Budgeting for sustainability: a Florida perspective.

• Author: Davidson, Linda C.
• Position: BEST PRACTICES

Local governments need to react in the short term by providing current budget solutions, but also by developing the ability to plan effectively and efficiently, forecasting budgetary requirements based on current economic conditions.

Developing and adopting budgets that support strategic goals without exceeding available resources is a challenge at all times, but particularly when the economy is unstable. Elected officials are reluctant to raise taxes or adopt new fees, so government finance officers are faced with some tough choices. Jurisdictions can cut services, reduce costs, or explore and implement resilient alternatives--a combination of strategies to provide resources that will be sustainable in the future. Local governments need to react in the short term by providing current budget solutions, but also by developing the ability to plan effectively and efficiently, forecasting budgetary requirements based on current economic conditions. We need to use long-term financial planning to anticipate future needs and provide sustainability in our funding strategies.

Florida law dictates that local governments must adopt a balanced budget. Florida's ability to fund budgets on the state and local levels has been severely affected by the economic downturn. The state has also mandated significant property tax reform. Factoring in the foreclosure crisis, financial market conditions, reductions in sales tax and other state revenues, and declining property values, significant reductions in revenues and service delivery are expected at both the state and local levels. According to RealtyTrac, Florida had the second most foreclosure filings of any state in 2009, and high foreclosure rates continue to affect property values and tax collections.

Throughout Florida, local government finance officers have employed many strategies and approaches for dealing with the revenue shortfalls and reductions in services and personnel that have been required in the last several years. To diversify their financial position, many jurisdictions have adopted new revenue enhancements and fees, expanded their use of grants, prioritized services, and reduced operating costs (e.g., employee layoffs and furloughs, outsourcing of services, and regionalization and consolidation of services) .They have also adopted budget policies that provide financial resiliency and direction that will be sustainable for the long term.

A recent survey prepared by the Florida Legislative Committee on Intergovernmental Relations (FLCIR) asked Florida cities and counties to detail the effects of tax policies and the economy The majority of respondents indicated that their local governments will reduce their workforce, reduce services or the level of service, and contract out services or jointly fund services.

REVENUE ENHANCEMENTS

Fees provide a mechanism for collecting additional revenues while reducing the...