Fall is in the Air – and Budget Workshops are Filling Your Agendas

By Mike Bailey, Finance Director, City of Redmond

You can tell that summer is winding down. The nights are longer – and cooler; Seahawk football has returned; and councils are about to start their workshops to review the preliminary budget. While the Seahawks are always an interesting subject, this article will focus on how to make the best use of your upcoming budget workshops and hopefully create the “best budget” for your organization.

Budget Workshops

While budget workshops may not be on your top 10 list of most fun things to do, you may want to reconsider the list! (I'm thinking of starting a “budgeting is fun!” social media campaign.) Presuming you already appreciate the importance of these discussions, you should give some thought as to how to make them as meaningful as possible. The budget should be much more than a spending plan. It allocates scarce resources among many important and competing interests, efforts and initiatives in your organization on behalf of your community. The budget is where you, as an organization, get to determine your priorities – the old adage is to “put your money where your mouth is.” The budget document is also where you can share these ideas with others who want to know how you are spending their money. But it all starts with good conversations.

Preliminary Budget

By now you've had your policy setting retreats, reviewed your financial policies, updated your revenue projections and tuned up your budget prowess at the annual AWC Budget & Fiscal Management Workshop. As a council, you've been waiting patiently while the administration and staff put together a Preliminary Budget. We know from a quick review of the MRSC's Budget Suggestions that the Preliminary Budget has to be to councils no later than October 31st. The RCWs also tell us what has to be included in the Preliminary Budget. The required budget message is to include an explanation of the budget document, an outline of recommended fiscal policies and programs (or changes to existing policies and programs). The RCWs go on to describe the required hearings on the budget as well, but you can learn all about this through your review of the MRSC's Budget Suggestions.

This section of state law (RCW 35A.33.057) is where you will also find the requirement for the legislative body (or a committee) to hold “hearings” to gather information regarding estimates and programs. So how do we take advantage of these hearings so that we create the “best budget”? First, we need to understand what our “best budget” should be.

Best Budget

Budgets can take many forms. The “best budget” focus is on demonstrating choices and accountability for making, and pursuing community goals and aspirations for the organization as a whole. That is accomplished by working together for what is best for that community. The budget is an opportunity to align resources with the community's vision and council goals as well as an opportunity for teamwork. (What a budget should not be is a competition within an organization to see who gets more of the pie.) The team consists of the administration, various staff and the council. That's right – council is part of the budget team. They have a different role (which I'll spend some time describing shortly) but we are all on the same team.

Competing Interests

Within the staff team there can be competing interests. One of the things that makes working for a full service city interesting is the wide variety of responsibilities we have. While parks is working to plant more trees and create more green space, public works is working to put down more pavement. While police works to catch those who break the law, human services is working to create shelters for the homeless and services for the less fortunate. The dichotomies go on. This results in a natural tension within the organization and this becomes even clearer when we decide where to invest resources. That said, it is the responsibility of the administration to present a preliminary budget that strikes the right balance between these competing interests and also proposes the right balance between anticipated resources and planned expenditures.

Council's Role

The council's role is to “steer the ship.” That means to make the choices and decisions about which policies and programs to pursue – and at what level. The preliminary budget should reflect the policy guidance that came from the budget retreats we referred to earlier. It should also reflect the financial policies which were reviewed and approved by the council. The goals, focus areas and related policy documents and conversations should guide council's review of the budget. The council should reflect on the input they've gotten from the community through surveys and other feedback as well.

Council also has a fiscal responsibility role to the taxpayers. This is a different type of responsibility. It can be as high level as the level of taxation and fees, or as ground level as a review of how monies are being spent (aka: line items). Ideally the administration has high credibility with the community and with council so that this level of review can be less tedious. Without credibility, councils may feel a need to understand how the money will be spent to a greater degree, at the risk of distracting the conversation from focusing on big community goals. To be clear, if you find yourself focusing on line items, you will not apply sufficient focus to the overall community good. While it is easier to evaluate how much money is spent on consulting services, it is more important for councils to evaluate, and make choices around, the intended results of these expenditures.

Budget Questions

So how can we boil this all down to effective budget workshops? I suggest that councils consider the issues presented by a budget process and determine together the questions they would like to see answered by the participants. Some suggestions for those questions include:

1. How does the financial plan that's presented set us up for the future? (Is it borrowing from the future by spending reserves or creating a bow-wave of future expense? Or is it setting us up for a prosperous future? Is the budget “structurally balanced”?)
2. How does your proposal further the council's policy goals (either from another policy document like the comprehensive plan or from the council's goals established during a budget retreat)?
3. What are the risks and how does your budget address them? What risks are left unaddressed by your budget?
4. What alternatives did you consider when drafting your budget proposal?
5. What will you accomplish and how can we (and the community) hold you accountable (both financially and for results) based on your proposal?

Questions like these will result in a valuable conversation within the team and will likely lead to a good outcome for your community's “best budget.” Team mates support each other, but they also hold each other accountable to team results. Ask questions with an open mind and work together for the good of the team. Have good conversations this budget season, and make this another championship year.