Why financial trends matter for local governments?
With the challenges of managing time for elected and appointed officials in ensuring smooth functioning of local governments, spending time to get into details of local financial and economic changes over time can oftentimes be unrealistic if not an impossible expectation. Especially, elected officials are hard pressed for time and appointed officials always have enough on their plate with the daily stresses of running their city and county operations smoothly. Under these circumstances, the Iowa Government Finance Initiative (IGFI) report is designed to be that one-stop resource that can provide officials a good and robust understanding of their city or county – its people, their economy and their financial situation and trends. With an easy to understand narrative, the report is an easy read on a long list of simple and complex demographic, economic and financial indicators. Developed as past of the IGFI mission to provide educational outreach, the reports improve understanding of local government financial situation and trends. In addition, from a practical standpoint, they are also useful reference as local governments go through the annual budgetary process. The reports provide a context in which resource allocation decisions get made. That includes demographic changes, prevailing economic conditions and what they mean in terms of revenues and potential changes in spending patterns in various types of services. The report also emphasizes the distinction between short-term operational budget and long-term capital budgets. Indicators have a good mix that can be used in decision making for both types of budgeting. Another value the report provides is for local governments to build efficiencies in the way they expend resources to provide services – the reports through the indicators provide a general sense on the ‘optimal’ level of spending in various ‘sizes’ of communities. Helps cities to step back and understand if specific services can be more efficient and/or be more effective.
With the constant and high turnover of elected officials – the reports provide a very good orientation to newly elected officials who can then participate and contribute in meaningful and effective ways during the budgetary decision making process. Helps them understand the city/county governments financial situation so that during a budgetary session, they can understand and include that as they make decisions on allocating/re-allocating resources. Finally, the reports provide a broad understanding of legislative changes mandated at the state level so they understand the impacts on their city or county’s budget and how they might need to respond. Overall, the expectation is that in the long-term, improved understanding of local government finances will lead to better budgeting processes, efficient resource allocation, more accountability and better governance at the local level.