Thinking out of the Budget Box

I’m at heart a “budget” guy. In the four cities I worked in as an employee (full disclosure, it was over 25 years ago) I was always heavily involved in the budget process.  The process of planning and determining how to commit the agency’s limited (and getting more limited all the time) resources always held a special interest for me.  I looked forward to it and always tried my best to somehow make the process better and more meaningful.  These are a few quotes that always inspired me at budget time.

1. It’s not the plan that is important, it’s the planning. (Graeme Edwards)

2. Thinking is the hardest work there is, which is probably the reason why so few engage in it. (Henry Ford)

3. It is always wise to look ahead, but difficult to look further than you can see. (Sir Winston Churchill)

4. Our struggle is to identify the sources of revenue and the means to obtain the funds. Without funds, all the planning and research studies can’t help us. (John Breaux)

Of course one has to balance these fine motivational comments with the inevitable quote you can expect from one of your agency’s department heads:

Budgeting is the biggest pain in the butt I have to deal with all year.

Well okay, I guess not everyone saw the process the same way I did.  You can’t blame them since the process basically starts with, “Expect less resources, expect more obligations, but don’t present me with any more problems.”  These are pretty tough times and it’s going to be difficult to balance the budget.  But remember, you always have and you always will. Times have changed but let’s look for an upside.  Here are some thoughts:

Difficult times can lend themselves to greater ease in making significant changes.  Be prepared to change something! No doubt many of you have nearly had your head handed to you in the past for merely suggesting that services currently done by in-house staff be contracted out.  Now you might enjoy some success with such suggestions.  Does it really matter who sweeps a street as long as it is done properly?  Does it have to be weekly? While no one wants to “lose” a public service such as your “own” fire-fighters, does it really matter what seal they have on their helmets? They are all professionals and what really matters is that you obtain the best services available for your residents and local businesses that your agency can afford. Be bold.  Maybe you can start a consortium that owns a sewer vactor for three cooperating agencies instead of each of you owning one.  Why wait for someone else to do it?  Start it now, or at least start the discussions.

Make sure your budget changes show short term and long term results.  This can be a very vexing prospect, considering that your career, hopefully, is long term, while often some elected officials only seem concerned with the next four years of their term (or see it as the proverbial stepping stone).  Yes, that makes it more of a challenge.  You will need to try to convince them that their decisions will have both short term and long term consequences and that a legacy of better long term decisions is as important as the short term ones.  Contracting out some services, thus by reducing retirement obligations, will probably generate more long term savings than short term ones.

Don’t be afraid to suggest that a service may no longer be affordable at all.  Again, while no one wants to be the harbinger of death to a particular service, because somebody likes it, it may simply be necessary.  It may be best to have the public provide input on which services they feel are most important.

Identify any policies that got the agency into the existing shortfall situation and try to extract some policies from your elected officials.   Over-dependence on sales tax receipts put many a city in a difficult position by simply becoming fully dependent upon that maximum amount based upon unrealistic annual increases.  Learn from that error and then consider… what would you have done differently had you known (or even if you did know) that those levels of sales tax receipts were unrealistic?  Perhaps a suggestion that any amount collected over a more conservative annuals percentage increase be dedicated for one-time capital purposes that reduce long-term costs or for funding that nagging underfunded vehicle replacement fund.   I had the opportunity of working with a very rural fire district many years ago that had an interesting policy:  Where a change in service delivery was required, a solution requiring additional expenditures could be suggested only after two solutions not requiring any additional financial resources were put forth.   On occasion, one fire-fighter would put out a trash bin fire. They said, “Well, it’s that or let it burn”.

Lastly, and perhaps more importantly, check every one of your revenues very closely. You may want to conduct a service cost study and development impact fee calculation study (full disclosure, WE do those).  Or contact us about our software that allows you to undertake these by yourselves.  More importantly, don’t be afraid.  You didn’t make the problems, but strong problems require strong alternatives and strong plain talk and that is what you were hired to do.

Be bold.

Lead.

Consider all alternatives regardless of how different they may sound.

And have some fun along the way and retain a sense of humor.