The Fastest Way to Address Budget Gaps: Fresh Labor Data, Clear Decisions

When it comes to emergencies, government knows how to move fast. Whether responding to wildfires, floods, or public health crises, the public sector has proven it can act with urgency, coordination, and resolve. But the latest crisis is quieter. There are no sirens or road closures, and yet it threatens the foundation of service delivery across the country: local government budgets. 

This is a fiscal emergency—one driven by rapidly shrinking revenues, persistent inflation, and the dwindling federal and state grants that once helped bridge the gap. According to the Wall Street Journal, localities are seeing a steep decline in federal pandemic aid, with many agencies now facing difficult choices about where and how to cut costs.  

At the same time, a new factor is emerging: the shifting federal workforce. Thousands of federal workers are being laid off or displaced, creating a unique opportunity for local governments to tap into a skilled labor pool, especially in areas like IT, cybersecurity, and healthcare, where talent shortages have been most acute. This shift presents an opportunity for local governments to fill critical roles without overburdening their budgets—provided they have access to the right data. 

The gap is real, and it’s widening. But there’s good news: local governments don’t need to fly blind. 

In this moment, your most powerful tool is fresh, accurate labor data—and your willingness to use it quickly and decisively. Your workforce is your largest expense. By focusing your energy there, you can find real, immediate opportunities to stabilize your budget without sacrificing the quality of services your community relies on. 

The Crisis Looks Different This Time 

The workforce crisis in government didn’t sneak up on us. For years, local leaders have warned about a shrinking pipeline of public servants, increasing retirements, and a growing pay gap between the public and private sectors. 

But this year, the budget pressures hit a tipping point. 

As outlined in ICMA’s “Roadmap to Dealing with Government’s Workforce Crisis”, many agencies are struggling to staff critical roles, even as they face escalating payroll costs. It’s a double bind: agencies can’t hire the talent they need and can’t afford the staff they have. 

Brookings calls it “The Empty Government Talent Pool”. The old assumptions—that talent will stick around for the pension or that cost-of-living bumps are enough to retain top workers—no longer apply. The workforce is evolving faster than many public agencies can keep up with. 

Meanwhile, budget leaders are being asked to make cuts or freeze hiring immediately—without a modern view into what’s really driving costs. 

You Don’t Need to Wait for a Study 

The traditional government response to fiscal strain is to launch a months-long study or hire a consulting firm. But when revenues are shrinking faster than budgets can adjust, delay is no longer a luxury local governments can afford.  As Nick Lyell of CivStart aptly said, “Staying the same in a changing world is not risk-free.” Waiting for perfect information can sometimes be the riskiest choice of all. 

What local governments need now is a structured, data-driven approach to run scenarios—right now. The right labor data will help answer key questions like: 

• What are we spending by department, classification, and funding source? 

• Which roles are truly essential to our mission? 

• Where are we above or below market compensation benchmarks? 

• What would a 5% reduction look like in real dollars and roles? 

• Where can we optimize cost without reducing service? 

That’s the power of modern labor costing. It allows agencies to simulate changes, test ideas, and forecast impact without making permanent decisions first. It’s like holding a rehearsal before opening night—only the stakes are your city’s financial future. 

Step 1: Start with What You Know—Your Own Data 

Before you begintrimming headcount or slashing budgets across the board, take stock of what’s already at your fingertips. 

• Payroll and position data 

• Department-level org charts 

• Budget-to-actuals from recent years 

• Overtime, temp, and vacancy tracking 

• Benefits costs and trends 

Pull these together in one place. Don’t worry about perfection. What matters is speed, consistency, and being able to segment the data by employee type, department, and funding source. 

If you’re using tools like TrueComp, this process becomes dramatically faster and more accurate. TrueComp centralizes and normalizes labor data from across your systems, making it usable for scenario modeling and executive decision-making. 

Step 2: Build Scenarios—Quickly and Transparently 

Once your data is structured, it’s time to model your options. You should be able to answer: 

• What happens if we keep all vacant roles open for 6 more months? 

• What’s the total cost of COLAs (Cost-of-Living Adjustments) over the next year? 

• If we realign staffing in one department, where else can we reinvest those funds? 

• Are there duplicative roles or outdated classifications we can consolidate? 

These scenarios don’t need to be perfect. They have to be directionally accurate. The goal is to help leaders make informed trade-offs quickly, not to get bogged down in analysis paralysis. 

Step 3: Benchmark Against the Market 

In the Deloitte Insights article, “Winning the Talent War in Government”, the authors highlight that governments can’t compete for top talent without knowing how their compensation stacks up. Internal data is only part of the picture. External benchmarks are critical—especially now. 

Compare your pay scales, total compensation, and benefits with similar agencies. Look at: 

• Neighboring cities and counties 

• Private-sector equivalents (for IT, Finance, etc.) 

• Historic turnover rates tied to compensation 

• Upcoming retirements and succession gaps 

This isn’t about cutting wages—it’s about aligning them with reality and spending your labor dollars where they’ll have the greatest impact. 

Step 4: Communicate with Confidence 

Most budget decisions aren’t made in spreadsheets; they’re made in council chambers, at staff meetings, and during tough community conversations. That’s why your data must be more than accurate—it must be clear and defensible. 

Bring visuals. Show the “before” and “after.” Explain how labor costs drive the budget and what your proposed path forward looks like in real terms: fewer layoffs, smarter vacancies, sustainable raises. 

When decision-makers and stakeholders can see the why behind your proposal, you build the trust needed to move quickly. 

Step 5: Reassess Often and Act Nimbly 

Budget shortfalls are rarely a one-time event. They tend to arrive in waves. That’s why your labor data strategy can’t be a one-and-done effort. 

Modern finance and HR teams revisit their models monthly or even weekly—especially when volatility is high. They continue to ask: 

• Did our assumptions hold? 

• Are we seeing new vacancy trends? 

• Has the grant landscape changed again? 

• What’s the latest on inflation, benefits, and bargaining? 

This is the mindset of agile public service: adapt quickly, plan continuously, and use real-time data to lead. 

Conclusion: Move at the Speed of the Moment 

Public sector leaders have always faced tough tradeoffs, but the pace has changed. As Route Fifty put it in their workforce crisis coverage: “The old playbook isn’t working.” Grants are disappearing. Vacancies are growing. Meanwhile, community needs continue to rise. 

To meet this moment, you need to move faster—and smarter. 

The quickest path to budget clarity and smarter hiring is through your labor data. Not just spreadsheets, but real-time, actionable insights that empower you to act with confidence. Tools like TrueComp are helping agencies model the impact of every decision, so you can make informed decisions, not guesses. 

Your workforce is your greatest asset—and right now, a historic shift in the public sector labor pool means every dollar, and every hire, matters more than ever.