We’re partnering with the Center for Priority Based Budgeting on the innovative webinar training series, “I Want to be Your Analyst.” Join us for a follow up webinar with Heather Geyer, City of Wheat Ridge, CO on Oct. 27 at noon PST & 3:00 p.m. Link: Register for Wheat Ridge Webinar.
By: Center for Priority Based Budgeting
Taxpayers expect local government to provide support in meeting their social, physical, environmental, and economic needs, especially with the declining assistance in these same areas from federal and/or state sources. In turn, local government is left answering:
- How does local government continue to offer the important, even vital, services required in a responsive and timely fashion?
- How will finance officers address debt obligations while maintaining resources to provide prioritized services?
- How can managers navigate the challenging waters so their communities become better, stronger, and more relevant than ever before?
To answer these questions, let’s consider a different perspective. We must consider how to manage, use, and optimize resources in a much different way than previously. This new environment demands a new vision of the future.
For managers, resources can appear to be scarce because of our tightly clenched grasp on some commonly held assumptions from which they need to break free. Perhaps there is a different way to see things. A new lens.
The Wheat Ridge, CO Experience
In 2012, Wheat Ridge city council identified core services as a top priority goal in their strategic plan. The city was operating at a base level of service due to budget cuts related to the economic downturn. The City faced a long-term lack of funding for Capital Improvement Projects (CIP). Without a dedicated revenue stream to fund $250 million in infrastructure projects and a budget shortfall, 2014 was the last year the City could fund minimal preventive maintenance projects through a General Fund transfer.
In Wheat Ridge, the Fiscal Health Model provided a new visual tool to facilitate budget discussions. The model allows staff to develop scenarios to provide elected officials an instant picture of the financial impacts of decisions. The model enable council and staff to engage in new conversations around budget and resource allocation.
The power of the model was realized at the City Council annual planning retreat in 2012. City Manager Patrick Goff used the model to show councilors members how different scenarios affected the city’s financial situation. Wheat Ridge has a backlog of more than $250 million in unfunded CIP projects. The model allowed staff to illustrate to Council, not by pointing to numbers in a budget book but by modeling the financial data, that given the current fiscal situation, “cutting” the budget to solve the problem was not a viable option. The city needed to identify new dedicated revenue sources to ensure the success of these projects. One councilor had an interesting reaction to this new way of looking at budgeting opportunities. The councilor believes there are still ways to find efficiencies to save money, but he now concedes the city’s fiscal realities. He realizes that no amount of reductions would solve the City’s long-term budget issues related to capital improvements.
A few questions to consider in these situations.
Are you seeking clearer understanding and communication with your elected officials?
Some elected officials have adopted Fiscal Health as a preferred means of communicating with staff regarding any decisions that potentially might have a fiscal impact – asking staff to “show us” those impacts using the principles of Fiscal Health as the primary communication device.
Are you working through challenging conversations about compensation with staff or bargaining units?
Organizations have entered into labor negotiations with their bargaining units using Fiscal Health as a way to quickly agree on the assumptions behind the City’s fiscal forecasts, therefore establishing a basis of trust in the discussion – then modeling the bargaining units’ requests to demonstrate impacts to the City’s fiscal position.
Are you weighing various financial related decisions, with complex variables, and long-term impacts?
Modeling is a powerful scenario-planning tool, providing easy to understand visualization of data. It has been used to help a water and sewer district prioritize capital projects, understand the ongoing impacts of those projects, and effectively develop rate increases by better understanding their ongoing and one-time sources and uses of funding in their operation.
Local governments choosing to implement the concepts of Fiscal Health as a treatment regimen are making substantial progress because they are doing the analytical work required to more accurately diagnosis the reasons behind their fiscal issues and then determining the best treatments that lead to a viable cure.
Communicating Fiscal Transparency
Local governments must be transparent about their fiscal health. Communicating that picture clearly is a challenge that has plagued managers for years. If managers are going to demonstrate financial reality to elected officials and staff, and to residents, they must find better ways to make fiscal situations understandable and transparent.
Finding creative ways to demonstrate what the next five to 10 years might look like is a must. Local governments are unable to make sound, timely decisions regarding investing in new resources, programs, or major capital projects when elected officials and local government managers are paralyzed by the uncertainty of whether they have funds to appropriate. Developing a long-term financial forecast is key to gaining a better understanding of what the future might hold.