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2021 Budget Suggestions is Here!


July 28, 2020 by Toni Nelson
Category: Budgets and Budgeting

2021 Budget Suggestions is Here!

By Toni Nelson and Steve Hawley

Wow, what a difference a few months can make! COVID-19 has obviously had a big impact not just on daily life and government operations, but also on local budgets and financial plans. These challenges are unprecedented in the modern era, and that uncertainty will make budgeting much more challenging than usual this year and next. What will the recession and recovery look like? Will there be further federal stimulus measures? How will the state legislature manage its budget shortfalls for the next biennium and will this have an impact on our budgets in 2021? What will the short-term and long-term public health and economic impacts be?

Unfortunately, we don’t know the answers to those questions. But we’re all doing the best we can with imperfect information, and local governments will persevere through this crisis like they always have before.

Highlights

To that end MRSC has just published 2021 Budget Suggestions to help cities and counties develop their budgets for the upcoming fiscal period. This is an annual flagship publication of ours dating all the way back to 1943 — during a very different global crisis. Here are some of the highlights from this year’s edition:

Overview of the budget process

We’ve included key statutory deadlines for cities and counties as well as information on budget hearings and key dates for getting voted revenue measures on the ballot. For instance, if you want a voter-approved sales tax to take effect at any point during 2021, it must appear before voters no later than the February 2021 special election, which means you must file the resolution with the county auditor no later than December 11, 2020!

Analysis of new legislation

There weren’t a lot of finance-related bills that emerged from the 2020 legislative session, but we discuss a few that might impact your budget and financial planning, including SB 5792 (cultural access programs), ESSB 6592 (tourism promotion areas), HB 1590 (the affordable housing sales tax), SB 6212 (affordable housing property tax), and the upcoming minimum-wage inflationary adjustment.

There are no statewide initiatives coming up on the November ballot. In fact, it’s apparently the first presidential election without a statewide initiative in Washington since 1928!

Economic and population data

This includes an overview of the state and national economies — which are subject to more uncertainty than normal — as well as the current status of the Consumer Price Index for inflationary adjustments and the Implicit Price Deflator (IPD) for property tax levy increases.

Per capita distribution estimates

For those revenues that are distributed on a strictly per capita (population) basis, we have provided per capita distribution estimates based on the state budget and the latest (June 2020) revenue forecasts from the state Economic and Revenue Forecast Council (ERFC). Multiply these factors by your jurisdiction’s population to get your estimated distribution or refer to our State Shared Revenue Estimator where we’ve done the work for you! However, please note that these are estimates only. In particular, motor vehicle fuel taxes (MVFT) depend upon gallons sold at the pump and consumption of fuel is significantly lower than expected for 2020 due to the COVID-19 pandemic. On the other hand, liquor sales and the associated liquor excise taxes that are shared with cities/towns and counties are up.

Timely budget articles

We’ve wrapped up 2021 Budget Suggestions with a few articles to help you navigate these uncertain times, including a discussion of the unique budgetary challenges this year and the need to plan for the possibility of virtual budget hearings this fall — as well as how to budget in uncertain times and recover fiscally based on the GFOA Fiscal First Aid resources. We also discuss ballot measure validation (minimum voter turnout requirements), how to figure out whether validation is required, and why validation will be tougher in 2021.

And finally, we’ve updated our Budget Document Scorecard — formerly called the Budget Document Assessment Tool — to help you evaluate your current budget documents and see where they excel and where there might be room for improvement. (If you fill the scorecard out on your computer the point total at the bottom will now be calculated automatically!)

Other Budgeting Resources

In addition to 2021 Budget Suggestions, we’ve got a lot of other budget-related materials on the MRSC website. In particular, see our:

  • City Revenue Guide and County Revenue Guide — Recently updated, the guides contain detailed guidance on property taxes, sales taxes, and a wide variety of other revenue sources and options.
  • Financial Policies Tool Kit — Our tool kit provides detailed guidance and key questions to consider that can help your jurisdiction develop or update its financial policies, including fund balance and reserves, cost allocation, debt management, and other policy areas.
  • Tax and Population Data — The budget process is data-driven, and our population, property tax, and sales tax data includes historical data for each city and county going back to 2010, as well as local sales tax rates and components showing where your local sales taxes are going.

You can view all of our budget-related materials at mrsc.org/budgeting.

If you have any questions or feedback on Budget Suggestions or other financial topics, please let us know! You can contact our financial consultant, Toni Nelson, at tnelson@mrsc.org. Additionally, MRSC has been actively engaged in clarifying CARES Act requirements for small business grants. Look for our follow-up blog in early August.


MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

About Toni Nelson

Toni Nelson joined MRSC in 2014 as the finance consultant. She has worked in local government finance since 1990 and was previously the “Small Cities Specialist” with the State Auditor’s Office (SAO), Clerk Treasurer for the Town of Twisp, as well as an independent financial consultant working with small local government across the state. Toni's area of expertise is "Cash Basis" accounting and reporting, budgeting, and the financial responsibilities and challenges of smaller local government.

Toni is a board member of the Washington Finance Officers Association (WFOA) and longtime member of the WFOA Education committee. While with SAO, Toni wrote the Small Cities handbook and she annually prepares the MRSC - Budget Suggestions publication. Most recently Toni co-authored the comprehensive update of the Revenue Guides for WA Cities, Towns and Counties, in 2019.

Toni conducts workshops on local government financial reporting, budgeting, and the essential duties of finance staff in smaller jurisdictions, with an emphasis on cash basis accounting and the challenges of small local government.

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