What should be cut?

A couple of weeks ago I wrote about "The curse of the spendthrift legislators." Governments everywhere in the 'first world' have racked up huge debts, primarily because they have ventured into areas they do not belong. Governments at all levels have some legitimate functions in libertarian philosophy. Most of these proper functions can be classified broadly as protecting our rights without impinging on our liberties, including economic freedoms.
So now that the government spending pendulum has swung too far in the wrong direction everywhere, how can it be reversed?  As an example on a smaller scale, the link above mentions that the City of Toronto has a budget shortfall for next year of three quarters of a billion dollars. So city councillors are faced with cutting costs or raising taxes....a lot. What to do? One of the many suggestions in a report produced by KPMG for the city was to cut library services. You might imagine the hue and cry and that was elicited from the statist community for that one.
Realistically there is no way city government (or any government) will revert to the libertarian ideal in the near future. Our only hope is that government makes moves in the direction of more liberty. Two articles by Larry Solomon of the National Post suggest how this may be done. The first here, deals with the KPMG report and its effect on services. The second here, addresses the library questions and the perception that the cuts will somehow encourage widespread ignorance. Both articles offer interesting alternatives.