To maximize your budget, it’s wise to choose projects that reflect your government’s stated future priorities, which you have outlined in your strategy and (presumably) communicated to your constituents. Most of the negotiating happens around the capital budget-which projects will you take on in the near future, and what will their impact be on the community? In general, governments have a good estimate of operating expenses from year to year because they are somewhat fixed costs. Local governments that use both capital and operating budgets then consolidate them to indicate the amount of total estimated revenues available for the current period and the amount of new debt to be incurred for projects in the capital budget (which usually won’t generate revenue right away). For example, a city might need to budget annually for snow removal it might also invest in a longer-term streetscape project that includes installing new and replacement sidewalks throughout the city. Both types of budgets play an important role in quality of life for residents. The second is a capital budget, which includes financial plans for long-term capital improvements, facilities, and equipment. One is an operating budget, which is exactly what it sounds like-it lists expenditures necessary for day-to-day operations. These needs often necessitate two different types of budgets. Naturally, that means allocating money across departments for purposes of both financing its operations and providing public services. See how other local governments have successfully connected budget to strategy-download our collection of case studies and best practices today! Why A Local Government Budget Should Be Tied To StrategyĪt its most basic level, the process of creating an annual budget is essentially planning for expected incomes and expenditures for the upcoming fiscal year. At the end, you can also read how one city has put this approach to work effectively to make its community a great place to live, work, and play. (But we don’t think it has to be, as you’ll soon see!) In this guide, we set out to explain an approach to budgeting that’s grounded in strategy, and which we believe delivers the best results. With such a big job to do, it’s no wonder that the local government budget process is usually long and laborious.

Not only does it help maintain financial accountability for local leaders, but it also represents plans for the future of the community at large. Good financial management is key to realizing an individual community’s vision, and the budget is among the primary tools guiding that pursuit. But in reality, it’s so much more than that. Technically, a budget is simply a spending plan, forecasting the estimated revenue and expenses for a local government over a specified future period.

Government budget