Faced with the prospect of growing deficits every budget cycle, the mayor, city council, and staff of Redmond, Washington, worked together to develop a long-range financial strategy that resulted in structurally balanced budgets that focused on realizing the city's vision. This strategy incorporates all the policy, environmental, and operational elements that affect the city's fiscal sustainability, starting with the vision the community defined for itself and aligning the resources available for pursuing that vision, both operationally and through capital investments.
The long-range financial strategy is a tool the mayor and city council use to help them evaluate all the elements that would affect the city's ability to pursue its vision, while maintaining acceptable rates of taxation and user fees (as defined by the city's price of government model). This conversation is translated into a document that represents the strategies they agree upon for informing the budget process. Included in the long-range financial strategy is a balanced six-year financial plan for operations and a 20-year capital plan that sets goals and allocates scarce resources (there is no attempt to balance the capital plan).
Like many local governments, the City of Redmond faced the same budget cutting challenges during each of its biennial budget cycles. A staff study, conducted internally in 2005, predicted deep and worsening budget deficits--and this was before the recent economic downturn. The council addressed the near-term nature of these deficits by adjusting some tax rates and successfully asking voters for an increase in the property tax levy, but the long-term problems remained unsolved. At the same time, the council wanted a better long-term approach to managing the city's fiscal affairs.
In 2008, the city implemented "budgeting for outcomes" (BFO) for the 2009-2010 budget, and it used this approach again for the 2011-2012 budget. In 2010, the council decided to revisit the 2005 study and see if the city could create a long-term strategy that would address the structural deficits while maintaining excellent community services. This was the genesis of Redmond's long-range financial strategy.
The full council outlined the basic policy principles they wanted to address in the long-range financial strategy in 2010, and it refined that outline in 2011. The council's finance committee then spent many of their monthly...