California Governor Arnold Schwarzenegger issued an executive order last month that effectively halts almost all government meetings in the state due to budget constraints. Many in California's meetings industry understand the situation but expect the order to have a major impact on their businesses or the businesses of their associates.
In January, the governor declared California in a state of fiscal emergency, and the state legislature passed some measures to ease the fiscal crisis.However, Schwarzenegger said more needed to be done. The order puts a freeze on all non-essential spending, which includes discretionary travel for seminars, conferences, and training; restricts agency, department, division, and business unit meetings that require travel to essential participants only; mandates videoconferencing and teleconferencing; and requires meetings to be held at locations at or near headquarters offices.
Sally Sbisa-Daugherty, treasurer for the Society of Government Meeting Professionals' Sacramento chapter, said government planners are concerned by the order. If it only extends to June 30, it shouldn't have too much of an impact, she said. But if the cuts extend into the fall and winter, or even into 2009, "then we would most likely feel a significant impact," said Sbisa-Daugherty, who is also regional director of sales for the Pacifica Hotel Company. Schwarzenegger said he expected the order to be a substantial step in rectifying the budget crisis.
"I think that we can get another $100 million of cuts out of it when we go in that direction," he said. "So everyone is working together to make this happen. We want to make sure that come July 1 we are on good financial footing, that we have the money, and that we don't run out of cash and all of those kinds of things."
Jeroen Gerrese, president of Regent Hospitality Services in Sacramento, said he wasn't surprised by the governor's action, considering the entire country's current economic state.
"Any directive that businesses or government agencies give to cut back on meetings is not good news, clearly, but it is understandable because everybody is taking strategic action because of the downturn," Gerrese said. "I would be joining a long list of hoteliers and restaurateurs that would be disappointed."
Gerrese said he is worried about the possibility that this cutback will impact contracts signed by the government for events at his property later in the year. He said that although he wouldn't normally want too much government business in good times because of the lower amount of revenue it generates, he counts on government events in bad economic times.
"When a mandate comes out, that's almost a double whammy," Gerrese said.
Robin Torre, director of sales for Humphrey's HalfMoon Inn & Suites in San Diego, said she also doesn't rely too much on government meetings because the rates are lower. But according to her, many hotels will be greatly impacted by the order.
"Meetings and government is a big percentage of the business for a certain market of hotels," she said. Torre stressed the importance of meetings and training for government officials in learning their job tasks properly and suggested some other area of the state's budget be cut instead. "If they want to continue to stay current and up to date, people need to get the information across to each other," Torre said.
Emily Schroeder, president of the Society of Government Meeting Professionals' Sacramento chapter, said she saw a trend toward meeting budget cuts even before Schwarzenegger's order.
"I was recently at the Department of Aging," said Schroeder, who is currently a planner for the California State Sheriffs'Association. "Before I left [the department], we were going through the 'will we, won't we have training?' question. If it comes out of the general fund, the first thing that gets cut is training."
Schroeder said the state had been sending people in shifts to her meetings in order to save money on mandatory training. She has tried to keep meetings costs as low as possible by having registration fees pay for food and hotel accommodations, she said. "Like anything, meeting planners have to be fiscally smart," Schroeder said.
Schroeder said at least 10 planners she has spoken to are feeling the pinch. "It's a very precarious position to put the meeting planners in because they're putting themselves and their reputations on the line," she said.
Overall, many government meeting planners have been lost in the past three or four years, Schroeder said. She said she wonders how this next year will progress.
Originally published March 24, 2008