this view. As with most New Years, it began with hope, but throughout was plagued with missteps and disharmony, misadventures and disconnects. But as it draws to a close, the American spirit must be recognized for a DOW that has set new records, the lowest unemployment in six years, millions of new jobs, escalating productivity, and growing consumer confidence. While we have not achieved the annual GDP anticipated, Q4 has been quite strong and may be a precursor to a more robust 2015.

America is a land of self-fulfillment; it is energized by opportunity, vision and latitude. As fortunate members of this society, we can seek, fail, seek again and succeed. We can try virtually anything and pursue illusory whim or calculated goal. This unlimited horizon has been and will continue to be the genesis of America’s strength and character. It is what leads us to believe that we can overcome any obstacle and win through the most arduous events. We are optimists who seem to be able to self-prescribe and heal our various maladies. Whether an external threat or our self-induced chronic diseases of congressional ineptitude, social bigotry, economic inequality, apathy and inane social media, we ultimately rally toward progress. However, the question remains, Will this continue?

Beginning with so many uncertainties, 2014 did not appear to have much chance to become a banner year. But in many ways it may become the launch point for additional progress in 2015. But that progress will compete with darker and more ominous forces. International unrest will divide nations as each seeks its own center and pursues its unique vision of sovereignty and prosperity; economies will continue to struggle due to resource, educational, infrastructure and social disparities; and those who desire to dictate the path of others will continue to assert their influence through conflict rather than reasoned discourse. It will remain a dangerously fragmented and contentious world that is growing warmer in more ways than we can imagine.

Is this to say we are not ready, excited and full of spirit? Certainly not! Looking back through history at many end-of-year scenarios, there have always been reasons for concern. But do we, as American’s, fold our tent, claiming that it is just too difficult, dangerous, or uncertain to give it our best? No.

I see slow economic growth but have embraced a ‘slow but steady’ posture. Congress will continue to be a mystery, as contention, distrust, greed, and power continue to be principal motivators, rather than vision, accountability and collaboration. The Middle East will be problematic, but, if the U.S. can begin to understand that complex mix of cultures and allow them to sort out their own social polarities, we may earn less of their attention. Innovation, productivity and job growth should continue their upward trajectory, but with fluctuations and potential DOW decline. The keys have not changed: patience, good data, strategic planning, employee development, and commitment to the ‘long-view.’ I have faith; I am a believer who is confident that 2015 will be another challenging, unpredictable, convoluted but rewarding New Year. Whether we’re ready or not, it’s here and is bringing a truckload of exciting new opportunities.

JFL Pic Blue Shirt-Yellow Tie 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). Reprints of his book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders (2010) has sold out three times. 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 http://www.futurescorp.com).

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New Day, New Year

As this New Year dawns, I have taken additional time to sort through a variety of data that provides some insight regarding what we might expect over the next 12 months. As noted in a prior posting, there are numerous reasons to be both mildly optimistic and somewhat pessimistic. After the ‘fiscal cliff’ was temporarily avoided, the DOW rallied to end the week over 13,400, signaling market optimism and a willingness to assume the best for U.S. industry in the months ahead. Unemployment remains around 7.8 percent, but people may finally be grasping that time and pace are the twin keys to a slow, stable job recovery, and we must accept that reality. Once expectations are calibrated to reality, manic calls for drastic action may mellow a bit as we slowly work out of this mess.

It is interesting to note that there were 137,000 new jobs created on October, 161,000 in November and approximately that many in December. In all, 1.84 million jobs were added during 2012, which is about what was created in 2011. This is not the 2.4 million needed for a fully revitalized economy, but the good news is that jobs are being created across several industries; manufacturing, housing, professional services, health care, architecture, financial services, information services, and retail. While insufficient for a robust recovery, it signals positive direction and steady gain, when much of the world is upside down (Italy, Greece, Spain), stagnant (France, England, Russia, and much of the EU) or slowing (South America, China, India). U.S. industry is positioned to recover, albeit slowly, through more careful planning, better data, an inventive spirit and a broader worldview. Panic and overreaction are never signs of good management and certainly don’t reflect foresight. For the most part, the American private sector has remained grounded while Congress and the White House grappled over fiscal ideology and foolish party politics. If anything, this continues to demonstrate that politics at the national level is deeply flawed, leadership is lacking, and the concept of promoting a singular, potent American vision has been lost. At some point I wonder when citizens will seek serious change.

Readers must understand that job growth has been driven by hiring in the private sector. Those who continue to rave about government growth might find it curious that government has shed millions of jobs over the past few years, losing another 13,000 in the past month alone. Whether this is good or bad remains to be seen, but be aware that many states, cities and counties are operating on paper thin budgets, trying to maintain services demanded by the same citizens who want budgets reduced. In my work with state and local government, I continue to see that, after close to five years, there is no fat left to cut. If anything, more hiring and some service recovery may be wise.

U.S. economic growth will be 2013’s central theme. How it is achieved will depend on geopolitical relationships, global economics, social-cultural transformations and the ability of the U.S. Congress to collaborate. We’ll see higher taxes- generally a slow return to the same levels as the 1990s, when the economy soared. This won’t all happen this year, but be aware that there is no possible way to pay for Medicare and Social Security, along with defense, research, education, social services, and all the other services required in a growing, highly complex society. There are too many converging variables that cannot possibly be funded and maintain the fabric of this society. This year will see more triage to determine program value and where the greatest benefit can accrue to the most people. Aging Baby Boomers will be a greater force in every community, demanding services and accommodations; they have money, expertise, connections, and are used to getting their way. They also remain highly competitive and contributory, making them a resource that may just carry America through this transformative period.

A lot is in play this year. The election is over, the economy is slowly improving, consumers are gaining confidence, and the global community is again looking to the U.S. for guidance and leadership. During the next five years America will encounter enormous challenges but has even more opportunity to achieve greatness than it did at the end of WWII. The question remains, Will we lead? Do we have the courage, foresight, and will to do what’s right for the long-term? The signs are mixed. But what choice do we have?

jfl-pic-blue-shirtyellow-tie1.jpgWith 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 government 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). His 2010 book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, is being hailed as the best book for public managers and community leaders who are committed to building a sustainable future.  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 http://www.futurescorp.com).

2010 – Predictions and Ruminations

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.

Predictions for 2010

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 http://www.futurescorp.com).

Forecast for Q2 – General Thoughts and Data

There are mixed signals coming from most sectors – some positive, others negative. The best we can do is to look at the data and calculate how these “converging variables” will impact our communities.

·         As most know, GDP will continue to lag, but there are signs it will not fall to the 2% – 2.5 % growth contraction originally predicted. Most likely, we’ll see growth at -1.8% to 2%. Still not good, but getting better. Caution is the main characteristic in every state and community…

·         Interest rates will continue to be low, with prime at around 3.25%; this is good for those who choose to borrow and will help boost business as stimulus funds work through the system.

·         Speaking of stimulus funds, have patience!  This is a financial phenomenon that takes time and will have many fluctuations over the next several quarters – well into 2010. Housing will pick up, although more slowly than communities would like. There is a huge amount of inventory that must work its way through the market. I wish there had been more effort to let truly bad mortgages fail instead of propping up so many poor loans. The correction may take longer due to messing around with so many really poor mortgages. However, this is a ‘damned if you do, damned if you don’t’ phenomenon. There are downsides to virtually every alternative so second guessing is rampant, but not very productive.

·         Due to the time needed to work stimulus funds through the huge U.S. society and financial system, unemployment will continue to grow – perhaps not past 10%, but probably to 9.5% by year-end. We’ll watch this carefully because it has a huge impact on every state and community. I don’t see momentum slowing until well into 2010 and then it will take time to get people back to work. Three years to return to under 5% unemployment would not surprise me, and many who find employment will be ‘underemployed.’

·         Oil will continue well below 2007-2008 highs, with most industry analysts predicting crude averaging around $60 or less a barrel as we get into the second quarter. It could increase during summer months, but reduced travel may keep prices lower than predicted. This is a huge stimulus for the U.S.

·         Better news on trade – the deficit is decreasing to around $450 billion, which is 3.2% of GDP for 2009 and still very high. This is important…it could be a key barometer of overall long-term growth and, if exports accelerate, will help energize the recovery.

·         Public pension funds are being watched carefully. All are getting hammered by the market and some will be in dire straits within a few years. More specifics on this in later blogs.

·         Many of my law enforcement contacts are very concerned about growing violence and crime – especially as unemployment  benefits run out. Even with extensions, there are many who have not saved, cannot find a job, and will soon have no benefits. This creates a powder keg of survival instinct driven by hunger, fear, frustration, and anger. People with few alternatives will seek to survive…and in some areas it could get dicey. Public safety is aware of this and is preparing in most communities. Smaller communities have fewer resources but could have more opportunities to provide neighbor-to-neighbor assistance.  Unemployed people with insufficient resources are a BIG negative with enormous potential to upset recovery plans. Get ahead of this curve with proactive plans to help the community…along with plans to react to safety and security issues.

·         There is far too much finger pointing and accusatory language around Washington, coupled with political grandstanding. None of it deals with reality – and that reality is that complex economic problems, as during the 1930s, require a lot of government funds to bridge the period before the market can find firm footing. If private enterprise cannot pour money into the economy, the government must. Patience is the key…let the plan work and amend as new data is absorbed. This is a new, very different world than in the 1930s. The Administration has started a series of curative actions; those actions will morph many times as the U.S. and global markets react. The key is to watch, remain ready to react, be unafraid to act, and gather every ounce of available new data. This is happening. Q2 2009 will see improvement over Q1. But there will be fluctuations that will impact every level of government, especially those agencies without clear plans, good data, or the will or process to respond.

·         Consumers will spend less, but will still be out there making sensible purchases. This contraction will endure far beyond 2009. It may be the beginning of a new era characterized by fiscal responsibility, less reliance on credit, lowered (and more realistic) expectations, and a trend toward more long-term thinking.

·         I see the opportunity for more collaboration and partnering in the next several years. Private-public and public-public collaborations are essential and will bring new efficiencies. Begin or continue exploring new models that expand options at every level.

As a corollary to the above, this is the perfect time for federal, state and local officials to consider what specific agencies should look like five or ten years from now. It appears that the current trend is toward more government and perhaps more intrusive government (I heard this again today from a financial services professional). I am not so sure this is a viable trend. It may be a reactive and curative/preventive action that might not endure at its present level. What will endure is the public’s interest in fairness, truth, and services. Unfortunately, we live in an entitlement society where everyone wants government to provide services but no one wants to pay the freight. This must end. I encourage government entities to disclose information about available funds, reveal what basic services are provided at what cost, and ask the public to decide what is essential. Some governors insist on transportation projects while others see education as more critical. Many see water or wastewater projects as first priority. Whatever stated priorities, as noted recently in another blog, the key question is ‘What is most important for long-term development, health, safety, and prosperity?’ We’ll explore this in more depth soon.  4/7/09

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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.

Probability, Predictability and Inevitability

Because much of my work is dedicated to helping public agencies prepare for the future, there are always conversations with highly analytic personalities who scoff at the concept of futuring. Some become quite exercised at the prospect of predictability, while other seem mildly amused that they are even participating in the discussion.

My approach during a recent program was to describe a reservoir that supplied the majority of a community’s water supply. I posed a simple equation based on this proposition – If you know the reservoir’s capacity and its current volume, its inflow (recharge) rate, and its extraction (discharge or outflow) rate, would it seem logical to believe that you can predict its ability to sustain the community water supply? Or, perhaps fall short as the community grows or declines or precipitation patterns change? Data is available on household consumption, leakage rates (the EPA estimates that 1.2 trillion gallons of water is lost annually through household leakage!), inflow, outflow, and community growth, so why is it so difficult to calculate and predict water supply availability? Frankly, it is quite simple.

The same process applies to predicting road surface life, landfill capacity, traffic congestion, new infrastructure requirements, and virtually every element of public management. In my experience many elected or professional managers who initially express reluctance to engage in true strategic or scenario planning become strong advocates once they experience a data-driven If-Then work session.

Having good data is the key. If there are 4,400 miles of asphalt roadway in the county, average weather, traffic weight and volume data is available, and road surface lifespan is known, managers can predict deterioration rates. Replacement can then be scheduled and budgeted. Pretty simple. The key is a focus on the future – and data that allows probability analysis and predictability. It is a learned skill and an earned perspective.

Public managers and elected leaders must aggressively embrace future planning beyond annual budgets. Long-term strategic and operations planning must be taught to all managers as a core skill. Public agencies that exhibit futuring skills are typically more efficient and prepared for the challenges ahead.

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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.