The Process of Balancing the City Budget Patrick Callahan, Consultant Callahan Municipal Consultants Handouts and presentations are available online at
General Overview Identify the Issue Define the Process Discussion – What works in your City?
So…What’s the Problem? Revenue Reductions Increasing cost of operation Demand for more services Distain for government and taxes
Revenue Reductions The $8.10 General Fund Limit Commercial property rollback Multi-Family Property rollback Impact of TIF
Increasing Costs Employee health insurance Salaries – “Market Place” Competition FICA & IPERS Contributions Materials & Supplies
Demand for more services Better police protection Improved street & storm sewers Emerald ash bore – tree removal More trails
New “Facilities” - More Annual Costs Aquatic Centers Parks and Trails Libraries & Community Centers
Suggestions – New Facilities Can the City handle the debt? What are the annual operating costs? Will we be willing to give up “something else” to keep it?
Public demand for more stuff Purse grants & donations No consideration to annual cost of operation That’s your problem?
The Budget Process – Preliminary Steps Read Chapter 6 of IPA Handbook Attend MLA Workshops Consider Goal Setting Session Update Capital Improvements Plan
Budget Preparation Process Identify & prioritize the services Estimate the expenses Identify and forecast the revenues
City Budget – First Draft Expenses vs Revenues No shortfall? “Lucky For You” The budget “Gap”
Budget “Gap” – What to do? “Across the Board Cuts” Fight About It? More meetings – more discussions
Balancing the Budget – The Process 1.Identify potential reductions 2.Identify new revenues 3.Prepare a “list” and Be Inclusive
Balancing the Budget – (continued) 4. Preparation of the “List” Item Potential reductions - $$$ Impact or services Net savings - $$$ Comments /Observations
Balancing the Budget – (continued) 5.Discuss and clarify 6.Individual Rankings – Mayor & City Council 7.Scoring System – A,B,C, & D
Balancing the Budget – (continued) 8.Prepare Summary of Rankings 9.Scoring spreadsheet – all rankings 10.Summary of reductions
Balancing the Budget – (continued) 11.Share and discuss 12.Go down the “List” 13.Proceed until budget is balanced
Advantages of this Process Systematic approach Equal “voice” & equal opportunity Reduce probability of “fights” Clear and transparent process
Additional Advantages Could save time Emergency “back up list” in case of emergencies Update annually – helpful tool
Disadvantages or Potential Pitfalls Major splits – The 3 “A’s” and the 3 “D’s” Lack of commitment The “all D’s” Council Member Lack of follow through
Additional Disadvantages Public pressure Department Head concerns Peer pressure
General Discussion How does your Council balance the budget? What has worked? What has not worked?
Budget Reductions 1.How has your City reduced costs? 2.What services has your City reduced or eliminated?
Revenue Enhancements 1.What new sources of revenue has your City implemented? 2.What existing sources of revenue has your City increased?
Additional Suggestions 1.Capital Improvements Plan (CIP) 2.Multiple Year Budget ( 3 to 5 years) 3.Continue to refine the Process
Available Handouts 1.Anamosa Budget Ranking Process 2.Balancing the Budget – Creative Solutions – IMMI 3.Budget Options for Small Cities – ILC Workshop
Available Handouts 4.Capital Improvements Planning – CIP Handout 5.G.O. Bonds versus Revenue Bonds 6.Budget Workshop Slides – IMPI
Contact me Patrick Callahan, Municipal Consultant Callahan Municipal Consultants, LLC 417 Kaitlynn Avenue Anamosa, Iowa – Website – callahanmunicipalconsultants.com