Who needs a budget? Simply put…all of our departments do!
What Is A Budget?
First, it is important to understand budgets. A budget is a financial document that forecasts (or estimates) the revenue that a department will earn/receive and details where that money will be spent.
In most municipal departments, and in some other types of departments, the revenue is a set amount that the commissioners or councilpersons allot for them. In other departments, such as mine, it is an estimate of how much tax funding we will receive based on the fire department tax rate and the total amount of property value within our district.
Either way, these two revenue amounts can be problematic for us when we do the budget. If we are given a set amount as in the municipality example, then we are competing with other departments or agencies for limited resources. Bad economic times can make it even more difficult to ensure funding for your department. On the other hand, variable funding can also be problematic. In the example of my department, it becomes an issue because the county tax department has to estimate how much of the tax money we will actually receive. We may be expecting to receive $500,000 in tax funding, but if people cannot or do not pay their taxes, then we will receive less and thus have to make mid-year adjustments to the budget.
The Budget Process
Budgets normally follow the fiscal year pattern which runs from July 1 through June 30 of the following year. We refer to this budget as the Fiscal Year Budget followed by the later year that the budget covers. Thus the budget we are working off of right now would be Fiscal Year Budget 2015.
The budget process normally starts around the beginning of the new calendar year. During this early part of the process, we are going to be looking at the current budget. Where have we had to make changes? Where did we make bad estimates in funding and or expenses? Where did we hit the mark exactly? We also will look at the budgets from the past couple years. This will allow us to see trends such as increases in employee health insurance costs.
The next step is not always used, but I highly encourage it. As firefighters, we all like our input considered and this is no different when looking at future expenses. Historically, in my department, the chief has sent out an email with a budget consideration document attached. The document asks for what expense we would like to have considered, the approximate cost, and then how it will benefit our department. It is explained that not everything can be included, but opening this up to our members can provide for innovative ideas that we may otherwise miss out on.
Now the chief or their designee has information on the current year’s budget’s strengths and weaknesses, ideas from members within the department and similar documentation. They will take all of this information and begin compiling the draft budget for the following fiscal year. This is done in concert with the county or authority having the jurisdiction’s budgetary authority. They will normally provide instructions on how to plan for the following year. For example, you may be asked to submit a budget that estimates the same amount of revenue as the current year and then a second budget that estimates a 5% reduction in revenue. Either way, this still allows for the chief to formulate their budget priorities into the document.
Following this hard work, the budget office will begin review of the document. They normally do not make changes to the budget document itself, but after their review they may suggest adjustments to help ensure the budget’s approval. For example, if they asked for a budget with a 5% reduction, but they are given one with a 3 1/2% reduction, they will return the document for further changes.
When this is complete, the authority having jurisdiction may have a budget retreat. During this retreat the only focus will be to review all of the department’s draft budgets and put them together into a single budget document. The retreat is attended by elected officials, such as county commissioners and senior level administrative staff like the county manager or other administrators. Most of the time, due to the work already done, this retreat can focus on the final difficult decisions that have to be made.
Once the retreat is completed, the senior level administrator will present the budget to the elected officials where there is time for public comment and then a final vote to adopt the budget. Even when the budget is adopted, the process is not necessarily complete. Revisions will usually be made during the year if needs, priorities, revenues or expenses change. There are different processes for transferring funds from one line item to another or from one department to another if needed. Every agency has different rules defining how this can be done.