Unlike the Federal Government, which can and does run a large budget deficit, most local governments are legally required to prepare a balanced budget. Because local governments cannot spend more than they’ve budgeted each year, preparing a budget is one of their most critical jobs.
Local governments must get their budgets right to ensure all departments have sufficient funding to offer critical services to residents. But how can you ensure this happens while developing the most efficient and effective budget possible? You’re about to find out.
Come to understand why having a comprehensive local government budget plan is critical to the success of your community as a whole. Follow along for ten tips to ensure you create a budget that meets the needs of your residents.
Why a Modern Government Budget Strategy is Critical to Your Municipal or County Success
Local governments exist to serve the residents that make up their community. As such, they must create a government budgeting strategy to fund critical programs and services. Many of these services are vital to a functioning society, such as solid waste pick-up and wastewater management. Without governments investing in these needs, individuals wouldn’t have access to essential resources.
But competing demands and limited resources make budget allocation a major challenge for local governments. Counties and municipalities must determine how to fund basic needs alongside programs and projects that enable communities to thrive, including public parks and libraries.
Plus, local governments fund these programs and services with the property taxes and sales taxes they collect from residents. Given the nature of a government’s income stream, public sector organizations must be conscientious about allocating funds in a way that reflects the needs and desires of their taxpayers.
The complicated nature of these decisions is why an effective budgeting strategy is critical to the success of cities and counties. A thoughtful budget plan helps local governments navigate these competing demands, responsibly allocate funds, and maintain transparency throughout the process.
10 Tips for Local Government Budget Planning Success
So, how do you prepare a local government budget that achieves these goals? Let’s find out. Below are ten tips to improve your local government budgeting strategy.
1. Take stock of the economic climate
The first step of any local government budget plan should be taking stock of your current economic climate. If the country is in a recession (or heading into one), it’s unlikely you’ll be able to attain the political will required to raise taxes. Similarly, elected officials will be wary of supporting any increased spending by the government.
By keeping your finger on the economy's pulse, you can better assess the upcoming budget cycle and prepare government staff accordingly. As a result, you facilitate a more efficient budget development process: departments submit fewer new budget requests, and budget staff don’t waste time analyzing requests that leadership will ultimately deny.
How Can Local Governments Encourage Economic Development? Here’s what to know.
2. Connect your budget with your organization’s strategic plan
Another vital component of a government budgeting strategy is connecting your local government budget with your strategic plan. Fund programs and projects that advance your organization’s strategic initiatives. Doing so demonstrates that your organization takes strategy seriously and is committed to actualizing the vision of elected officials, staff, and residents.
Additionally, connecting your budget with your strategic plan helps your organization prioritize funding choices. If a department has come to you with a request for funding that doesn’t align with the city’s strategic plan, your organization can allocate those funds to other critical needs instead.
3. Involve departments
Local government departments are the experts of their own needs and should prepare and submit their own budgets for leadership’s consideration. The budget department can then review these proposed budgets and offer funding recommendations to organizational leadership while considering the economic climate, anticipated revenues, and the priorities of elected officials.
Cloud-based software makes it easy for this to happen because solutions for each department make it easy to collaborate efficiently with one another. Departments can store insightful data about their anticipated budget, revenues, and project costs in the cloud. Because this data is easily accessible, government project cost estimating is more straightforward. This is particularly true for projects that involve multiple departments (for example, resurfacing a street which may include water and sewer, public works, and transportation departments).
4. Maintain an equity focus
As your organization moves through the budget development process, be sure to maintain an equity focus. Consider how new budget requests might benefit or harm specific demographics of a population more than others. Ask departments to answer equity-focused questions about their budget requests.
City leadership like the city administrator and municipal CFO can review responses to these questions to serve as additional data when determining which programs and services to fund. By considering who will benefit most and who will be burdened most from certain budget decisions, your local government can create more equitable outcomes for community members.
5. Provide online bill-pay options
Of course, you’ll want to make government revenue generation as straightforward as possible through online bill-pay options. Digital government fee and fine processing allows individuals to pay bills from wherever, making collecting revenues from residents and businesses easier. Consider enabling community members to pay property taxes, service fees (for things like water and trash collection), and fines (such as late fees or traffic fines) online to maximize your revenue stream.
6. Engage residents
Local government officials are sometimes hesitant to involve citizens in budgetary decisions because it adds an additional layer of complexity to an already-complex process. But a budget is meant to serve communities, and local governments are responsible for understanding what issues matter the most to their residents.
Take the time to educate residents about when and how they can get involved with the local government budget process. Go above and beyond checking the box with a public hearing and plan budget events where residents can learn about the myriad of values-based decisions that governments make every budget season.
You might also consider starting a participatory budgeting program by setting aside a portion of funds for residents to vote on how to spend. This approach can be involved, so do your research before starting a program like this.
7. Maintain transparency throughout the process
A stellar local government budget plan builds transparency into the process. City leadership, staff, and residents should know where to go to receive critical information about the budget development process. Provide updates about significant budget milestones during board meetings and update your departmental website with crucial details on budget development. You should also post your final budget to your website so anyone who wants to access it can.
8. Streamline your RFP process
While you might not initially think of the RFP process as a component of a government budgeting strategy, think again. Streamlining your RFP process and government cost estimating enables you to find the best contractors possible and make the most efficient and effective use of public funds.
Your organization should have policies to guide whether or not an RFP is required for specific projects. For example, a local government with a multi-million dollar budget may not need to submit RFPs for projects below $2,000. As you review RFPs, consider your budget for the total cost of time, materials, and labor and which proposals align most closely with your unique needs and budget.
With GovPilot, RFP notifications can be electronically submitted to relevant contractors, and proposals can be submitted electronically via your government website and instantly accessible to the relevant government officials.
9. Consider grants
An effective public sector budgeting strategy also requires considering any grants you’ll receive from the state or federal government. This includes large grants like the American Rescue Plan and Inflation Reduction Act. These grants provide an additional revenue stream for governments and can be a considerable boon to creating new resident programs.
In addition to the grants that your government receives, you may also be distributing grants to local non-profits. If this is the case, facilitate a clear and transparent process so organizations know whether they’re eligible for grants, how to apply, your selection criteria, and the benchmarks they must hit to maintain grant compliance.
10. Create a budget book
Once you’ve developed your budget, it’s time to create a budget book so leadership and residents can quickly review what’s being funded. Within the budget book, you can include a variety of resource allocation tables that break down organization-wide and department-wide budgets.
A great budget book also includes narrative information that helps residents and elected officials make sense of all those numbers. At the beginning of the document, you can explain significant changes to the budget year over year, anticipated accomplishments (and challenges), and any new projects, programs, or initiatives you’re funding. Once you’ve completed the budget book, publish it to your website so residents can easily find it.
Create a Capital Improvement Plan (CIP) for organization in coordinating budgets, schedules, locations, and other logistic aspects for upcoming infrastructure projects in a community.
Consider Local Government Asset Management and how digital solutions can help your municipality manage budgets and assets.
Use Cloud-Based Software to Digitize Your Public Sector Budgeting Process
An effective government budgeting strategy ensures that your organization has sufficient financial resources to serve residents. In addition to implementing the tips above, GovPilot’s cloud-based software can help you achieve your budgeting goals by enabling departments to collaborate throughout the budget development process.
With automated workflows, digital forms, and mobile apps, staff can access critical information while assessing government budgets. Since this data is easily accessible, it’s easier to actualize your local government budget plan and meet the needs of everyone in your community.
Ready to learn more about how GovPilot’s software can digitize your budget process? Don’t hesitate to book a demo today.
Municipal Budgeting FAQs
Why Do Local Governments Need a Budgeting Strategy?
Local governments have finite dollars and resources paired with practically infinite challenges that can and should be addressed. To make the most of every departments’ budget, local governments will need to build a plan around the top priorities, the cost of relevant projects, and expected returns on a yearly and quarterly basis.
Local government budgeting is also important to improve government services when possible, similar to how New Jersey recently improved housing services with the NJ 3-Day Affordable Housing Construction Inspection Bill.
How Does Technology Help With Public Sector Budgeting?
Government technology provides local governments with digitized access to their financial records, project start and completion dates, fee and fine revenue generation, and RFPs for more streamlined strategic planning around the available funds and the highest priority projects.
With public complaint software, you can make informed decisions about how to allocate government dollars based on the issues that matter most to your community members.
Recruit new government tech workers into your government to aid every department in streamlining operations and collecting budgeting data.
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