Small Town Government - The Budget Process

It's been a busy week for me, hence the dearth of posting.

One of the more interesting events that has taken up my time has been the start of the budget process for our little town.

For the most part folks don't think much about the town and school budgets until the look at them during Town Meeting in February and March. Even then they don't always understand the various budget items, but they do pay attention to the bottom line. Getting to that bottom line starts in late summer when the various departments put together their budget proposals for the coming year.

From there they go to the town administrator who goes through every line item and suggests cuts, increases, or the status quo. From there it goes to the selectmen who go over them again and make further adjustments to budget items.

Sometimes the budget proposals ask for large increases in spending. Others are quite modest. Yet others request no increase, requesting level funding for the new fiscal year. (Those are either the departments with only one or two personnel like our Parks and Recreation Department or the elected officials like myself who only receive a small stipend for our service. We sure as heck aren't doing it for the money.)

If the selectmen, town administrator, budget committee members, and department heads do our jobs, we see small increases in the town budget. Sometimes there are no increases, and even more rarely, budget decreases. (This sometimes happens when debt service on a bond ends or a multiyear appropriation for some service, purchase, or lease expires and is not renewed.)

I can tell you that it's easy to say “Oh, cut this and cut that” but it's not always easy to actually make it happen in such a way that doesn't cause more harm than good. An extreme example: cutting the police department budget to zero would save our town a big chunk of money, but we'd have no police protection. None. That isn't a good thing.

If we know revenues are going to be a problem the budget must be constrained to prevent undue increases in property taxes. After all, if the economy is in the dumps, just as it has been for the past 7 years, some folks will have problems paying their property taxes, particularly if they go up due to the town spending unwisely.

I should take a second to explain that most of the revenue in our towns come from property taxes and fees for various town services. They receive very little money from state government. Then again, we don't have a state income or sales tax, so the state government doesn't have that much of money to give to the towns to begin with. It also means the state cannot use such funds to 'encourage' the towns to do what it wants by withholding funding if they don't. This reliance on property taxes drives most towns to be frugal with the taxpayers' money. Here and there, now and then, the town government goes on a spending spree and, if not stopped by the voters at town meeting, property taxes skyrocket. When this happens it's not unusual to see selectmen being voted out of office for their spendthrift ways the following year.

I mentioned above voters stopping the proposed profligate spending. That's the beauty of our system – the townspeople have the right to vote down the budget and, if they do, a default budget takes effect. That default budget is usually the previous year's budget, minus the one-time expenditures it might contain. (A one-time expenditure might be for replacement of a town vehicle, equipment upgrades for the police or fire departments, new computers for or one of the town departments and the like.)

Another thing the voters can do to control spending: make and vote on a motion at town meeting to change the amount of funding on line items in the budget. They can increase them, decrease them, or even zero them out. This can be both good and bad because while most times it's used to cut spending, it can also be used to increase funding well beyond what the town government has requested. However, they cannot add new line items at town meeting, something that prevents unanticipated 'feel good' expenditures on services, products, or events the town cannot afford.

And so it goes in small town America.