Communicating about fiscal sustainability

Transparency beyond Audits and Budgets.

This article on communicating fiscal sustainability is the fourth in a series that describes strategies and options regarding the budget process and transparency in local government in Michigan. In recent years, local units of government and the State of Michigan have been more progressive in providing more transparent information about revenues and expenditures. Case in point, review a local community “dashboard” or “scorecard” from the City of Port Huron and the State of Michigan to begin to understand how local and state government have begun communicating with more transparency. You can also find most local units of government “scorecards” here.

Local units of government typically provided annual budget and auditing information as a general practice for many years. These documents are often difficult to understand without some knowledge of how government budgeting and finance works. Annual budgets (current year) and audit reports (previous year) were always available but difficult to decipher. The “dashboards” have become popular and useful tools for local and state government to communicate with citizens about how they receive revenue and how they spend the same.

Challenges remain regarding communicating fiscally sustainable practices with the public. Two of importance include: A.) The challenge in shifting the public’s attention from the “here and now” to the impact of budget decisions on future generations and, B.) Balancing the need for providing services now and in the future.

Citizens typically view current local government fiscal practices one year at a time. That is to say, what will the local unit provide and at what cost. What needs to be taken into account is the actions of a local unit’s decisions for any given fiscal year and the potential impact it might have in future fiscal years. Budgets outline current or “here and now” expenses and short and long term liabilities like bonds, pensions and other post – employment benefit obligations (healthcare). Elected and appointed public officials have an obligation to provide a balanced budget relative to revenues and expenses annually. These balanced budgets also include future obligations as mentioned prior. Much like household budgets, local units of government must provide for both the current obligations and future obligations.

The key for local units of government is to provide the most detailed information in an understandable way so that the citizens of a local government jurisdiction can understand. This communication strategy is one of the more important tools used by local units to provide citizens with the knowledge they require to understand the budget decision making process.

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