The long battle, beginning just after the first of the year, for the City of Falls Church’s Fiscal Year 2015 budget was resolved by a 4-3 vote last week. Despite the 4-3 vote, the process was not nearly as acrimonious as we’ve seen it in past years. Everyone on this Council was very close to the same position, and it centered on a willingness to give the School System what it needs despite its record growth in enrollment that is not expected to abate anytime soon.
What is still only beginning to be appreciated here, however, is how contesting macroeconomic theory impacts such local budget fights. Take, for example, the issue of the size of the fund balance. The City policy is not a textbook prescription, it is based on the application of a particular “monetarist” theory, by contrast with one that is more progressive, that sees investing resources being more important than conservatively clinging to them.
Yes, core distinctions that on a federal level are what divide the two major parties on economic theory were at work in the local budgeting process this spring, only slightly more self-consciously than before, but nonetheless by and large unrecognized.
No matter how tiny, the independent jurisdiction of Falls Church must become more self-conscious, because the forces of conservativism will continue to rear their heads in the face of conflict and if allowed to dominate, would steer the City in a very wrong way. For example, in this last budget cycle, we saw the call for the City to forfeit the independence of its school system to a wider, larger neighboring jurisdiction coming across more loudly than in recent years (although that sentiment has been around from the beginning).
This mentality deigns to keep government as limited as possible, such that if a school administration can function with a million students, then that would be preferable from a cost-benefit standpoint, to one that handles only 2,500 students. When calculated from a simplistic perspective, this seems clearly preferable, on grounds it will hold down taxes, usually.
But there is a core fallacy in that approach which its critics on the national stage are quick to point out. That is, the key to the nation’s future lies in human capital, and not capital alone. This requires investment in that human capital which pays off over a longer term, and is not so easily quantified as in a discrete budgetary balance sheet.
When one sets a particular tax rate for a particular year against the long-term impact of shortchanging education, for example, the shortsightedness of the first approach can begin to be made clear. The crisis in education in the U.S. right now is a result of three decades of such “monetarist” approaches, beginning in 1980 and resulting in the Great Recession of 2008.
Now, America’s educational performance levels are slipping rapidly against global competitors, as the “monetarist” grip continues to strangle its potential. That’s the issue for Falls Church and everywhere else.