Fiscal Plans #2

Fiscal planning for the full term, not just next year

Indiana’s local government budget system is designed to look only one year ahead.  That satisfies the statutory mechanics of setting annual appropriations, property tax levies, and rates.  However, it offers nothing to a local government executive who wants to plan ahead, even if “planning ahead” means only planning the four-year term of a local elected official.

Frequently, local officials complain that they do not receive management reports that show the financial condition at the end of the year.  Reports only show what has been expended or encumbered to date and what appropriations remain available in the current year.  Beyond that is pretty much a mystery.

Consequently, units often draw down their reserves without realizing it.  They are caught off guard when their resources run dry after a year or two, leaving them with no alternatives.  The other side of the coin is that they may be building up reserves year after year without realizing it and missing opportunities to use these available resources for worthwhile projects.

A comprehensive fiscal plan can solve this problem by projecting appropriations, property tax revenues, and other revenues years into the future.  Fiscal trouble can then be identified years in advance and addressed while options still exist.  Fiscal opportunities can be identified in advance, too, allowing local government executives to plan ahead for equipment purchases and salary adjustments.  Such investments can then be made with less worry as to whether the unit can really afford them.

No one should try to manage a municipality, county, township, or district without a comprehensive fiscal plan.

Written by: Curtis Coonrod

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