Navigating the City Budget Maze: A Closer Look into the Process

Catherine Huckaby
Sep 11, 2024
8 min read

Updated: Apr 5

In a previous post, "Demystifying Your City's Budget: How to Get Involved and Stay Informed," we covered the basics of city budgets and why they matter to you. Now, let's roll up our sleeves and take a deeper look at the process of creating and managing a city budget.

Our goal is to help you understand how your city's financial decisions are made, so you can play a more active role in helping shape your community's future.

The Budget Cycle: A Year-Round Process

While many people think of budgeting as a once-a-year event, the reality is that city budgeting is an ongoing process. The timing revolves around each city's fiscal year, with larger populations, bigger budgets, or significant fiscal challenges often requiring earlier starts. Here's a streamlined overview of a typical budget cycle:

Planning and Preparation (3-6 months before fiscal year)
- Assess current financial status
- Department heads assess needs
- City financial staff project revenues and expenses
- The city council may hold initial strategy sessions
Budget Development (2-4 months before fiscal year)
- Departments submit budget requests
- The city manager or mayor reviews and adjusts requests
- Preliminary budget drafted
Review and Adoption (1-2 months before fiscal year)
- Proposed budget presented to city council
- Public hearings held for community input
- City council debates and may amend the budget
- Final budget adopted
Implementation (Throughout the fiscal year)
- Departments implement programs and spend funds
- The finance department monitors revenues and expenditures
Audit and Evaluation (2-4 months after fiscal year)
- Independent auditors review financial statements
- City staff and council evaluate budget performance

Understanding this process can help you identify the best times to get involved, ask questions, and make your voice heard.

"The world is run by those who show up." - Unknown

Key Players in the Budget Process

Now that we understand the cycle, let's look at who's involved in creating and managing the city budget:

City Manager or Mayor: Depending on your city's form of government, either the city manager (in council-manager cities) or the mayor (in mayor-council cities) typically oversees the budget preparation process and presents the proposed budget to the city council.
Department Heads: These are the leaders of various city departments (e.g., police, fire, parks and recreation, public works). They submit budget requests for their departments based on operational needs and strategic goals.
Finance Director: This person leads the finance department, which is responsible for projecting revenues, analyzing department requests, and compiling the overall budget document.
City Council: The elected representatives who ultimately review, potentially amend, and adopt the final budget.
Community: That's you! Through public hearings, community surveys, and direct communication with elected officials, citizens play a crucial role in shaping budget priorities.

"Civic engagement means working to make a difference in the civic life of our communities and developing the combination of knowledge, skills, values, and motivation to make that difference." - Thomas Ehrlich

Deep Dive: From Department Requests to Final Budget

Let's take a closer look at each stage of the budget preparation process.

1. Department Budget Request

Each city department prepares a budget request that typically includes:

Base Budget: Funding needed to maintain current service levels
Decision Packages: Requests for new programs or expanded services
Performance Measures: Metrics to evaluate the effectiveness of department programs

For example, the Parks and Recreation Department might submit a base budget for maintaining existing parks, a decision package for a new community center, and performance measures like "number of program participants" or "park cleanliness ratings."

2. Revenue Projections

While departments prepare their requests, the finance department projects how much money the city expects to receive in the coming year. This involves:

Analyzing economic trends
Estimating property and sales tax revenues
Projecting fees and fines
Anticipating state and federal grant funding

These projections are crucial because they determine how much money is available to fund department requests.

3. Budget Balancing

After gathering all requests and finalizing revenue projections, the city manager or mayor, in collaboration with the finance director, must prioritize competing needs while working within the limits of expected revenues. This process often includes:

Negotiating with department heads to reduce requests
Identifying efficiency improvements to reduce costs
Proposing revenue increases (e.g., fee adjustments, tax increases)
Recommending the use of reserve funds for one-time expenses

This stage can be particularly challenging in years when revenues are flat or declining.

4. Proposed Budget Presentation

The city manager or mayor then presents the proposed budget to the city council. This document typically includes:

An executive summary highlighting key points
Detailed revenue and expenditure tables
Department narratives explaining their budgets and goals
Capital improvement plans for major projects
Debt schedules showing current and planned borrowing

5. Public Hearings and Council Deliberations

Cities are required to hold public hearings on the proposed budget. These hearings are your opportunity to:

Learn more about the city's plans and priorities
Ask questions about specific budget items
Advocate for programs or services you believe are important

After the public hearings, the city council will deliberate on the budget. This often involves multiple work sessions where council members:

Question department heads about their budgets
Propose amendments to increase or decrease funding for specific items
Debate the merits of new programs or capital projects

6. Budget Adoption

Finally, the city council votes to adopt the budget. In most cities, this must happen before the start of the new fiscal year (you should be able to find this on your city's website). The adopted budget becomes the official spending plan for the coming year.

"The most important political office is that of the private citizen." - Louis D. Brandeis

Budget Monitoring and Adjustment

Adopting the budget is not the end of the process. The finance department monitors actual revenues and expenditures throughout the year, comparing them to budget projections. If significant discrepancies arise, the city may need to make mid-year budget adjustments. These could include:

Freezing hiring or purchases if revenues fall short
Cutting programs or services in severe cases
Allocating surplus revenues if income exceeds projections

Many cities provide quarterly financial reports to the council and public, allowing for ongoing oversight of the budget's implementation.

Navigating Budget Documents

City budget documents can be hundreds of pages long and filled with complex tables and technical jargon. Here are some tips for making sense of them:

Start with the Budget Message: This is usually at the beginning of the document and provides an overview of key points.
Look for Summaries: Most budgets include high-level summaries of revenues and expenses by category.
Focus on What Interests You: If you're passionate about parks, for example, focus on the park and recreation department's section.
Compare to Previous Years: Look at how department budgets and specific line items have changed over time.
Check for Glossaries: Many budget documents include a glossary of terms to help you understand the jargon.
Don't Be Afraid to Ask Questions: If something doesn't make sense, reach out to your city's finance department or your council representative for clarification.

"Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has." - Margaret Mead

Beyond the Budget: Fiscal Policies and Long-Term Planning

While the annual budget is important, it's also crucial to understand your city's broader fiscal policies and long-term financial plans. These might include:

Fund Balance Policy: How much money the city aims to keep in reserve for emergencies or economic downturns.
Debt Management Policy: Guidelines for when and how the city will borrow money.
Long-Term Financial Plan: Projections of revenues and expenses over a 5–10-year period.
Strategic Plan: The city's overall goals and priorities, which should guide budget decisions.

These policies and plans provide context for the annual budget and help ensure the city's long-term fiscal health.

Getting Involved: Making Your Voice Heard

Now that you have a deeper understanding of the budget process, how can you effectively participate? Here are some strategies:

Attend Budget Workshops: Many cities hold informal sessions to explain the budget process and gather public input early in the cycle.
Participate in Community Surveys: Some cities use surveys to gauge public priorities for the upcoming budget.
Join a Citizen Budget Committee: Some cities have formal committees of citizens who provide input throughout the budget process.
Speak at Public Hearings: Prepare a short (usually 3-5 minute) statement about your budget priorities or concerns.
Contact Your Council Members: A detailed, well-reasoned email, phone call, or request for an in-person meeting can be an effective way to advocate for your priorities.
Organize with Like-Minded Citizens: Forming or joining a group can amplify your voice in the budget process.
Follow Up: After the budget is adopted, keep track of how it's being implemented and hold your elected officials accountable.

"If you think you are too small to make a difference, try sleeping with a mosquito." - Dalai Lama

Conclusion: Your Journey to Budget Literacy

You're well on your way to understanding your local budget process by using the information from this post and additional resources. Remember, the goal isn't to become a finance professional but to build the knowledge and confidence to engage meaningfully with your city's budget process. Start where you are today, explore these resources, and get ready to play an active role in shaping your city's financial future!

Ten Additional Budget Process Resources

For more information about city budgets and local government finance, here are some valuable resources and websites:

Your City's Website: Don't forget that your own city's website is often the best source for specific information about your local budget. Look for sections labeled "Budget," "Finance," or "Transparency."
Local Universities: Many universities have public policy or urban affairs programs that produce research on local government issues. Check if universities in your area have publicly accessible libraries or research centers.
State Municipal Leagues: Each state has a municipal league, an association of cities within the state. These organizations often produce reports and host training sessions on municipal finance. Search for "[Your State] Municipal League" to find yours.
Government Finance Officers Association (GFOA): The GFOA is a professional association for government finance officials. Their website offers a wealth of information, including best practices in budgeting and financial management. While some content is technical, they also provide resources aimed at the general public.
National League of Cities (NLC): The NLC is an advocacy organization for city leaders. Their website includes research reports and articles on various aspects of city governance, including budgeting and finance.
Urban Institute: This organization conducts research on urban policy issues, including local government finance. They often produce reports and interactive tools that can help you understand city budgets in a broader context.
Lincoln Institute of Land Policy: This organization focuses on land use, taxation, and public finance. They offer many free publications that can help you understand property taxes and other aspects of local government revenue.
Civic Dashboard: This site aggregates data from various government sources, allowing you to compare financial and demographic information across different cities.
OpenGov: While primarily a software company serving governments, their blog and resource center offer insights into government budgeting and transparency.
Ballotpedia: This non-partisan encyclopedia of American politics includes information on local government structures and finances. It can be particularly useful for understanding how your city's government is organized.

Remember, while these resources can provide valuable information and context, they should complement, not replace, direct engagement with your local government. The most up-to-date and relevant information about your city's budget will always come from your city itself.