Connecting state and local government leaders

5 Good Reasons Why Local Governments Should Embrace Long-Term Budget Forecasting

Main Street in downtown Stockton, California

Main Street in downtown Stockton, California Shutterstock

 

Connecting state and local government leaders

There are plenty of reasons why cities and counties focus on short-term fiscal needs. Here are some advantages for those who change that risky mindset.

SAN ANTONIO — In the world of city and county budgeting, the “balancing of the short term and long term is one of those inherent difficulties with local government.”

That’s according to Kurt Wilson, the city manager in Stockton, California. He should know. Wilson was appointed to his position in January 2014, just 10 weeks after the city of 300,000 residents located about 50 miles south of Sacramento had entered bankruptcy.

“A bankruptcy is the result of a series of bad decisions,” Wilson said this week during an educational session on long-term budget forecasting at the International City / County Management Association’s annual conference, which wrapped up Wednesday in San Antonio. “It’s difficult for an elected official to make long-term decisions” when re-election and trying to please everyone are top of mind, he said.

Stockton exited bankruptcy in February 2015 after what Wilson described as “an ugly, personal and vindictive battle with Wall Street.” While it’s often hard to clearly define the winners and losers in a bankruptcy, Wilson told a packed meeting room that the bankruptcy judge sided with the city during some of the more difficult clashes with Stockton’s creditors, thanks to long-range budget forecasting efforts the city had undertaken.

“The judge took painstaking detail … with the long-range plan,” he said.

Stockton’s route out of bankruptcy led to a more stable fiscal footing and helped changed the narrative about the city.

“Stockton is one of those success stories,” Wilson said. “A few years ago, you’d give us that pity look: ‘Oh, you’re from Stockton.’”

What can other local governments learn from Stockton and other jurisdictions that have undertaken long-range budget forecasting?

Wilson was joined by a panel that included Bryan Hill, the county manager in James City County, Virginia; Scott Huizenga, a budget officer in Kansas City, Missouri; and Robert Leland, a special adviser with Management Partners, Inc. and former financial director for the city of Fairfield, California.

There are a lot of reasons why local governments are often hesitant to embrace long-term budgeting, including the amount of time and effort required by staff and more immediate near-term problems to address. For elected officials, there’s always the next election to think about.

But those reasons, of course, don’t lead to a stable, long-term fiscal foundation. They only exacerbate the multi-layered, complex problems.

Want to make the case for long-term budget forecasting?

Here are five advantages, as drawn from Leland’s presentation:

  • Transparency: Stating assumptions improves credibility and communicates true fiscal condition.
  • Fiscal Discipline: Realistic forecasting precludes wishful thinking about capacity for revenue growth.
  • Early Warning: Reveals adverse trends; gives staff and council time to craft appropriate solutions; avoids crisis mode.
  • Promotes Sustainability: Identifies long-term impacts of policy decisions; encourages sustainable solutions rather than short-term fixes promoted by one- or two-year budget.
  • Living Document: Continuously updated with new information: “The numbers never sleep.”

Michael Grass is Executive Editor of Government Executive's Route Fifty and is based in Seattle.

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