GUEST COLUMN.

I have become increasingly convinced that we have a problem in government budgeting: we make everyone think like accountants.

To be clear, this is not an attack on accountants. We need accounting. We are responsible for public money, and we should know where it came from, where it went, whether it was spent appropriately and whether we recorded it correctly.

But accounting and budgeting are not the same thing.

Somewhere along the way, I think we blurred that distinction. We took the structure we created to account for money - funds, departments, cost centers, object codes, personnel categories, contractual services - and made it the structure through which we make budget decisions.

Sit in on many government budget conversations and you will hear a lot about money but surprisingly little about services. We talk about vacancies, salary savings, contracts, recurring costs and fund restrictions.

T

hose are important issues. But they are not usually the most important questions.

The more important questions are: How quickly can someone get a building permit? How often should we inspect something? Should a service be available five days a week or seven? How long should someone wait for help?

Ultimately the big question is this: What level of service are we trying to provide, and what does it cost?

Those are budget questions. Yet our traditional budgets often make them remarkably difficult to answer.

What Does $40 Million Buy?

Imagine a department with a $40 million budget. Its leaders can probably tell you exactly how much is budgeted for personnel, benefits, supplies, contracts and equipment.

But ask a simple question - what does the public get for $40 million? - and the answer often gets much harder.

If the budget grows to $43 million next year, what changed? Are we serving more people? Expanding hours? Responding faster? Or does it simply cost $3 million more to provide the same service?

Those are very different stories, but a traditional line-item budget can make them look almost identical.

The same problem arises when budgets need to be reduced. If we cut $2 million, what changes? Do fewer people get served? Do residents wait longer? Does something happen less frequently? Or can we provide the same service more efficiently?

We should be able to explain which choice we are making.

Working in a budget office also changes your sense of scale. Spend enough time looking at a large government budget and eventually $1 million starts to look small.

Residents do not experience government that way. They experience it when they call for help, drive on a road, use a park, apply for a permit or wait for someone from government to respond to a problem.

Those individual experiences are what all those enormous numbers are supposed to produce.

A Different Budget Conversation

At Bernalillo County, where I lead our Policy and Budget Department, we are starting to approach this differently.

We are defining the programs and services the County actually provides and asking departments to explain, in plain language, what each program does, why it exists and what the public receives from it.

Then we ask what I think is the most important question: What is the current level of service?

That means moving beyond descriptions like 'provides permitting services.' How many permits do we process? How long does it take? Can residents complete the process online? How frequently do inspections occur?

We are trying to describe services well enough that someone can make a choice about them.

Eventually, we want budget conversations to get away from sounding like this: “Contractual services are increasing by $800,000.”

Ideally, the same discussion should focus more closely on something like this: “We currently provide this service five days a week, and residents wait an average of seven days. An additional $800,000 would allow us to provide seven-day coverage and reduce the average wait to four days.”

Now we have something to discuss.

Maybe that improvement is worth $800,000. Maybe it is not. Maybe another service is a higher priority. That is exactly the conversation a budget is supposed to facilitate.

The same should be true when resources are reduced. If a reduction means response times get longer, say that. If fewer locations will be served, say that. If the same service can be provided with less money because a department found a better way to operate, say that, too.

Put the tradeoffs on the table, before and after you make the decisions.

Budgeting Is About Choices

None of this eliminates the need  for traditional financial information. We still need strong controls, accurate forecasts, sustainable revenues and clean books.

But those things should support the budget decision. They should not define it.

Government has finite resources and a remarkably large number of things it could spend money on. The job is not simply to make the numbers balance. The job is to decide what we are trying to accomplish with the resources we have.

Accounting should tell us whether we handled public money correctly.

Budgeting should help us decide what we want that money to do.

The chart of accounts is essential.

It just isn't a strategy.

The contents of this Guest Column are those of the author, and not necessarily Barrett and Greene, Inc

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