It's hardly a surprise they are cutting services, this is the nature of the beast when your funding is independent of service provided. It creates a situation where normal market dynamics (better services, higher income) is replaced with a situation where worse services gives reason to request higher incomes. It is the main reason why all public funded/managed entities spend money or make savings in the wrong way to be efficient (they spend money on non-frontline services, and cut frontline services).
This will, of course, be a problem across the public sector when the budget cuts start, they have spent the last 13 years expanding the public sector in non-essential roles as the funding has been increased, but you can guarantee that is not where the axe will fall.
The only way to change this mentality is to remove the allocation of funds and create competitive alternatives however...