Friday, May 20, 2011

Mayor Buckhorn's Cut and Invest Plan

Tampa Mayor Bob Buckhorn's economic plan is following the Bill Clinton strategy of "cut and invest" 1993 budget. That isn't a bad thing. Clinton's 1993 budget was brilliant and paved the way to reduce the deficit. Gulf Coast Business Review looks at Buckhorn's economic agenda.

The Cuts

The City of Tampa has a $24 million budget shortfall. Buckhorn indicated that he is likely to layoff city workers. In the long run less workers makes government more inefficient. We saw how the Bush administration cut domestic departments and turned a surplus into a deficit. The flip side is the City of Tampa relies on tax revenue from sales and property taxes. The housing market went bust and wages are stagnant.

Tampa is facing increased costs in its pension plan. From 2009 to 2010, Tampa's payments into the pension fund went from $20 million to $40.6 million. My question for readers is the City of Tampa investing its pension fund into a hedge fund? That would explain the cost increase.

Buckhorn intends to sell buildings that the city no longer needs. This will bring in revenue and get rid of overhead cost. The question is are there buyers in the market for office space?

Tampa appears to be stuck with its parking garages from the Greco administration. No one in their right mind would want to buy a parking garage. Buckhorn said the cost for the upcoming year will be $7 million.

Investment

Buckhorn to increase research and development. I noted before that research and development has good longterm economic benefits. The problem is scientific breakthroughs can take time and R&D is not the biggest job creator. That doesn't mean Buckhorn shouldn't pursue federal R&D grants and in encourage tech companies to move to Tampa. He should.

Buckhorn has big plans for the Port of Tampa. Buckhorn went down to Panama to help spur trade. Buckhorn is looking at the highway construction connecting to port to I-4 as a way to make Tampa a major shipping player.

Buckhorn is interested in Tampa have rail. The sales tax vote for light rail failed. Gov. Rick Scott killed the high-speed rail line connecting Tampa to Orlando. It will be interesting to see if Buckhorn makes a push for rail.

Update: Buckhorn responded on Twitter if the City of City's pension fund is invested in a hedge fund. Buckhorn said no.


@pushingrope no, they do low-risk investments

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