The basic goal of a city budget is to plan how money will be spent and from where it will come. When the revenues a city earns are projected to fall short of the funding needed for operating costs, elected officials and city administrators must find ways to continue providing essential services while minimizing tax increases and employee layoffs. Budgeting is a lengthy and detailed process that involves city’s leaders and various committees and municipal staff.
Draft a budget proposal for the next fiscal year. Begin by identifying primary program objectives and assessing the financial resources the city will need to pay for those programs. Obtain information from each city department. Those involved in the budget planning process must agree on common financial goals, but there are likely to be many revisions of those goals before a final budget is adopted.
Determine the cost of services that the city is required by law to provide, ranking those needs in order of priority. Examine the previous year’s spending for each department when projecting costs for the next fiscal year. Budgets are based in part on how much money was spent for programs and services in the past. However, those planning the budget must also keep in mind what the city can afford.
Take into account that personnel costs account for a large percentage of a city’s budget. Salaries and benefits paid to municipal employees are among the budget components that officials review when looking for ways to trim costs. Even when layoffs are avoided, a hiring freeze may be implemented as a cost-savings option.
Request a list of the city’s fixed municipal assets. Instruct each department to conduct an inventory and assess the condition of its assets. This will budget planners determine when maintenance or upgrades are needed for streets, sidewalks, bridges, drainage systems, curbs or utilities and water. Set timelines for receiving and reviewing information. Address questions or concerns about budget specifics throughout the process. Talk to the city’s financial advisers and ask for recommendations. Make changes to the budget proposal as needed.
Estimate how much money the city needs to provide optional services that residents want. Although most budget requests are considered to be an investment in the city’s future, it may be necessary to make tough choices when establishing priorities for funding public safety, education, infrastructure, parks, transportation and the arts. Depending on the funding available, some project requests may be delayed until future fiscal years.
Calculate the city’s expected income from taxes and other sources. Although taxes generally account for more than half of a city’s operating revenue, consider how much income the city will receive from fees, fines and other charges. User feels include such things as water and sewer services, garbage collection, parking meters, transit fares, and licensing fees. While each city’s dependence on these revenues varies, in many cases, they account for a minor percentage of the annual operating revenue. Many budget planners take into account how much revenue has been earned from these sources in the past.
Consider how much funding the city expects from state and federal government grants to provide special services. The federal government allocates money to grant programs that local governments receive directly or through the state to help fund such community programs as public health, child development, housing, and economic development Some city governments rely on investment income and loans to finance programs and services.
Estimate how much income the city will raise through taxes. Since taxes are used to pay for such essential public services as police and fire departments, a tax increase may be necessary. However, if budget planners project a budget surplus, the money can be used to pay down debt or saved for a fiscal year when revenues fall short of projections.
Educate citizens on key points of the budget and offer them opportunities to participate in the budget planning process. Encourage them to speak about proposed spending at public meetings. Officials can use a public forum to discuss the major economic issues affecting the city, including changing trends in the national economy. Community leaders can provide information and facts about the city’s schools, job opportunities, community services and public programs.