Fiscal First Aid When afflicted with financial distress, public managers first need to stabilize the ailing government. “Fiscal first aid” techniques can be used to stop the bleeding and provide immediate relief. Cases of more severe distress may not be completely resolved by fiscal first aid, but fiscal first aid can provide a short-term respite and time to develop more permanent treatments. In less severe cases of financial distress, fiscal first aid alone may be sufficient. This Web resource presents fiscal first aid techniques in four categories: | | Primary Treatments are those that are recommended as the first line of defense and should be considered as a first option. In many cases, the go-to treatments not only provide immediate help but also improve the long-term prognosis. | | | Treatments to Use with Caution may be called for if the go-to techniques are not sufficient. However, the side effects of these treatments could potentially worsen financial condition if used improperly.
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| | Treatments to Use with Extreme Caution might help the near term financial situation, but could ultimately work against financial sustainability. For example, a treatment might damage the government’s reputation, thereby reducing the public’s support local taxes | -
Resources on Revenue Structures: In addition to first aid techniques, the GFOA is gathering information on improving revenues. GFOA Training on Fiscal First AidAugust 12-13: Denver, CO Fiscal First Aid: Recovering from Financial Distress October 26-27: Chicago, IL Fiscal First Aid: Solutions for Fiscal Stress Desktop Training: Fiscal First Aid Series Case Studies The GFOA is looking for local governments to participate in detailed case studies about responses to fiscal distress. First Diagnose! As a first step, figure out what the main causes of the problem are. Accurate diagnosis is essential for selecting the right treatment and getting the patient’s (your government’s) support for the treatment regimen. When diagnosing, it is advisable to emphasize factors internal to the organization such as structure, culture, and communications. While external causes, such as a poor economy or state/federal mandates, may be at least partially to blame for fiscal distress, fixating on these largely uncontrollable items saps confidence that a good solution can be found. Of course, presenting a diagnosis where the patient is partly to blame for his or her condition requires a delicate bedside manner. |
 Learn about MuniCast, a financial forecasting model designed to allow local governments to immediately construct long-range projections of revenues and expenditures, as well as multiple economic, spending and debt scenarios. For more information about this GFOA Web resource, contact Shayne Kavanagh, Senior Manager, GFOA Research and Consulting Center.
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