Developing a local government budget is a standard, annual process. What makes the process so difficult is that it has many components and many stakeholders. It’s helpful to learn from how other communities approach their budgeting processes, including how they best deliver community services, how much they allocate toward various parts of the budget, and how they communicate their planning to their stakeholders. While it’s helpful to have some sense of a template, each local community is different and has a different culture, and those are important factors to consider in budget planning. Most importantly, communication and community engagement are vital components of budget planning and should be considered as part of the budget planning process.

Local governments are wise to consider the benefits of technology in getting the most from their budget planning process. Technology can help save costs in time and material, which can far offset any initial or ongoing costs in the budget.

A critical step in budget planning is making a plan on how to get buy-in from the stakeholders on the budget. This step takes clear, ongoing two-way communication, and the best way to do that is by implementing a Transparency Portal.

Important Things to Consider When Budget Planning for Local Government

The basic process for planning a local government budget is to consider the potential income, factor in the basic expenses, and allocate according to priorities after that.

Usually, local governments start by taking information from the previous year, and perhaps a few years before that. From there, they can ensure that all the basic budgeting needs are covered before entertaining anything else.

Some local governments use a PEST analysis, which helps to identify political, economic, social and technological factors that affect their community. These are usually areas over which local boards have little or no control. These considerations are important because they can help to identify risks and opportunities for the community. Some people like to turn the acronym into a positive word by rearranging the letters to STEP.

While it’s vital for local governments to factor their current operating needs into the budgeting process, they must also plan for the long-term perspective. This is where it’s helpful to consider the community’s mission and vision. Planning for the long term requires having a long-range vision and identifying what action steps the government needs to take to reach its final, desired outcome. This is the place where local governments can “dream big” and shoot for a picture of what the best-case scenario would be. Long-term planning requires thinking through the future needs of the community. It’s helpful to break down the community’s needs into what it needs for the next year, the next two to five years, and the next three to 10 years.

In addition to looking at the long-term vision, local governments must also cover the financial bases for their near-term priorities. In both cases, the goals that governments set should be SMART goals. SMART is an acronym for specific, measurable, action-oriented, reasonable and time-limited. Many different groups and organizations rely on SMART goals to ensure that planning leads to action.

Strategic planning and budget planning go hand-in-hand. The issues on which local governments plan to spend the taxpayers’ money should correspond directly to the future goals that they want to accomplish. For this reason, many local governments start with the known issues and the issues that provide direction according to the strategic plan. This process enables them to prioritize conflicting needs. This is the first step toward making budget allocations.

Local governments never seem to have access to the amount of funds that they’d like to have to run their community. It’s important to consider the limitations on financial resources and other types of resources, such as people, money and materials, and allocate funds accordingly.

Metrics and statistics speak the loudest to community stakeholders. Having solid information that supports budgeting decisions goes a long way toward getting buy-in from the community. Knowing how the government made their decisions and how they will develop and implement their plans demonstrates how the government officials prioritized various parts of the budget, which makes it easier for citizens to support tax increases when they’re needed. Positive results and outcomes benefit residents, and they want to see their tax dollars at work.

Incorporate the Community’s Needs Into Budget Planning

The best way to incorporate the community’s needs into local government planning is to ask them directly what their needs are. That’s what makes improving community engagement so vitally important. Community stakeholders include more than the local residents. In addition to the local citizens, stakeholders include the town’s employees, local businesses, council members, administrators, and the mayor or local leader.

In engaging with stakeholders, it’s important for local governments to be clear on how they plan to track and report progress. The best way to do that is by budgeting for and implementing a Transparency Portal by iCompass. A Transparency Portal attaches seamlessly to your municipal government website and has the same look and feel as your site. The portal is an online tool where citizens can engage with their local government any time of day or night.

The web portal allows citizens to review council meeting agendas and meeting minutes to keep them up-to-date and informed at all times. The Transparency Portal is also a good place to post community announcements and reminders and to remind citizens about all of the amenities that their community has to offer them. The Transparency Portal is the citizens’ “go-to” place for providing comments and feedback and demonstrates how government officials are aligning their strategic goals to the local community budget.

Citizens can also use the portal to apply for vacant positions on local boards and commissions where they have the opportunity to provide direct input about community needs that affect the budget. The portal is a great place to provide information on workshops, town hall meetings, and the efforts of task forces and work groups.

Engaging citizens via a web portal takes a bit of extra time, but making the effort to engage the community responsibly helps leaders learn about the issues that most concern members of the community. As citizens begin to feel more like part of the process, they’ll appreciate the government’s efforts to show that they’re willing to be accountable and transparent.