Home County Resource CenterLibrary Publications

County Budget Overview

The budget is one of the most important documents a county government prepares because it identifies the services to be provided and how they are to be financed. Almost every decision, activity, and program in a county government can be expressed in the financial language of the budget. In order to fully understand county budgets, it is essential to know the critical parts of the budget document, \ the primary budget players, the budget process, the different types of budgets, and how the budget is a tool for governing

Critical Parts of a County Budget

Operating Budget The operating budget section is usually the longest section of the budget document. This section outlines the operational and spending plans for county government agencies and programs. The operating budget is an aggregation of the individual budgets of each department and agency. Information on the mission, staffing levels, performance objectives and indicators, expenditure levels, and possibly even financing sources, are presented for each county department and agency

Financial Summaries The financial summary section of a county budget summarizes information contained in the operating detail section. At a minimum, most financial summaries present a consolidated budget summary, cross-classify financial data, and present information on revenues, indebtedness, and capital spending

Capital Budget A capital budget is the appropriation of bonds or operating revenue for improvements to facilities and other infrastructure. A capital project is the acquisition or construction of fixed assets, which are of a long-term and permanent nature. Examples include land, buildings, streets and highways, bridges, sewers, and parks

Primary Budget Players

• County Commission: The ultimate holder of the purse strings. Approves all budgetary changes

• Chief Financial Officer (CFO): The primary architect of the budget. Provides options and recommendations to County Commission

• Central budget office/finance office: The CFOs main tool in preparing the budget for legislative consideration and coordinating its implementation. Performs analyses and makes projections of revenues, expenditures, and trends

• Department officials: The day-to-day managers of county programs and services

The Budget Process

The budget process is nearly as important as the budget itself. The process determines whose opinions will be solicited and how they will be weighed. The period for which a budget is authorized typically spans a fiscal year that may correspond to a calendar year or to some other twelve-month period. Budgeting is a yearlong process that consists of four phases: preparation, adoption, implementation, and evaluation. Below is a typical budget process

Major Types of Budgets

• Line-item Budget:Focus is on financial accountability. Control oriented
  • Departmental outlays are grouped according to the items that will be purchased, with one item or group of items on each line (e.g., salaries and wages, contract services, supplies and equipment).
  • Predominant form of budgeting because it is easiest to prepare and implement.
• Performance Budget: Focus is on improving service delivery. Output oriented
  • Budget becomes a work contract between departments and commission based on desired service levels.
  • Workload measures help justify the budget; cost and output measures help evaluate whether service delivery is efficient and economical; and outcome measures reveal to what extent programs are achieving their goals.
• Program Budget: Focus is on goal attainment or effectiveness. Outcome oriented
  • Organizes budgetary information into a set of organized activities directed to particular goals. Funds are allocated along program rather than departmental lines.
  • In pure form, depends heavily on analytical techniques (e.g. cost-benefit analysis) to determine best allocation of resources.
• Zero Base Budget: Focus is on cost efficiency of services. Priority ranking orientated
  • Departments divide their activities into discrete services called decision units.
  • Decision units are considered at various funding levels called decision packages (elimination, minimum, current, and enhancements) and rank ordered.
  • Departmental rankings are merged across the whole governmental unit to form a single, ranked list and final resource allocations are assigned.
• Target Base Budget: Focus is on limiting expenditures. Justification orientated
  • Revenue projections are done and a proportion is set aside for discretionary budget decisions. The remainder of the budget is allocated to departments based on historical share.
  • Departments submit budgets showing spending plans for target base budget. Departments also submit requests that justify the need for enhancement packages, which are funded out of the discretionary set aside.
  • Typically used in budget cutting situations.

The Budget: A Tool for Governing

• Policy Making Tool:

  All budgets reflect decisions about a variety of policy issues. Ignoring the policy dimensions of budgeting may result in poor policy decisions by default - for example, failure to allocate funds for ADA renovations could allow outdated policies to remain in effect. The budget format, presentation, and even wording of the document all influence the making of public policy. A budget that explicitly reveals trade-offs can help ensure the making of policy - rather than the obscuring of policy - is the primary focus

• Planning and Management Tool:

  A budget is a plan of financial activity for a specified period of time (either a fiscal year or biennium) indicating all planned revenues and expenses for the budget period. It provides a mechanism to allocate resources for the pursuit of community goals. Budgeting helps policy makers set goals, and assists program managers and department heads in improving organizational performance

• Communication Tool:

  The budget is a concise way for decision makers to communicate changes in priorities and rationale for decisions made. The budget document and process can be an effective tool in helping citizens understand the need for change and the reasons behind policy and political decisions. A budget also provides a means of establishing public accountability by offering residents a clear statement of how tax money is spent and proof that county finances are in good shape

Sources and Additional References

Berman, David R., "State-Local Relations: Devolution, Mandates, and Money" in The Municipal Year Book 1997 (Washington, DC: International City Management Association, 1997)

Petersen, John E., and Strachota, Dennis R., Local Government Finance (Chicago, IL: Government Finance Officers Association of the United States and Canada, 1991)

U.S. Advisory Commission on Intergovernmental Relations, State Laws Governing Local Government Structure and Administration, March 1993 (Washington, DC: United States Government Printing Office, 1993)

Please contact Jacqueline Byers for more information.