For those who might not be familiar with this practice, it is in effect a multi-year fiscal planning framework that has a lot to commend it. In many municipalities, budgets are a yearly ritual, and we find that a lot of staff resources get entangled in a lengthy process that seems to start over again just when it was just completed. Moreover, not everything a municipality does can fit ever so neatly within the budget cycle.
Most budgets are presented sometime around November to allow for any further modifications and alterations as needed, and the whole shebang goes into effect at the end of the fiscal year in March. I think it is pretty clear what the advantages can be in adopting a different budget cycle framework, but a few of them I can list here:
- Planning predictability: Not knowing from one year to the next what the financial status of the municipality will be does not bode well for longer range planning, especially for those projects and funding initiatives that exist beyond a single budgeting cycle. Yes, there are strategic and official plans for a reason, but such documents are more like guides or roadmaps that speak to aspirational funding priorities. If a reasonable approximation can be made on the fiscal side for the next three years, for example, that allows for a relatively predictable planning and implementation schedule. There is less worry that a sudden shock or surprise will mean nixing a program or project halfway through.
- Efficient use of staff resources: Perhaps too much time is spent by municipal staff preparing for the budget dance. If it takes 6-8 months to gear up for that moment, if there was a multi-year budgeting framework in place, this would result in far less time spent year after year on the do or die aspect of budgetary preparation. Freeing up staff time to concentrate on other aspects of their work, beyond some occasional rejigging of the budget, would mean more focus on service delivery rather than the perpetual process of budget cycle drudgery.
- Flexibility: Despite what may appear akin to a five-year plan with set quotas, there is actually a great deal of flexibility in a multi-year budgeting framework. One aspect of flexibility might be, for example, snow removal budget that is hard to guesstimate according to the current fiscal year model. The other added flexibility is in making adjustments as required due to unforeseen and unanticipated events. Things do change - new provincial or federal legislation may require some alterations to the budget, and so there should be just enough margin of flexibility or wiggle room to make said adjustments.
- Staying true to design: Sometimes whims change, or there is a drop in interest over a project or program that initially enjoyed a great deal of enthusiasm. Sometimes political headwinds change, or the appeal of novelty takes over in embracing new projects. It is important that what enjoyed consensus as a priority is kept in focus to see these to their proper conclusion instead of adopting the old Roman imperial model of abandoning a strategic priority halfway through just to start a brand new one. Committing to a multi-year budgeting framework requires a disciplined approach, and can reduce the amount of start-stop in delivering on key priorities.
There are other benefits to adopting this kind of fiscal planning, and it does not have to mean that a budget devised in one year will be set in stone for the x number of years to come, but it ensures some degree of alignment between elected officials, staff, and the community in a way that gives a strategic plan the financial oomph derived from some degree of predictability.