Understanding Local Government: Three Resources on Municipal Finance

A city’s fiscal health is at the core of its ability to deliver local services. Although the passage of Proposition 1A in 2004 protected against future state diversion of property and sales tax revenues, cities still face a continuing challenge in matching revenues with service needs.

To assist local officials, the Institute for Local Government (ILG) offers three publications that cover the nuts and bolts of fiscal management and revenue sources. This information is especially valuable for newly elected officials, newly hired staff, the media and members of the public who want a better understanding
of how local government works.

Beginning in November and continuing through December 2008, you can order all three publications in a special packet available at www.ca-ilg.org/financepacket. Normally sold separately at $10 each, the set of three publications can be pur chased for $20. Proceeds from these sales help support ILG’s work in service to local officials.

The three publications are Understanding the Basics of County and City Revenues, Financial Management for Elected Officials and Building a Healthy Financial Foundation Through Revenue Diversification.

Understanding the Basics of County and City Revenues provides an overview of key revenue streams, including:

  • Taxes (and how they are distributed);
  • Service charges, assessments and fees;
  • Revenues from other government agencies;
  • Rent for use of public property; and
  • Fines, forfeitures and penalties.

Understanding the Basics of County and City Revenues offers practical information to help the public understand how cities and counties function fiscally. It also provides perspectives on issues affecting local revenues, including the state-local fiscal relationship since Prop. 13, the impact of state and federal mandates, and requirements for public participation in the revenue process. This document is the first in a new series of “Local Government 101″ publications that focus on local government structures and processes.

The second publication, Financial Management for Elected Officials, helps local officials perform their oversight role with respect to their agency’s financial practices. It covers key information including long-term financial planning, budgeting, financial reporting, cash management and investments, purchasing, capital financ ing, debt management and financial warning signs. The pamphlet comes in sets of five copies handy for distributing at meetings or sharing with colleagues.

The third publication, Building a Healthy Financial Foundation Through Revenue Diversification, offers some ideas for local officials grappling with these questions:

  • How can we do more with less?
  • How can we stretch our dollars to meet our essential needs?
  • How do we build a healthy financial foundation that will serve our community now and in the future?

This publication encourages officials to think in terms of achieving an optimal mix of revenue bases by revenue source. The goal is not simply to maximize revenue collection, but to develop revenue diversification strategies that are consistent with and contribute to the overall policy goals and priorities of the city and the community it serves.

Coming Soon

Watch for A Local Official’s Guide to Public Involvement in Budgeting, a new publication from ILG’s Collaborative Governance Initiative. Designed for city managers, finance directors, elected officials and other public servants, this publication includes examples and lessons learned from communities throughout California and helps readers choose from various approaches to involve the public in local budget processes. Support for its development and distribution is provided by the IBM Center for the Business of Government, the James Irvine Foundation and MuniFinancial.

For more about the Collaborative Governance Initiative, including free downloads of guides and other materials, visit www. ca-ilg.org/cgi . For information about other ILG publications, visit www.ca-ilg.org/ilgpubs.

This article appears in the November 2008 issue of Western City
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