Regarding budgeting basics, government entities have much in common with their corporate counterparts. One thing in common is the struggle for collaboration and communication on budgetary issues. Every organization, big or small, struggles to collaborate on budgetary issues and communicate pertinent information to make the budgeting process go more smoothly.

These techniques can enhance collaboration and communication while developing, refining, and approving budgets. If you're working on a budget for a government entity, these techniques can help you move from draft to approved, enhancing your ability to work with colleagues, ensuring essential budgetary items are included, and creating a productive work environment.

The Critical Nature of Budgeting

Budgets are always fraught with anxiety. Not only must they reflect known needs, but they must also account for the unknown – the ‘what if’ factor.

One important task to undertake is ‘what if’ scenarios. These scenarios help your organization prepare for many unknowns: natural disasters, manmade disasters, and inflation. While it’s impossible to predict any of these accurately, you can run several what-if scenarios and assess impacts on revenues and expenses.

A simple example of the impact on revenues is a municipality considering the following questions:

• What if you increased pool admission fees by $5 per person?
• What if you sold 1,000 more rec center memberships?

Such quick what-if scenarios can be sketched, and potential revenue increases estimated.

Alternately, you may wish to run expense-related scenarios such as:

• What if we experience four large snowstorms instead of two? How will this impact our payments to subcontractors used to clear side streets?
• What if we give the town employees more than a cost of living raise? How will a raise increase impact salaries and wages?

Here's where collaboration and communication come into the picture. By collaborating with various department stakeholders, you can team up to brainstorm what-if revenue and expense scenarios and then propose ones that make the most sense to all. Collaboration with colleagues becomes vital to the budgeting process to envision many things that can impact the budget.

Budgets Impact Both Short- and Long-Term Needs

Another important consideration is how the budget impacts both short and long-term needs. While you may be voting in a budget for one, two, or three years, what may be the long-term consequences of this budget?

This is where strategic vision and leadership are vital to the budgeting process, as well as collaboration. Thinking through the what-if scenarios, projections, and estimations will help you imagine the possible long-term consequences.

To continue the thread above, increasing rec center or pool fees may sound great. It will add revenue to the government's coffers and pay for other areas where you wish to increase budget lines. However, what if some families can't afford it? What if pool attendance drops off? What might the impact be?

You can make better decisions by test-driving various budget scenarios and imagining the many ways in which the future may unfold. Of course, you cannot foresee every scenario. But it's a valuable exercise that helps you anticipate, plan, and collaborate to put your organization in the best possible position during budgeting.

Budget Collaboration

After working together on what-if scenarios, further collaboration is required to produce a finished budget. Where to begin? Start with last year's budget and pull up the prior year's actuals, too. Conduct a change analysis.

• Did revenues increase or decrease?
• Did expenses increase or decrease?
• In which line items did you note a change?
• Can you explain the environment that led to the change?
• Do you need to budget for inflation? What is impacting costs – the cost of goods or services?
• How will you manage budgeting in light of the current inflationary cycle?
• Are there new elements to add to the budget?
• Can any old elements be retired?
• Do you need a flat increase of costs for 5%, or is it nuanced? What is suitable for your local municipality?
• Do you need to increase the cost of labor, salary increases, healthcare or insurance costs, etc.?
• How about leases and rents – have these increased or stayed the same? What should you budget for them?

Everyone holds a different piece of the puzzle. Meeting with your colleagues and collaborating with them on each question should lead to valuable dialogue that will help you form a reasonable draft of the budget.

Budgeting Tools to Support the Process

You’ve met with your colleagues, reviewed prior years’ budgets, and discussed what-if scenarios. You’ve got the raw data. What tools are available to streamline collaboration and make the budgeting process easier?

There are different tools for different needs. For example, individual department heads preparing a first draft of their budgets can work on them using simple tools like spreadsheets. However, problems will arise when it comes to collaborating; even cloud-based spreadsheets can be problematic, especially if you need to compare or work with multiple files or worksheets within a file.

SaaS (software as a service) platforms provide financial management tools that streamline and enhance communication. Cloud-based tools enable people to log into the system via a web browser and share information in real-time, regardless of location.

Many such tools enable forecasting, and you can put your what-if scenarios to the test as well. Additionally, budget developers must review, edit, query, comment, and copy information. Many systems enable these functions through the system dashboard, ensuring everyone with system access can collaborate with their colleagues during the budget formation and review process.

AccuFund is one such financial management system with a version specially tailored to government entities. It makes collaborating on budgets, developing what-if scenarios, forecasting, reviewing prior years much easier. Information can be shared quickly and used to fuel the all-important communications process vital to successfully creating and adopting a government budget.

Communication Challenges During the Government Budgeting Process

Communicating budget information can be challenging. During the budgeting process, keeping open lines of communication to all stakeholders is vital, but none more so than communicating with citizens. Citizens demand to know how their tax dollars are being spent. To keep them apprised, you will need to focus on external and internal communications.

External Communications During Government Budgeting: Speak to the People

• Provide straightforward, easy-to-understand materials
• Share information early and often
• Be open to two-way dialogue and feedback

Provide straightforward, easy-to-understand materials

To improve communications as part of the government budgeting process, it's vital to communicate to citizens in ways they understand. This means you must do more than create a presentation for a town meeting about the forthcoming budget.

Instead, to ensure citizens are fully briefed on the budgeting process and suggested allocations, create short, simple, easy-to-understand one-page summaries of the budget. Explain how tax dollars are used, what they are used for, and the proposed amount. If there are any changes to the suggested amounts, note the change. Be sure to have the document translated into languages other than English in communities with large populations of speakers of other languages.

Share information early and often.

As your agency embarks on the budgeting cycle, share the proposed budget early and often. Circulate the materials you've created about the budget with local media and prepare special media one-pagers so the local radio, television, or newspaper reporters have easy talking points and accurate numbers to refer to when reporting on the story.

Host multiple town halls. Circulate information through public agencies such as libraries and community centers. Engage directly with the public by sharing information online and on social media.

Be open to two-way dialogue and feedback.

Most government agencies have formal sessions, such as town halls, where citizens can voice their feedback. Add additional ways for people to share feedback on the budget, such as an email address where they can write to officials working on the budget to express their opinions. Consider harnessing the power of social media – instant messages, chat features, and the like can also be used to share feedback.

Internal Communications During Government Budgeting: Working with Colleagues.

Also important is clear, respectful dialogue among colleagues working on government budgets. During this stressful, high-stakes time when the public may be very vocal about local expenditures, behind closed doors, you and your colleagues may also be engaged in deep discussions about budget needs.

Listen with full attention.

During budget discussions, put away your cell phone. Start meetings by asking everyone to put phones on mute (if they can) and set them aside. This ensures respectful listening as well as sharing.

Prepare your points.

Think through what you need to share during discussions. Ensure you have your facts readily available – last year's budget, rationale for this year's budget, and public feedback. Go into the conversation with your references in hand.

Know where you can compromise.

We'd all like to have everything. It would be wonderful if everyone agreed on a budget. But that's rarely – possibly never – happened. Instead, compromises must be made to ensure a budget resolution is passed. So, go into discussions with colleagues, knowing ahead of time what you feel you can concede on and what would be difficult to compromise on.

Government Budgets: Collaborate, Communicate, and Use the Right Tools

Budgeting is always challenging, whether drawing up your budget or developing a budget for a town, city, or municipality. Focusing on the right processes for collaboration and communication and using tools such as financial management software built for government agencies makes the process go more smoothly. With an eye toward long-term planning, a reasonable timeline, clear stakeholder communication, and data at your fingertips, you'll be ready for a successful budgeting process.