Commentary

12/07/2012  by Alexandra Bjerg

City of Alameda moves to two year budget cycle


The famous Alameda Theater in the city of Alameda (photo: Flickr/Telstar Logistics)

On Tuesday, the city council of Alameda voted to convert to biennial budgeting; a process designed to promote fiscal discipline, long-term policy planning, and increased accountability. 

Starting next year when the City of Alameda starts crunching numbers for the next budget, they will have to plan for two years instead of one. Currently Alameda produces an annual budget with a second year forecast. 

A mere 12 percent of the 91 Bay Area cities have implemented a true two-year budget. The overwhelming majority, 67 percent, work with an annual budget and the remaining 21% have adopted an annual budget with a second year forecast. 

Urging the council to shift to a two-year model at the council meeting Tuesday evening, city controller Fred Marsh listed a number of advantages to making the switch including “more conservative revenue and expenditure projections, time savings in the production of the budget, improved funding and staffing certainty for the various programs the city offers, and it allows the council to focus more on long-term strategic and fiscal plans with less of a focus on annual budget balancing.” 

With budget cuts constantly looming on the horizon, longer-term funding certainty for departments and programs will hopefully cause a boost in employee morale, added City Manager John Russo.

The change also results in holding departments more accountable for their budgets and provides them with incentives to save and mange limited resources appropriately. If they overspend in the first year, they will have that much less to work with in the second year. Departments will need to exert fiscal discipline to ensure that they allocate funding prudently so that by the time month 23 rolls around they still have enough money to close out the year. 

As part of the new process the city intends to hire a consultant to help departments develop enhanced performance measures “to assess the quality of programs, to gauge progress in achieving key objectives, and to align resources with the council’s priorities,” said Marsh. As Russo correctly pointed out, in government, “what gets measured is what gets done.”

Public workshops will also be held so that residents may assist in the identification of spending priorities and the development of benchmarks. 

“The ability to create, utilize, and monitor quantitative and qualitative performance measures are what I believe to be the absent part of how municipal government works in California,” said Russo. “It’s really important that you have those benchmarks so that you are able to hold people accountable, and a two year budget cycle gives you the time to do it.”

Establishing a biennial budget institutionalizes the collection of data and the evaluation of outcomes and performance every two years leading to increased efficiency and accountability. 

California Forward has long endorsed the adoption of biennial budgeting combined with multi-year forecasting because of the benefits it provides: improved efficiency, required longer-term planning, and additional time for program evaluation. And ultimately, the predictability and accountability afforded by the two-year model will help to restore the public’s trust in government. 

Categories: Government, Budget Reform, Multi-Year Budget, Accountability

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