Editor’s Note: The operation of city government can be a complex process that relies on, in some cases, sophisticated calculations. The intent of Municiapl Budget 101 is to provide a high-level overview of this process as it applies to La Porte City, with the belief that a better understanding of the process will allow public discourse to assist local decision-makers as they work to develop a capital improvement plan for our city. For additional and more specific information related to City Finance, logon to the Iowa Department of Management website, www.dom.state.ia.us/.

Lesson Three: Expenditures and the Certified Budget

As cities throughout the state of Iowa work to develop a budget for the new fiscal year, that begins July 1, 2015, the newly elected officials who took office on January 1 are tossed into the mix during the latter stages of the process. By law, city budgets must be placed on file with the state of Iowa by March 15. Before the budget can be filed, however, a public hearing must be conducted, and notice must be given to the public 10-20 days before the hearing takes place. In order to meet these deadlines, the bulk of the budgeting process needs to be completed by  early February. That doesn’t leave much time for the newly elected officials to assess the needs of their communities.

New La Porte City Mayor Dave Neil has expressed the need for La Porte City to develop a Capital Improvement Plan (CIP). Such a plan could help bring focus and clarity to the budgeting process A CIP typically details the major infrastructure improvements the City intends to make over a three to five year time period.

Last month, in the League of Cities publication Cityscape, Cindy Kendall, an extension program specialist with the Iowa League of Cities and Iowa State University Extensions, described the importance of goal-setting, writing, “By understanding the goals of the community, the city can set priorities and focus resources in areas important to achieve its goals. Prioritizing the community goals also gives city staff direction on which services and service levels to include in the Capital Improvement Plan and in preparation of the next budget.”

In other words, the key questions that need to be answered include 1) What are the services La Porte City citizens value most, and 2) How much are they willing to pay for them? Figure 1 illustrates the City’s overall expenditures for the current 2014 fiscal year budget, as reported in the certified budget document filed with the state. Figure 2 offers a closer look at the cost of services the City provides in four major areas of the budget.

Figure1

The charts illustrate how many dollars La Porte City budgeted in each of the areas, with roads, garbage and police accounting for the three largest anticipated expenditures this year. Because the City receives additional revenue for road improvements and charges fees for the collection of garbage, those two activities have less of an impact on the amount of property taxes residents pay compared to the police department, which has more limited funding options. Last week’s City Council meeting was the first for new mayor Dave Neil and Council representatives Eric Allsup and Brent Sadler. They were joined by more than 80 area residents in attendance, the vast majority of whom were there to show support for maintaining 24-hour police protection in the community.

In La Porte City’s case, it is not realistic to expect the City’s new administration to develop a comprehensive CIP with just a few weeks remaining to certify the 2015 fiscal year budget. Given the City’s infrastructure needs, it would be unwise to rush the process. A formal Capital Improvement Plan, as noted by Kendall, should reflect the goals of the City Council and, prior to its adoption, requires that a public hearing be conducted. For such a plan to succeed, City leaders will need to take sufficient time to involve key stakeholders throughout the community to ensure the plan is representative of the community’s wishes.