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Wednesday, July 6, 2011

State and local governments struggle to make ends meet

Tuesday’s New York Times presented an extensive article about the effects of financial cutbacks in local governments.  The story focused on Wilmington, Delaware, but acknowledges that similar difficulties are being felt in cities and states throughout the U.S.  Click here to see the NY Times story.

Implications:  The aftershocks of the Great Recession will be many.  As federal stimulus programs dry up and tax revenues continue their somber pace, state and local governments will continue to try cut spending.  But at what point does cost-cutting hit muscle and bone, instead of just trimming fat?  And how can local and regional governments continue to spend money that they do not have?

Get ready for a very contentious election cycle.  (And I say that as someone who is writing from Minnesota, a state whose government is currently shut-down for lack of a civilized agreement on the budget.)

One question I might be asking about all this:  “Is there a way my company, product or service can provide alternatives to services that were once provided by a government agency?”  I’m thinking about private campgrounds that might fill the void of closed or declining state parks, or home health care companies that might supplement services once provided by previously government-sanctioned services… or other private-sector alternatives.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

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