How to make this year’s budgeting process your city’s best yet
January 31, 2024
Does thinking about creating your city’s annual budget cause a spike in your cortisol levels? If so, you’re not alone. Many city finance department members feel a sense of dread when the conversation turns to long-term financial planning.
But “budgeting” doesn’t have to be a bad word!
With a little bit of strategy and planning, you can make your city’s budgeting process much more pleasant and productive for all. Here’s how to make this year’s budgeting process your best one yet.
It can be easy to get pigeon-holed when thinking about your government budget. Instead of getting caught up in determining property tax increases or vehicle purchases, first take a step back to look at your city’s overall operations.
Starting with the big picture can help you to think through all of the capital expenditures you might have for the year. For example, if your city wishes to build a city park, you’ll need to look at the entire capital outlay the project would require. This would include peripheral costs such as the need for additional employees to manage the park, equipment to maintain it, and more.
One way to think about this is to ask “if we do X, how will it affect Y?” Keep in mind certain expenses may not be a single-year expense and would impact budgets in future years.
Know your numbers—and the story behind them.
It’s not enough to say “we’ll have three new residential housing developments coming in next year.” You need to also report on the additional revenue and expenses these will produce. Again, think holistically—how would three new housing developments impact your city’s public safety expenditures?
Being able to tell the story behind the numbers is critical, too. You don’t want to simply bombard your department heads, city council, and constituents with a bunch of numbers. You’ll need to explain why the numbers are what they are and what this will mean for the city’s long-term financial planning and operations.
Think of the budget as a process, not an event.
Budgeting can feel like this thing that just happens each year—and this is where stress can creep in. If you think about it as a process—i.e., you have a well thought-out plan for how it’s going to happen—you can help to eliminate feelings of chaos.
A well thought-out budgeting process will lay out each staff member’s role, identify opportunities for collaboration (with your financial team, city council, and department directors), and foster accountability. A good place to start is to think through the types of strategic planning sessions you’ll want to complete.
Questions are great! You’ll want to ask them internally as you begin to develop the budget to eliminate redundancies between departments. For example, the police department and public works maintenance might both budget for fuel for the police department, especially if communication between the two departments is lacking. Asking questions early on in the budgeting process can help to sort out these redundancies and prevent confusion later on.
Additionally, you’ll want the city council to ask questions when you present the budget. Yes, you heard me right—this is not a bad thing!
The council needs to have a thorough understanding of the budget and, more specifically, the “why” behind what is proposed within it. Encouraging questions from the council can help to ensure members understand and are in agreement with the proposed budget. If you don’t have the answer to a question, you can always say “I’ll get back to you.”
Align the budget to your city council’s goals.
As you’re creating your government budget, be sure it’s aligned to the outcomes your council wants. For example, if one of your city council’s goals is to reduce crime, this might require adding a traffic officer and crime analyst to the city’s payroll.
Measure and review performance.
Once you establish your budget and move into the year, you’ll need to measure the city’s performance against it. This requires establishing performance metrics. To determine what these will look like for your city, try to answer the question: If we do X, how do we measure it to know if we’re meeting the outcomes council desires?
Measuring performance against budget also allows you to provide meaningful reports to your city council and the public. You’ll of course want to provide a report on your website and review performance with council at regular intervals throughout the year.
Make this year’s budgeting process the best one yet!
Putting these practices into motion can help you move through the budgeting process with ease. However, if you’re feeling overwhelmed, Abdo can help. Whether it’s providing training to help your staff get comfortable with your government budgeting process or leading the budget process for you, we can brighten the experience for all. We can even serve in an outsourced CFO role to guide your team through budgeting and beyond.