County budget will feed needs over wants

By Dan MacArthur
North Forty News

Larimer County is joining the growing ranks of governments taking a new budgeting approach that directs more money to its most vital priorities by shifting funds from functions lower on the food chain.

Variously called outcomes-based or ends-based budgeting, it differs by identifying and directing more money to higher-priority tasks. Traditionally, governments have equally allocated available revenues to departments based on what they spent previously without taking into account their relative value.

The county commissioners offered tentative endorsement of the approach following a May 22 presentation by a five-member "resource allocation team" that has been researching the issue, conferring with other counties that have adopted the approach, and developing an implementation plan. Some two dozen others representing a range of other county departments also were in attendance.

"It seems like the only way to go," said Commissioner Karen Wagner.

"I'd rather do it now than when we're in pain," offered Commissioner Kathay Rennels.

The allocation team heartily concurred, stressing the need to act now before the county faces the pain of real budget strain, as the city of Fort Collins did when it adopted outcomes-based budgeting two years ago.

The team also emphasized the need to gradually implement the outcomes-based method over seven years rather than abruptly, as the city did, resulting in severe disruption caused by massive layoffs and salary freezes that created poor morale among remaining employees.

"We wanted to introduce a process that's hopefully a little less painful," said Assistant County Manager Neil Gluckman.

A huge shortfall in sales tax revenues prompted the city's sudden transition, resulting in the loss of 107 staff positions and $5 million in budget cuts in 2006. Deeper cuts in this year's budget were avoided only because voters approved creation of a library district. That move freed up an additional $3.3 million, limiting the city's 2007 budget cut to $4.4 million.

Regardless of the preferred flavor, the outcomes-based approach is laced with vague government-speak about alignment, accountability and transparency. But beyond the jargon, it's all about determining the most important functions of government and allocating the necessary funds to make them happen.

After a shaky start, Fort Collins has refined its budget process this time around and is already well underway. But the county lacks such experience and acknowledges that the process of developing next year's budget will be imperfect.

The commissioners will play the dominant role in concert with elected officials and division heads, who soon will meet to identify and prioritize special issues and requests. They then will meet with the commissioners to review the current "state of the county." In doing so, they will take into account financial and economic forecasts, the amount of carryover funds available in 2008, and public priorities expressed in the most recent citizen surveys.

The commissioners then will review and endorse the resulting "interim results statements" and ranking criteria be used to guide decision-making. Next they will prioritize special requests and services in next year's budget. The real fun follows as the commissioners determine how much to spend for sustaining services and funding special requests.

Finally, the service providers will submit budgets meeting the county's target levels of support, with supplemental funding proposals only for acknowledged special priorities. The recommended overall budget would be submitted by Oct. 15.

By its very nature, the outcomes-based-budgeting approach results in winners and losers as supplementary funds are provided for higher priorities at the expense of lesser ones. In Fort Collins' case, that process resulted in a 14-page "stop-doing" list.

The county's approach will be less dramatic and traumatic at the start. Depending on how the numbers shake out, emphasis would be placed on perhaps the top 5 percent of priorities that would receive elevated funding. The next 75 percent might be earmarked for maintenance or minor economizing. And the bottom tier could be subject to greater economizing or reduction.

Despite the similarities, however, there are some distinct differences between the city and county's ability to implement on an outcomes-based budgeting approach. Turf is the principal one. All city operations ultimately are under centralized control of the city manager acting at the direction of the council. But various county departments, often performing related services, are autonomous and headed by independent elected officials charged with their own constitutional mandates.

One real advantage, however, is that the county relies on a more reliable revenue stream provided by property taxes, rather than the fickle sales tax revenues supporting cities.