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Local Government Budgeting: How to Approach It Effectively in 2023

Budgeting and Reporting

Local government budgeting decisions will have an impact on multiple entities and individuals.

Local government budgeting decisions will have an impact on multiple entities and individuals. Local citizens faithfully pay their taxes to support their local government with the expectation that their local government will provide them with the services they need to be a healthy and productive part of the community.

One key way to effectively meet constituent expectations is by maintaining operational accountability. This middle ground for financial and political accountability isn't quite as well understood as the other two, but it's a key issue that drives performance budgeting. How can local governments leverage operational accountability while balancing performance measures, key program data and budget allocations when evaluating budget requests?

Viewing the budget as a process rather than an outcome can empower local government staff, elected officials and local citizens alike to stay accountable and budget effectively.


Building out the budget for the year will look different in some ways for each local government institution, but it's important to follow some key steps for efficient, effective and accountable budgeting.

1. Budget Development

The first step in the budgeting process is to evaluate current budget requests, revenue and financial objectives. Having a clear strategy and vision for the budget will help keep your planning aligned with the mission, as well as being accountable to stakeholders.

2. Budget Approval

Once the budget has been prepared by administrators, it may need approval from committees overseeing different sections. Citizen engagement is critical at this point, and it's important to solicit their input through surveys, open houses and discussion sessions.

3. Budget Implementation

The budget will need to receive legislative approval, and then it can begin to be implemented. The budget office is responsible for monitoring spending and ensuring that funds are reconciled with the approved budgetary plan.

4. Budget Publicization

Finally, a local government must clearly communicate the new budget to stakeholders, including municipal citizens. Residents, administrators and elected officials must be able to review the full budget and reports to ensure transparency and accountability.


Challenging budget issues call for strong approaches in organization, prioritization and communication. Technology comes to the rescue in assisting local governments with all three of these concepts.

To assess the scope of the issue, it's important for local governments to carefully review three periods of budgets. It's key to take a look back at past budgets to see where they've been. They also need to assess the current budget and evaluate where they are currently. The third period is more challenging to project accurately. Nevertheless, it's crucial for boards to consider their current budgetary needs, as well as the future budgetary needs of their community.

For example, community growth has both positive and negative impacts. A new housing development feeds local businesses and other establishments. At the same time, local government boards must consider the financial impact on the school district, local transportation, and police and fire departments. In addition, they need to consider the impact on road maintenance, sewage disposal, traffic patterns and other similar matters.

Many local governments are considering using program performance measures as a basis for making budget decisions. This approach can be used to incentivize and motivate local government departments to operate in the most efficient, effective manner possible.

Organizational goals play a central role in local government budgeting. The best budget planning considers how to work long-term strategic goals into the budgeting process. There are a couple of notable benefits to this approach.

By tying the budget to the short- and long-term strategic plans, local government staff and council members can rely on the budget to keep the strategic plan on target. The connection between local government budgeting and strategic planning serves an even greater function related to local citizens. This approach takes citizen and stakeholder input into consideration. Keeping citizens in the loop helps get their buy-in, which is vitally important to developing trust and confidence in their local government bodies.

Residents of communities typically don't relish the idea of giving their local governments so much of their hard-earned income. At the same time, keeping the strategic goals in front of local citizens makes it easier to understand why the local government spends its funds the way it does and keeps them informed about where their money is going. More importantly, local government goals help to justify tax increases and program cuts if they should become necessary.


Across the board, budget challenges weigh heavy on the minds of city managers and publicly elected officials.

When state and federal governments struggle with their budgets, there is a trickle-down effect on local governments. As state and federal governments cut their budgets for various reasons, one of the items on the chopping block tends to be funding for local governments. This is an issue over which local governments have no control, but they must actively plan for it and re-evaluate their budgets accordingly.

With scarce funds at issue, city boards and councils tend to compound the issue by failing to connect the budget with a central strategy or vision.

Local government budgets may have a positive or negative impact on government staff. Lack of funds and poor budgeting lead to staff turnover and burnout. As these issues unfold, efficiency and effectiveness suffer as well. Budgeting concerns often extend to government departments, affecting motivation, ownership of responsibilities, loyalty and obedience, which may lead to difficulty in interpreting meaningful performance measures.

Weak or poor budgeting strategies lead to low levels of citizen engagement, input, understanding and involvement, which may discourage citizens from buying into the plans that the local government makes.


Investing in technology is the surest way to create efficiency and effectiveness in local government budgeting while keeping the lines of communication with local citizens open and honest. Budget cuts and tax increases are far easier to swallow when citizens know what is going on and that there are solid reasons for the impact on their budget. A tool such as Goals in the Diligent Community platform allows for tagging agenda items to specific, identified goals.

The board portal system from Diligent Community streamlines the processes for setting up meeting agendas and creating council meeting minutes in the most efficient manner possible. This secure, engaging and inclusive solution is designed to encourage and enhance local citizen engagement. Citizens can get searchable access to all reports, agendas and records. Additionally, they can bookmark their local government site on all of their favorite electronic devices and easily pull up agendas and meeting minutes for local government meetings. They can also view integrated livestream video of the council meeting directly alongside the meeting agenda in real time, or review the relevant recordings connected directly to agenda items in the minutes. Recordings with closed captioning and time stamps make it a snap for citizens to view all council meetings at their convenience.

In summary, local governments don't have the liberty of enjoying an unlimited budget. Nevertheless, local government budgeting should reflect its vision, strategy and priorities. This way, no matter whether the budget is healthy or shows scarce funds, local governments will be able to demonstrate that they are committed to running effectively and to earning the trust of their citizens.
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