Creating and using a revenue manual: a dynamic tool for analysis.

• Author: Reynold, Amy Zachary

The landscape of local government revenue presents an assortment of challenges and opportunities for public finance officials. The traditional role of the public finance officer has expanded to include fiscal facilitator to local government officials, emissary to citizens, and information manager, all while meeting jurisdictional needs. To successfully navigate the eddies in the flow of revenue, the finance officer must have powerful tools to provide decision-making support.

Properly using these financial tools provides the finance staff an opportunity to create mechanisms for knowledge collection, revenue analysis, and review Because each local government has distinct economic and environmental influences, creating tools unique to the government becomes invaluable as a foundation on which to make decisions and understand impacts of various factors on a revenue system. The revenue manual is primary among the tools used as a resource and can be integrated with other policies to build a financial framework within a local government.

WHAT IS A REVENUE MANUAL?

A revenue manual is a comprehensive document that describes all the revenue sources, including taxes, fees, and charges, that support local services within a jurisdiction. Each revenue stream of the government portfolio is examined in detail for its unique historical characteristics that illustrate stability and future adequacy. Moreover, the revenue manual provides local government officials and taxpayers a picture of the revenue landscape and facilitates a transparent presentation of sources and limitations of these funds.

WHY CONSTRUCT A REVENUE MANUAL?

The recommended practices from the National Advisory Council on State and Local Budgeting (NACSLB) suggest that preparing and updating a revenue manual be included as part of a strategy to promote a better understanding of government resources. (1) The development of tools to evaluate financial options aids governments in making informed choices during the budget process.

Preparing a revenue manual establishes a cornerstone on which other financial planning can take place by emphasizing the need for a government to develop, review, and update long-range financial plans and projections for all revenue sources and factors that impact present and future revenues. Additionally, the examination of a government's revenue system provides an opportunity to analyze whether the system is well diversified, stable, fair, and equitable.

The revenue manual, over time, becomes a comprehensive document of the jurisdiction's revenue system and provides a framework to see the opportunities and challenges facing the entity. At the macro level, the revenue manual ensures the entity has the most reliable and accurate information to monitor the revenue system and with which to make budget decisions. At the micro level, each revenue stream is examined by presenting an overview of the current situation, growth trends, and critical areas for strengths, weaknesses, opportunities, and threats. The exercise of constructing the revenue manual establishes consistency for preparing revenue projections, analyzing major revenue, and evaluating changes to rates and bases.

Governments can employ the revenue manual for administrative functions as well by having this document in place to facilitate training new staff and educating local government officials. (2) This transparent illustration of a government's revenues is an invitation to taxpayers to be involved in a public conversation about revenues and their uses. Lee County, Florida, engages its citizens in a conversation through a free program called the Government Resource and Orientation Workshop Series, or LeeGROWS. Local citizens enrolled in this program learn about the day-to day operations of the county As part of the program, the budget office uses the revenue manual as a tool to educate the citizens about the collection and uses of all the county's revenue sources. (3)

WHO SHOULD BE INVOLVED IN CONSTRUCTING A REVENUE MANUAL?

The chief finance officer should assemble a team of staff that, at a minimum, includes the finance and budget office staff. A project manager should be named who is ultimately responsible for the organization and oversight of the manual preparation. Fiscal officers or budget analysts housed in other departments or offices should be called upon to provide any pertinent historical information or data about...