The Local Government Annual Budget Process

The annual budget process for local governments is a complex and multi-phased undertaking that typically begins six months into the fiscal year and takes between six and nine months from initial planning to final approval. This process involves the development, approval, implementation, and evaluation of a budget that reflects the municipality’s strategic objectives, projected revenue and costs, and plans for the future.

Key Facts

  1. The annual budget process for local government typically begins six months into the fiscal year and takes between six and nine months from initial planning to final approval.
  2. The budget serves as a spending plan, forecasting estimated revenue and expenses for the local government over a specified future period.
  3. Local governments often have two types of budgets: an operating budget and a capital budget. The operating budget covers day-to-day expenses, while the capital budget includes financial plans for long-term capital improvements, facilities, and equipment.
  4. The local government budget process should be tied to the municipality’s strategic objectives. Budget requests from departments should be linked to city-wide goals and priorities.
  5. The budget process involves several phases, including preparation, approval, implementation, and evaluation.
  6. During the preparation phase, strategic objectives are identified, and department operating budget requests are gathered. The chief executive holds meetings with department directors to review these requests.
  7. The proposed budget is then finalized and sent to the legislative body for review and approval.
  8. The legislative body reviews the budget in detail and may host a public budget hearing and information session to gather public input.
  9. After community input and review, the legislative body approves and adopts the budget.
  10. Throughout the fiscal year, the budget office monitors expenditures, and regular performance reports are produced to ensure progress towards strategic goals.

Budget Development

The budget development phase involves several key steps:

  1. Identification of Strategic ObjectivesThe first step is to identify the municipality’s strategic objectives and priorities for the upcoming fiscal year. These objectives should be aligned with the long-term vision and goals of the local government.
  2. Department Operating Budget RequestsDepartment directors solicit input from program managers within their departments to formulate budget requests. These requests should be linked to the city-wide strategic objectives and include detailed information such as revenue estimates, expenditure lists, and program performance measures.
  3. Review of Budget RequestsThe chief executive reviews the budget requests submitted by department directors, often in collaboration with the finance director. Meetings are held to discuss the requests and ensure alignment with strategic objectives.
  4. Drafting the Proposed BudgetOnce the budget requests have been reviewed, the chief financial officer drafts a proposed budget. This draft is then reviewed and negotiated with department heads to ensure accuracy and feasibility.
  5. Submission to Legislative BodyThe proposed budget is then submitted to the legislative body (e.g., city council, county council, or county board) for review and approval.

Budget Approval, Adoption, and Implementation

The budget approval, adoption, and implementation phase involves the following steps:

  1. Legislative Body ReviewThe legislative body reviews the proposed budget in detail, often through committees that oversee various portions of the budget. Work sessions are held to discuss the budget and make revisions as needed.
  2. Public Budget Hearing and Information SessionThe legislative body may host a public budget hearing and information session to gather input from the community. This input is considered alongside objective data, expert knowledge, and strategic goals when making budget decisions.
  3. Budget AdoptionAfter community input and review, the legislative body approves and adopts the budget. This typically occurs one or two months before the fiscal year begins.
  4. Budget ImplementationOnce the budget is adopted, the budget office monitors expenditures and ensures that funds are spent as intended. Regular performance reports are produced to track progress towards strategic goals.
  5. Year-End Budget ReconciliationAt the end of the fiscal year, the legislative body conducts a final budget reconciliation to assess the accuracy of budget projections and ensure compliance with accounting principles.

Citizen Engagement and Communication

Citizen engagement and communication are crucial throughout the budget process. Local governments should provide opportunities for community members to provide input and feedback on the budget. This can be done through open houses, citizen academies, focused discussion sessions, and needs surveys. Effective communication of the budget to the public helps build trust and buy-in.

Conclusion

The local government annual budget process is a complex and multifaceted undertaking that involves the development, approval, implementation, and evaluation of a budget that reflects the municipality’s strategic objectives, projected revenue and costs, and plans for the future. Citizen engagement, communication, and alignment with strategic priorities are key to ensuring an effective and transparent budget process.

References

  1. OpenGov: What is the Local Government Annual Budget Process? (https://opengov.com/faq/local-government-budget-process/)
  2. ClearPoint Strategy: Local Government Annual Budget Process: Step-By-Step Guide (https://www.clearpointstrategy.com/blog/local-government-budget)
  3. MRSC: Introduction to Budgeting (https://mrsc.org/explore-topics/management/financial-management/introduction-to-budgeting)

FAQs

What is the purpose of a local government budget?

A local government budget is a financial plan that outlines the municipality’s estimated revenue and expenses for a specific fiscal year. It allocates funds to various departments and programs to support the community’s needs and priorities.

What are the different types of local government budgets?

Local governments often have two types of budgets: an operating budget and a capital budget. The operating budget covers day-to-day expenses such as salaries, utilities, and supplies. The capital budget includes financial plans for long-term capital improvements, facilities, and equipment.

How is the local government budget developed?

The budget development process typically begins six months into the fiscal year and involves several phases. It includes identifying strategic objectives, gathering department budget requests, reviewing and negotiating these requests, drafting a proposed budget, and submitting it to the legislative body for approval.

How does the legislative body approve the budget?

The legislative body (e.g., city council, county council, or county board) reviews the proposed budget in detail, often through committees. Public input is gathered through budget hearings and information sessions. After community input and review, the legislative body votes to approve and adopt the budget, typically one or two months before the fiscal year begins.

How is the budget implemented and monitored?

Once the budget is adopted, the budget office monitors expenditures and ensures that funds are spent as intended. Regular performance reports are produced to track progress towards strategic goals. At the end of the fiscal year, the legislative body conducts a final budget reconciliation to assess the accuracy of budget projections and ensure compliance with accounting principles.

How can citizens participate in the budget process?

Citizen engagement is crucial throughout the budget process. Local governments should provide opportunities for community members to provide input and feedback on the budget. This can be done through open houses, citizen academies, focused discussion sessions, and needs surveys.

How is the budget communicated to the public?

Effective communication of the budget to the public helps build trust and buy-in. Local governments should use clear and accessible language to explain the budget and its implications for the community. This can be done through public hearings, online resources, and printed materials.

How does the budget align with the municipality’s strategic plan?

The local government budget should be closely aligned with the municipality’s strategic plan. This ensures that financial resources are allocated to projects and programs that support the long-term vision and goals of the community. By linking the budget to strategic priorities, local governments can demonstrate accountability and good fiscal management.

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