yep. That's what happens in a recession. Income to the govt. decreases drastically.
The govt. does early retirements, and cuts hours, cancels projects, and holds off on scheduled improvements, etc. just like any company in the world. When it's income decreases.
I don't understand your second paragraph. The private sector pays taxes. It was always thus (back to during the Revolutionary War, even). I hope you show us how to run a govt. for free some day.