You read the newspapers. You have held a variety of managerial positions in both Zenith City and West Dakota and, in the process, have learned to deal with budget cuts. Thus, last fall, you realized your need to dust off these old skills. You started to think ahead. You did not, however, start by reducing expenditures.
Politicians hate pain.
They don't get elected by imposing pain. Thus, Budget Director Rangstrom, in response to the clear desires of the mayor and the city council, is requiring every department in city government to reduce current-year expenditures by the identical 5 percent. It punishes the efficient who had managed to control expenditures by improving productivity and driving down costs. Thus, in thinking ahead, you had decided not to reduce total expenditures below your monthly allotment. Instead, you had shifted some expenditures from current operations to the purchase of more materials and other items that your department would need.