Building a better budget through trust and communication.

• Author: Peterson, Eric J.
• Position: Topsail Beach, North Carolina

Simple yet effective redesign of the budget process and document create more efficient decision making in a small town.

In September 1991, the Town of Topsail Beach, North Carolina, hired a new town manager, who inherited an organization in excellent financial and organizational condition with a good budget document and process already in place. The new manager, however, wanted to build on Topsail's already solid process and make it better by achieving five goals:

1) presenting relevant budgetary information in a clear and concise format to make it easy for the board of commissioners to make well-informed decisions;

2) formatting the budget so that it serves as a "work plan" for the fiscal year;

3) incorporating the four major areas necessary to qualify for the GFOA Distinguished Budget Presentation Award (i.e., policy document, financial plan, communications device, and operations guide) to make the budget a useful resource document;

4) encouraging the board to move away from its practice of reviewing the budget by detailed revenue and expenditure line items toward a program-based review so that the board could focus on "big picture" issues, thereby decreasing the probability of getting sidetracked on less important items; and

5) combining the elements of capital programming and financial forecasting with the annual budget process to allow the town to prepare for the future.

In preparing to revise an already-functioning system, the manager focused on two areas necessary for building a positive relationship with the governing body: communication and trust.

History of Topsail Beach

The Town of Topsail Beach is located on the southern most five miles of Topsail Island, a 26-mile long barrier island in southeastern North Carolina that ranges in width from one-quarter to one-half mile. The town has approximately 400 full-time residents, but its summertime population swells to 8,500 during busy weekends. The town operates under the council-manager form of government, with a mayor, five commissioners, a town manager, 13 full-time employees, 24 volunteer firefighters, and eight auxiliary police officers to supplement the five-member police department. The town's departments and service areas include administration, police, fire, water, inspections, erosion control, and public works. The town's general, water, and beach erosion control funds total $1,189,900 for fiscal year 1996.

The name for the island (pronounced Topsul) originated in the 1700s; local folklore claims the name originated during the days of piracy. Topsail was a favorite hiding place for many pirates, including the dreaded Blackbeard. The pirates hid their ships in the channel behind the narrow island, waited for passing merchant ships, and then attacked their prey. The merchant ships soon became aware of this infamous hiding place and learned to watch for the tops of the sails showing over the dunes - hence the name Topsail Island. The town is now a popular vacation spot for families: its development is exclusively single-family residences with several small businesses and motels.

The First Year: A New Document

The new manager's first step in revising the budget document and process was to talk with the board members so they could share their budgetary experience, expectations, and preferences. The manager also asked them how they felt about using a different type of budget format. Each of the board members gave the manager a "free hand" to do what he felt was most appropriate regarding the document and process.

The manager thought it best to avoid making substantial changes to the town's budget process during his first year, particularly because the existing process was simple yet effective for the small town. In the first step, departments submit general goals, objectives, and major capital needs for the upcoming fiscal year to the manager in preparation for the second step - a goal-setting retreat with the board. At the retreat, the board, manager, and department heads discuss recommended priorities for the upcoming year. The town's goals and objectives for the upcoming fiscal year emerge from the decisions made during this retreat. This process - in conjunction with the regular year-round communication that takes place between the board, manager, and departments -...