Principles Useful in Local Government Budgeting

I want to share an important list of budget principles which a good friend of mine, and great friend of local government has put together Charlie Francis has a long career in our field. He has thought deeply about the role of local officials and their responsibilities to their communities, taught and written on the subject. His list:

The Ten Commandments of Local Government Budgeting

  1. Thou shalt prioritize transparency and accountability in all budgeting decisions.
  2. Thou shalt create a long-term financial plan to ensure the sustainability of the municipality’s finances.
  3. Thou shalt involve all stakeholders, including residents and community groups, in the budgeting process.
  4. Thou shalt base all budgeting decisions on reliable data and evidence.
  5. Thou shalt consider the long-term impact of all budgeting decisions on the community’s quality of life.
  6. Thou shalt balance competing priorities and allocate resources based on community values and needs.
  7. Thou shalt set realistic financial goals and expectations.
  8. Thou shalt maintain a reasonable level of reserves to address unexpected expenses.
  9. Thou shalt regularly monitor and evaluate the budget to ensure it remains on track.
  10. Thou shalt ensure that all budgeting decisions are legal, ethical, and in line with the local government’s values and mission.

In one of my first government jobs I shared an office with a tall old oak bookcase full of budget documents dating back into the early 1900’s. In those days budgets were done on ledger paper, by hand. These documents were fascinating to me and spent too much time carefully paging through them.

For most of my working life dollar amounts have been “soft,” entered onto Lotus (remember when?) or Excel spreadsheets. These totals were just as easily corrected, updated, restated, or amended as we choose.

Just the thought of having one chance to get each line item right, and then manually add those number together for page totals and ultimately organization level totals could make my palms sweat and my normally nimble fingers freeze on the keyboard.

Back in the day, there must have been a level of satisfaction in recording the year-ending details, running the totals, and summarizing the financial results with a sense of certainty and finality. The numbers were the numbers. Period.

We simply do not have that luxury today. As government finance has become more sophisticated, the accounting has become more fluid. Revenue and expenditure are reclassified, accruals and forecasts are updated, reserve requirements and other policy elements are amended.

Over the years the budget’s role has evolved until today it has become a widely-shared multi-purpose document that has earned a key role in modern governance. The annual operating budget guides daily operating decisions and keeps everyone, staff, and stakeholders on the same page throughout the year.

Charlie’s ten commandants are well aligned with GFOA’s Distinguished Budget Presentation Awards Program established in 1984 to encourage state and local governments to prepare budget documents of the highest quality and transparency.

Nearly 2000 governments, have been recognized under the program. To qualify their budget documents must succeed in four roles:

Whether an agency chooses to pursue the budget award or not, the award criteria can be a useful organizing tool as the budget book is assembled.

Today many governments produce multi-hundred page books in printed PDF and on-line versions. The Web versions often include links to other government records such as CIP Plans, strategy documents, operating procedures and other background material.

Any government budget leader would be wise to emphasize the important budget goals highlighted by GFOA, and employ Charlie’s commandments as a checklist for their team throughout the budget cycle.

Charlie is a deep and powerful resource, you can reach him at:

Charles D. Francis, Government Finance Executive Consultant
TheVirtualGov CFO 828 Great Oaks Trail, Eagan, MN 55123
Phone: +1 818-572-3965

At McCann Consulting we embrace the principals espoused in both these writings. The Practical Pragmatic Budget Handbook we are developing on-line incorporates and expands on these themes, focusing on their application by smaller agencies.

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