Cost Accounting in Local Government

The more things change the more they stay the same

We are living in a time of change. Redevelopment Agencies in their current form have disappeared. No one knows what the State budget will look like until the voters weigh in on temporary tax increases in the fall. Everyone is still trying to figure out what their new normal is for Sales and Property taxes.

But the more things change the more they stay the same. Because, in the face of all this change, it is more important than ever to know what it is you do and how much that costs. As the new normal for tax revenues becomes apparent over time, you will need to know what your new normal is for the costs of the services that those taxes are supposed to fund.

But we can’t make those kinds of decisions until there is a discussion at the local level about what we are willing to pay for. Is your agency still trying to provide yesterday’s level of service with today’s level of funding and staffing? Are you still hoping that revenues will return to their previous level? Do you even know precisely what level of service the community is currently receiving, and more importantly, willing to pay for?

Local government needs to have an honest conversation about what that level of service costs. Does your community want the cheapest police department with the commensurate service quality? Does your community want to outsource maintenance services, even if that has a long term impact on the quality of the infrastructure?

So once you have figured out what your new normal is for revenues, it is time to clearly identify what it costs to provide the current level of service and specifically talk about what the residents are receiving for that level of service. What is your average police and fire response under current and other cost scenarios? What is your pavement and park maintenance schedule under current and other cost scenarios?

Only once you have that level of information can the community prioritize what they want to do and do well within the revenues they are willing to pay. We should be past trying to do everything and do it poorly. It is time to choose.

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