Importance of a Good Budget Process

Former US President Joe Biden once quoted his father on the topic of political budgets: “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value”.

It’s one of those thoughts that seems simple at first blush, but you soon realize has several deeper meanings. A budget, regardless of what order of government you serve, is more than just a collection of line items and costs. It is a roadmap for your political activity, a signal to your constituents about what you value, and it is the single most important document that voters use to judge their representatives, even in today’s fast-click, short-attention media environment.

Let’s start with the obvious: a budget lets the municipal corporation plan for the year ahead. It allows for projects to proceed without needing multiple approvals, it allows for routine business to be conducted quickly, and of course, it helps keep the municipality in financial balance when multiple complex projects, programs, and services are in full swing. This is what you might call the most basic use-case of a budget, but it certainly doesn’t end there.

The budget is read and interpreted by the entire community, and everyone is going to be looking for something different. It is impossible to please everyone with a single budget – after all, what is a budget if not a series of choices and priorities? But a strong budget process, with clear timelines and transparent results will go a long way to dissuading any mistrust about Council’s decision-making from those who may not be pleased with the budget. A clear budget shows where tax dollars are allocated, explains why some projects move forward while others don’t, and reduces suspicions of “backroom” deals or political favouritism, accusations that have become more common in our current media environment, even at the municipal level.

The budget is also the primary way for Council to signal their political priorities and put their official “stamp” on a new administration. Most elected officials simply cannot wait to get to work and put their own spin on municipal direction, however this can lead to role confusion and overzealousness as some councillors may act before fully understanding their role. The budget process gives members of Council an opportunity to dig into the business of the municipality and make changes in a predictable manner, providing change and growth as well as stability and clarity, the key goals of Council and Administration respectively.

Budgets are also useful as a guidance document for Council and Administration. The budget is the final piece of the puzzle that pulls together Council’s strategic plan, Administration’s Asset Management Plan and Municipal Plan, long-term capital forecasts and service levels and performance measures, all into one handy document. A real, clear budget process prevents budgeting by inertia, where last year’s numbers just roll over, and allows Council to see if their spending is truly matching their goals.

We’ve discussed Council’s role at length, but now let’s consider a budget from the perspective of a Senior Director. A good budget process is worth it but takes a lot of work. A Senior Director might need to prepare business cases for projects under their department, along with costing, performance measures, and reporting on outcome from the last budget. Revenue forecasts, cost pressures, long-term spending and liabilities, all of which need to be evaluated and vetted by trained staff and collected and translated into a budget by the CAO. A strong budget process depends on a strong and well-trained staff cohort to coordinate the political and administrative needs of the municipal operation.

So, you’ve got a strong staff, you’ve got clear political goals and a Council that knows their role, and now, you have a budget. What does the municipality look like on the other side of a good budget process?

Members of Council feel respected and informed, and that they have done their due diligence to set the municipality on the best path possible. Staff feel their concerns about costs, timelines, and other practical matters have been heard, acknowledged, and even actioned in the latest budget. Debate was well-structured and didn’t dive into personal waters, but stayed above the fray and focused on policy, keeping Council on an even keel for the next debate. And of course, now the public has a better idea of your political goals, how you’ll achieve them, and (hopefully) feel informed and connected to their community.

In the long-term, after many years of good budgeting, we see the real benefits: multi-year financial planning that sticks to the plan and yields real dividends; assets that last for their expected life cycle or longer; successful debt management and reduction; and perhaps most importantly, ongoing and solid public trust in both the process and the corporation – something no amount of budget money can buy.

So, as many jurisdictions around the country move into budget season, remember that a good budget needs more than numbers – it needs public buy-in, trust, accountability, transparency, and above all, a solid process.

What have been your experiences with the municipal budget process? Do you have any stories, good or bad, that you would like to share? Email us your thoughts at tyler@strategicsteps.ca.