Across the country, most local governments are facing dramatic cuts. Radical revenue declines leave few choices when laws require balanced budgets. The process will be painful, but it also offers opportunities for positive change, a chance to reinvent ourselves with greater effectiveness.

We are going to be more successful in meeting the demands of the public and elected officials if there is clarity about what is being eliminated, what is being retained and what is being reinvented. Metrics need to be revised to reflect new realities. Clear and reasonably challenging expectations will provide certainty in a time of confusion and change.

Two years ago, I asked every city department and function to define their key service delivery areas and challenges through a process we nicknamed "Renewing Phoenix." Renewing Phoenix was an excellent way for management and employees to question and reinvent the details of the city's service delivery, our long-term service needs, and opportunities for partnership across department lines and within the community. This knowledge proved valuable as we used it to quickly identify changes in services that should be scrutinized in the budget-cutting process. It helped us prioritize services and build creative service-delivery systems at lower cost in cooperation with the mayor, the city council and the community.

The pressure to cut budgets is also an opportunity! It presents a chance to develop streamlined processes that the organization, management or employees might resist in normal times. As managers, budget pressure can motivate us to explore the concept of giving employees more independence of action, to allow increased personal initiative to meet the public's needs. Sometimes management can be a barrier to simpler, faster processes.

Currently we are studying a number of organizational consolidation ideas proposed by the mayor and individual city council members to see whether additional cost savings can be achieved. We are encouraging individual employees to reduce their travel, energy consumption and spending wherever they work. We engaged an interdepartmental team of our best and brightest staff in a "Revenue Alternatives" exercise that investigated employee and community suggestions for improving our revenue picture. The top 10 revenue-enhancement ideas from employees and management will be implemented in 2009.

We have identified ways to increase our use of nonprofit organizations to deliver key services. Work units are merging to access a wider variety of skills and offset peak work cycles. Staff is shifting from lower priority tasks to key service areas. Service delivery has been redesigned to be simpler and more direct in order to maintain service levels at a lower cost.

Employees are not machines, and their attitudes and morale will inevitably be changed by the budget process. Consideration and care given to employees who leave the organization or change jobs is not just about social justice and fair treatment. The treatment received by employees demonstrates in a real way that the organization cares about its people and can positively affect the way employees who are staying on feel about their workplace.

During this time of confusion and intense worry, employees hunger for information. Time and energy spent in communicating with employees will demonstrate to them that the organization cares. If they have no facts, employees will make up rumors or cynical views of the organization. Less damage is likely to occur if the simple truth is communicated-even if the facts are painful. Employees can then help the organization communicate with constituents about the severity of the budget cutbacks ahead. Constituents will likely voice questions and concerns to multiple city contacts, so this is another opportunity to share the fundamental facts along with the city's plans for change.

Here in Phoenix, we send regular e-mail updates to employees and created a special employee newsletter called "In the Loop," which provides details on the schedule for budget cuts as well as tips for wellness and stress management. The budget director and I co-hosted several open question-and-answer sessions for employees in our city council chambers, where we were able to respond to employee questions in person. The open sessions also gave us a good indicator of the issues foremost in employees' minds that we need to make sure we address.

We devote time at each of our weekly, televised city council meetings for a brief budget update to the mayor, council and citizens watching at home. Our goal is to share the latest information we have about revenue forecasts and other issues that affect our budget reductions.

We continue to hold regular briefings with labor representatives and our key management and personnel staff from city departments. Our staff regularly shares information with an extensive network of city boards, commissions and neighborhood groups, leading up to our annual budget hearings after the first of the year.

Much of this communication occurs on an emotional level. There is an opportunity here for genuine leadership that shares in the pain but helps employees to see a better future. We have seen the rightful outrage directed at private-sector executives who do not equally share the pain of tough times with employees. We in the public sector must do better.

The right answers will be different for different communities and situations. The critical point is to make sure the discussion of how your jurisdiction will balance the budget does not start and end with the financial balance. Somehow, we must find ways to improve service delivery. And by treating employees fairly, we can build higher morale for our organizations and communities.