How to Approach Local Government Budgeting Effectively

Lena Eisenstein
5 min read
Local governments are accountable to multiple entities and individuals, which is important to the concept of democracy. Local citizens faithfully pay their taxes to support their local government with the expectation that their local government will provide them with the services they need to be a healthy and productive part of the community.

Operational accountability serves as the middle ground for financial and political accountability. While operational accountability isn't quite as well understood as the other two, it's a key issue that drives performance budgeting. Performance measures are often used in local council meeting deliberations to evaluate and accommodate budget requests. Data has a significant impact, especially when budget requests are new or when local governments wish to enhance and expand programs.

Budgets for local governments determine where governments spend their money, how much they allocate to various departments and where the money comes from. Local government staff, elected officials and local citizens should view their budgets as a process, rather than as an outcome.

Budget Challenges in Local Governments Are Weighty

Across the board, budget challenges weigh heavy on the minds of city managers and publicly elected officials. According to our iCompass survey of municipal governments, just over 41% of city managers and elected officials reported that they lost sleep because of worrying about their local government budgets.

When state and federal governments struggle with their budgets, there is a trickle-down effect on local governments. As state and federal governments cut their budgets for various reasons, one of the items on the chopping block tends to be funding for local governments. This is an issue over which local governments have no control, but they must actively plan for it and re-evaluate their budgets accordingly.

With scarce funds at issue, city boards and councils tend to compound the issue by failing to connect the budget with a central strategy or vision.

Local government budgets may have a positive or negative impact on government staff. Lack of funds and poor budgeting lead to staff turnover and burnout. As these issues unfold, efficiency and effectiveness suffer as well. Budgeting concerns often extend to government departments, affecting motivation, ownership of responsibilities, loyalty and obedience, which may lead to difficulty in interpreting meaningful performance measures.

Weak or poor budgeting strategies lead to low levels of citizen engagement, input, understanding and involvement, which may discourage citizens from buying into the plans that the local government makes.

The Essentials of Local Government Budgeting Strategies

Challenging budget issues call for strong approaches in organization, prioritization and communication. Technology comes to the rescue in assisting local governments with all three of these concepts.

To assess the scope of the issue, it's important for local governments to carefully review three periods of budgets. It's key to take a look back at past budgets to see where they've been. They also need to assess the current budget and evaluate where they are currently. The third period is more challenging to project accurately. Nevertheless, it's crucial for boards to consider their current budgetary needs, as well as the future budgetary needs of their community.

For example, community growth has both positive and negative impacts. A new housing development feeds local businesses and other establishments. At the same time, local government boards must consider the financial impact on the school district, local transportation, and police and fire departments. In addition, they need to consider the impact on road maintenance, sewage disposal, traffic patterns and other similar matters.

Many local governments are considering using program performance measures as a basis for making budget decisions. This approach can be used to incentivize and motivate local government departments to operate in the most efficient, effective manner possible.

Organizational goals play a central role in local government budgeting. The best budget planning considers how to work long-term strategic goals into the budgeting process. There are a couple of notable benefits to this approach.

By tying the budget to the short- and long-term strategic plans, local government staff and council members can rely on the budget to keep the strategic plan on target. The connection between local government budgeting and strategic planning serves an even greater function related to local citizens. This approach takes citizen and stakeholder input into consideration. Keeping citizens in the loop helps get their buy-in, which is vitally important to developing trust and confidence in their local government bodies.

Residents of communities typically don't relish the idea of giving their local governments so much of their hard-earned income. At the same time, keeping the strategic goals in front of local citizens makes it easier to understand why the local government spends its funds the way it does and keeps them informed about where their money is going. More importantly, local government goals help to justify tax increases and program cuts if they should become necessary.

Consider the Advantages of Technology in Local Government Budgeting

Investing in technology is the surest way to create efficiency and effectiveness in local government budgeting while keeping the lines of communication with local citizens open and honest. Budget cuts and tax increases are far easier to swallow when citizens know what is going on and that there are solid reasons for the impact on their budget.

A board portal system by iCompass, a Diligent brand, streamlines the processes for setting up meeting agendas and creating council meeting minutes in the most efficient manner possible. A Transparency Portal provides a one-stop internet location for all the latest happenings in local government. The Transparency Portal provides an online space designed to encourage and enhance local citizen engagement. Citizens can bookmark their local government site on all of their favorite electronic devices and easily pull up agendas and meeting minutes for local government meetings. They can also listen to the audio recordings of council meetings or catch them live in real time. Recordings with closed captioning and time-stamps make it a snap for citizens to view all council meetings at their convenience. The Transparency Portal is the 'go to' place where citizens can view copies of the council's budget and strategic plan and even make a Freedom of Information Act (FOIA) request if they choose.

In summary, local governments don't have the liberty of enjoying an unlimited budget. Nevertheless, a local government's budget should reflect its vision, strategy and priorities. This way, no matter whether the budget is healthy or shows scarce funds, local governments will be able to demonstrate that they are committed to running effectively and to earning the trust of their citizens.