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Tightening the Belt on Spending

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The Scenario:

Your property taxes are too high. The city boasts gains in sales tax revenues and overall growth that year after year increase our budget, yet you still have a pothole on your road that has been there for years and Tullahoma cannot seem to find the money to fix or add new sidewalks. When you ask your elected officials about these items, the answer you get is: “We just do not have the money.”

The Solution:

Passing the annual budget is the most critical task an elected official will undertake. The budget typically gets reviewed in a traditional line-item fashion. Allocations are made based on forecasts such as anticipated population growth or predictions of what construction projects will be necessary for the coming budget year. This traditional approach lends itself to a constant struggle to answer the most common question in public budgeting: “How do we decide to allocate X dollars to A instead of B?” The result of this approach is most often a modest, incremental adjustment to the previous year’s budget. This method is an inefficient way to approach the process.

We should never approach the budget by asking: “how much do we need?” Instead, we should be looking at it from the standpoint of “how much do we have?” When you approach the budget by asking how much you have versus how much you need, it forces a different strategy. Rather than arbitrarily allocating money simply because we always have, we start looking at the efficacy of each project or department. Allocations for “Project A” are no longer based on how much was budgeted the prior year. Instead, we base funding in part on the answer to the question, “did allocating X dollars to Project A accomplish what we intended?”

I propose implementing a performance-based budget process that uses data points derived from measurable objectives to steer decisions made related to the budget. Many different factors affect budgetary decisions, such as choices made in prior years, fiscal constraints, federal and state mandates, and overall strategic objectives. Because of these factors, it is not possible for every decision to be based solely on performance metrics. However, we can use the data to make better-informed determinations.

The goal of this approach is to ensure that every tax dollar the city government spends is justified. The city should always be able to answer these questions:

  • Did the program or service have the intended outcome?
  • What was the overall social impact?
  • Does the program or service align with the overall strategic objectives of the city?

This methodology cannot happen overnight. It will require rethinking our current processes and retraining how we approach spending, goals and management. All elected officials and city staff would need to recommit to being accountable for the long-term. The residents of Tullahoma would also need to build a determination to hold officials and staff accountable for tracking our progress. Your Board of Mayor and Alderman would need to work with the community and outside experts to deliver an updated strategic plan for the community. This plan would become the basis for the downstream operational and tactical plans that determine performance metrics that are then used to align and inform the decision-making process.

Whew! That’s a mouthful. What I’m saying is this: “We need a plan, we need to stick to it, and we need your help.”

By taking this approach and being transparent throughout the process, we can ensure that tax dollars are going to essential services that the city should be providing. If spending on a project is not performing as expected and does not align with an established goal, we should not be spending that money. This was true before the economy came screeching to a halt and the long-term tax revenue for our budget became unclear, but in these uncertain times it’s remarkably true that we need to be extra mindful of how we budget our limited resources.

What Are Your Thoughts?

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