The Purpose of the Budget: More than Meets the Eye

A government’s budget should do much more than document the allocation of resources; it should be more than a prospective accounting of spending for the coming year. While a detailed examination of spending is critical, a public budget can, and should, accomplish two distinct purposes in addition to resource allocation:

Communicate to the public and policymakers. The budget is an expression of priorities. Items that are funded are of a higher priority than those which are not funded. These priorities are generally established at the local level, though it should be noted that federal and state mandates may require that money be spent in particular areas. As a result, a budget expresses the priorities not only of those who developed it, but also of state and federal legislators and policymakers who establish mandates and priorities for municipalities.

As an expression of priorities, a budget should seek to inform and engage the public and policymakers in an understanding of the priorities being pursued. It is critical that a district’s budget go beyond the mere allocation of resources by explaining what was done and why. Only then can a budget begin to communicate to the public and policymakers and engage them in a discussion about what is being done with public funding.

This engagement is critical to building public support for a municipality and its work. It is always possible to adopt a budget without communication, focusing primarily on informing a municipality’s legislative body to win adoption, and then move on to other work. However, this presents a lost opportunity to engage the public and build its awareness and commitment to what the government is doing on its behalf.

Provide transparency and accountability:  In addition to communicating to the public the reason for expending public funds in a particular way, a budget should facilitate ongoing transparency and accountability. The budget should be easily accessible: both literally and in the sense that it is written in such a way that the general reader can understand and engage with it.

A well-structured budget should examine current and proposed spending levels against prior years’ expenditures. This will support an examination of proposed spending and will also provide information on the accuracy of revenue and expenditure estimates in prior years. This is the first step in developing a system of accountability, and it will be expanded upon later in this paper to include a reporting of prior year, current year, and anticipated future performance and cost-effectiveness of services.

The budget should also examine the municipality in the context of other comparable municipalities. To better understand municipal spending and performance, it can be very helpful to examine the spending and performance of comparable entities. One of the great strengths of local government in the United States is that each municipality can approach the same problem with different solutions; a critical missing piece is the analysis of each solution and the dissemination of information about the most successful approaches to accelerate improvement across many municipalities.

A public sector budget should not be a transaction: something that is proposed, approved, and filed away with the municipal accountant or comptroller. A budget is an opportunity to review spending and performance; consider and adjust priorities; and communicate to the public the decisions that are being proposed in spending taxpayer money. The form of the budget can and should be used to facilitate this communication while supporting ongoing monitoring and accountability. Public participation is key to this process.

Provide transparency and accountability:  In addition to communicating to the public the reason for expending public funds in a particular way, a budget should facilitate ongoing transparency and accountability. The budget should be easily accessible: both literally and in the sense that it is written in such a way that the general reader can understand and engage with it.

A well-structured budget should examine current and proposed spending levels against prior years’ expenditures. This will support an examination of proposed spending and will also provide information on the accuracy of revenue and expenditure estimates in prior years. This is the first step in developing a system of accountability, and it will be expanded upon later in this paper to include a reporting of prior year, current year, and anticipated future performance and cost-effectiveness of services.

The budget should also examine the municipality in the context of other comparable municipalities. To better understand municipal spending and performance, it can be very helpful to examine the spending and performance of comparable entities. One of the great strengths of local government in the United States is that each municipality can approach the same problem with different solutions; a critical missing piece is the analysis of each solution and the dissemination of information about the most successful approaches to accelerate improvement across many municipalities.

A public sector budget should not be a transaction: something that is proposed, approved, and filed away with the municipal accountant or comptroller. A budget is an opportunity to review spending and performance; consider and adjust priorities; and communicate to the public the decisions that are being proposed in spending taxpayer money. The form of the budget can and should be used to facilitate this communication while supporting ongoing monitoring and accountability. Public participation is key to this process.