Trends for Local Governments to Watch in 2014

It’s that time of year when pundits and poets lob their loftiest thoughts on the near-term future into cyberspace.  Not wanting to be left out of the melee, I’m offering the trends I’ve been watching that could have a big effect on local governments…things we ought to be not only watching, but developing strategies to address.  My thanks to Trendwatching.com, The Economist, The Futurist, About.com, and the Christian Science Monitor for their insights.

 
1.  In 2014, the economy will grow faster, unemployment will decline, inflation will stay low, and the housing market will continue toward normal YET buying and owning things will increasingly go out of style in favor of renting, paying-to-use, and subscribing, which will have implications for our sales tax-based revenue streams.

Economists are generally optimistic for small gains in GDP; forecasts anticipate GDP growth of 2.8% to 3.2%, with unemployment dropping to 6.3-6.6% and inflation running at 1.4-1.6%, well below the Federal Reserve’s target of 2%.  These are all good signs for the economy, and good signs for local governments.  Borrowing rates will stay low, so infrastructure investments should accelerate.  A long-term view, however, shows sales tax revenues weakening due to social changes including online purchasing and the growing tendency to pay for the temporary use of things rather than buying them.  Smart local governments will begin developing plans to offset revenue losses from weakening sales taxes over the next few years, and will look for systems to reliably capture use taxes.

2.  Society will be increasingly “crowd-shaped”.  From IBM’s Dublin research lab that used smartphone data to identify the most-frequented transportation routes to remap transit, reducing average travel times by 10% and increasing ridership, to the ICMA Conference planning process that requires crowd-sourcing of conference offering ideas, our citizens will increasingly become accustomed to being given the opportunity to have their ideas and expectations shape policy and other decisions.  Local governments will need to navigate the First Amendment and other considerations that some have used as reasons NOT to move more quickly into crowdsourced solutions.  Even fund-raising for special projects by crowdfunding (think Kickstarter or Indiegogo) will be embraced by forward-thinking local governments.  Everything from library hours and collections, to park and recreation offerings, to crime prevention and response can be reshaped by intelligent systems that aggregate data on preferences or behaviors of citizen/customers. 

3.  Privacy.  The Pew Research Center reports that 86% of US internet users have attempted to remove or mask online activities.  People want to be served, but not watched.  As local governments struggle to engage citizens through electronic and other means, new strategies will be needed to build trust and demonstrate that outstanding, customer-focused service and open, transparent communication can be achieved without undue intrusion.  Don’t be frustrated by the reluctance of many citizens to provide electronic information; provide ways for them to customize and personalize their information requests, and document systems that will protect their privacy. 

4.  The Internet of Things will focus on people.  Gartner predicts that the internet of connected things will add $1.9 trillion of economic value to the global economy by 2020.  In 2009, there were 2.5 billion connected devices…In 2020, that number will rise to 30 billion connected devices.  Cars will soon display a driver’s heart rate and will increasingly warn and adjust for road hazards.  Products will link to deliver personalized versions of allergy-sensitive clothing.  Headphones with integrated monitors will sense a user’s mood and select mood-appropriate music to play.  Online grocery delivery apps will provide pre-packaged grocery bundles so that busy consumers will only have to choose a “lifestyle”, then the products will be selected for them based on historical preferences.  What will that world mean to local governments?  Increasingly, pressure will be applied to allow for individualized service options based on price, geography, age or other demographics, health, etc., and laws and regulations will be forced to catch up, while still insuring equal access to services for all residents and taxpayers.  That analysis and preparation should begin now.  

5.  Guilt-free consumerism.  In a global study reported on Trendwatching.com, one-third of global consumers (2.5 billion people) were identified as “aspirational consumers”; 92% of these people reflect a desire for responsible consumption, and 58% trust their favorite brands to act in the best interest of society.  What this means to local governments is that increasingly it will be crucial to demonstrate a commitment to reducing the government’s negative impact on the planet, and likewise to demonstrate a commitment to helping citizens to reduce their own impacts of consumption and other behavior.

6.  Following the disastrous year for politics in Washington, local governments will need to develop and implement specific strategies to strengthen public trust in government.  While public confidence is worse for the federal government, this general frustration with the inability to move forward cooperatively will continue to spill over on to local governments.  This will be particularly important as the 2014 election season ramps up and candidates use the lack of public trust as a campaign issue.  Smart local governments will earn and strengthen public confidence by objectively reporting their performance successes, establishing and communicating new collaborations across issues and agendas, and proactively reaching out to inform candidates and potential candidates of their performance results quickly and consistently.

7.  Pension reform.  With recent rulings that have spanned the gamut from allowing pension cuts in Detroit to preventing certain pension changes in San Jose, CA, pension reform efforts will continue to be the subject of ongoing legal challenges.  Cash-strapped local and state governments should watch the legal evolution of this topic closely as they struggle to fund long-term liabilities in the face of limited revenues.

8.  Demographic shifts.  Hispanics, women, seniors and young voters will have another undeniably significant impact on the 2014 mid-term elections, as well as on service demands and social trends.  Local governments should be thinking about how they will demonstrate their commitment to all minority groups and be able to illustrate their long-term plans for serving specific demographics.

9.  Mental health.  Increasing attention will continue to be focused on the many gaps in services and funding for those at risk due to mental health and substance abuse issues, particularly in light of the accelerating evidence of mental health as a related cause of mass shootings.  There is no single solution to the mental health crisis, but local governments must be conveners and facilitators of change, and must help to implement collaborative solutions with non-profits, the health care industry, insurers, law enforcement, and the faith-based community.

10. The Face of Poverty.  Recent trends show that middle and low income families are now making less in terms of inflation-adjusted dollars than they were in the 1970’s.  This income gap will not only affect the overall economy’s efforts to rebuild, but it will have long-term impacts on access to higher education and training for 21^st century jobs.  If we are to truly restore the American Dream, cities and counties must lead the effort to bring communities together to strengthen economic opportunity, with programs like the “Bridges out of Poverty” effort.

All this means that innovative, well-managed local governments will need to be increasingly aware of external trends, responsive and flexible in adapting to change, and will need to build support for change through “moral momentum and clarity of purpose”, as noted by Randy Pruett in Texas CEO magazine.  Your focus on your core mission and purpose has never been more critical.