Why Are Budgets Useful in the Local Government Planning Process?

Lena Eisenstein
5 min read
All parts of a local government are interdependent of other parts of the system. There are many steps in the budget process including development, approval, implementation, and feedback. Every step is important for residents, elected officials, and employees. Before a local government can establish and develop a budget, they need to finish their strategic plan because it will determine how the government can best allocate funds. Citizen input is an important part of the process because they're looking for assurance that their hard-earned tax dollars are going to the programs and services they want and need most. They have the right to know why budgets are useful in the planning process. Technology for local governments is of great value in helping to engage citizens and keep them informed about what's going on within their communities.

The Budget Process

If you're going to allocate money, of course, you need to have funds to spend. The first consideration in a local government's budget is to total up all the available revenues which usually include non-restricted funds, restricted funds, and other funding sources. The next step in the budget process is the preparation. Staff has preparation to do at the administrative level and at the legislative levels. Implementing the budget is another part of preparation. An outside auditor usually performs the year-end accounting and financial reporting processes.

Once everything is sufficiently prepared, the next step is output. At this point, staff and officials consider the available revenues and approve the allocation of funds to pay for projected services for each department for the upcoming fiscal year. At this point, the budget will list line-item budgets, program budgets, zero-based budgets, and possibly other evolving budget formats.

Many local government charters require the government to hire an outside auditor to provide objective financial feedback to the administrators and elected officials. The government may also be mandated to post a draft of the operating and capital budgets publicly and allow time for feedback. Elected officials, management staff, and residents often have valuable feedback to offer. This is where Community by Diligent, which is board management software platform where citizens can get copies of budget drafts, budgets, council agendas, and meeting minutes completely online. They can use the citizen portal to make requests for hard copies.

The budget has to account for the local government's current operating environment including the political, economic, social, and legal environments. Elected officials have a great deal of control over the internal environment, but they have little control over the external environment. Many aspects of a local government's budget are affected by higher levels of government. Council members must consider the future budgetary constraints and needs of their cities. What makes this so challenging is that they have no control and little influence over external funds, mandates, grants, and legal requirements. All these steps work together and they must work together with the strategic plan, which has to be completed before the budgeting process even begins.

Strategic Planning and the Budget

Whenever you set off on a journey, it's nice to have a plan for where you're going. Whether you use GPS or some other kind of map, you won't get anywhere unless you know where you are, where you want to be, how you're going to get there, and how long it will take for you to reach your destination.

The strategic plan is an important tool that local governments use to help them set reasonable, achievable goals that will influence their future and provide guidance on how they will reach them. Once a local government has established goals, they will be able to see which parts of the plan require funding and it will be easier to align the financial resources to help make the strategic plan a reality. The government's short-term funds fall under operational planning while the long-term goals fall under strategic planning. The strategic plan has to come first because they can only allocate funds once they've established goals. In fact, the budget ties funding decisions to high-level goals and objectives. The strategic plan and the budget should focus on results and outcomes as a measure of responsible governing.

To ensure sound decision-making, local governments need to have the right stakeholders involved in each local government budget cycle so that they can be sure they're taking all relevant information into account. Collective input and collaboration ensure that councils make budgeting decisions that are consistent, appropriate, and objective.

There have to be clear links between the goals and the budget. That isn't to say that every line-item in the budget has to have a goal, but each line-item should in some way link to a goal in the strategic plan. Many problems can occur when the budgeting process isn't done methodically and carefully. Without a responsible budget, council members won't be able to implement the strategy and they're likely to encounter poor financial performance by the end of the fiscal year. A poorly-planned budget may also manifest in misapplied resources, drawn-out planning cycles, or a misuse of funds. Managers may forecast numbers incorrectly and the council will get skewed results on key performance indicators.

Transparency is a key part of local governance. Community by Diligent is a valuable tool that allows local government leaders and clerks to achieve excellence in modern governance. Efficiency is another word that embodies modern governance. Community gives staff the ability to drive workflow predictably and transparently. It encourages feedback and responsiveness from stakeholders, which are important parts of the budgeting process. Community is a 'mobile first' digital solution that encourages completion of all steps and processes in the course of budgeting, allocation, and implementation so that the council's decision-making process is more effective. It is accessible by laptops, tablets, and smartphones and allows for real-time cross-platform annotations. In addition to being able to provide input and access all publicly approved documents, Community also makes live, fully inclusive meeting participation possible with live broadcasts of council meetings in real-time.

Community is an inclusive program and Diligent is committed to expanding engagement for all citizens through the use of technology. When citizens can't get out, Community brings government right to them. With Community, the budget and the strategic plan work together like clockwork.