NYC had a similar budgetary/fiscal issue too and they thought they'd manage it by assessing more taxes on companies and people. The result was corporate as well as individual flight.

It's tough to slim down on spending. Be it individuals or governments and quasi-governmental organizations. Companies can swiftly implement spending cuts and RIFs --sometimes aggressively.

Governments, though, there are threads throughout --elected officials often trade support for positions and favoritism and if they take those away, so do many of their fiercest people who get out the vote. Also, their voters are averse to having the services they've grown accustomed to getting cut.

So sometimes you need that official who knows he or she is a one termer but will go in and cut and cut. People will hate them but it will allow the government a chance to make a turnaround.