A Different Approach to Budgeting

Scott Sorrel
Peoria County

Local governments can take on many leadership structures. For example, the City of Peoria operates within a mayor/city council and appointed city manager form of government, with the city manager overseeing daily operations. For county government in Illinois, there are three forms of governance: commission, township or home rule executive form. Peoria County is one of only 12 counties in the state that operate under the township and county administrator form of government. Eighteen county board members are elected from districts, and I serve as the appointed county administrator, providing operational direction and coordination within the organization.

One of my primary responsibilities is developing and implementing a balanced annual budget. Peoria County's fiscal year coincides with the calendar year, but our budget process begins in late spring and concludes in November, with the adoption of a new budget effective every January 1st. The county's budget process kicks off with a review of current year expenditures, thereby laying the groundwork for the subsequent year's expenses. Historically, this exercise of identifying expenditures for the coming year is followed by an exercise of increasing futility: how to pay for next year's expenses considering declined sales tax revenue, stagnant motor fuel taxes, diminished grant funding and delayed state reimbursement?

To mitigate these ongoing uncertainties, we took a different approach to our budget process for fiscal year 2016. Rather than identifying expenditures, then finding a way to pay for them, we identified revenues, then determined how best to spend them. Our revenues are forecast through a combination of historic averages, professional review and comparisons against external sources. This year, we established a 24-month forecast cycle rather than 12 months to help alleviate income unknowns due in part to the lack of a state budget.

As a result of a revenue-based budget process rather than expenditure-based, this year's budget of $131.5 million is the first in several years that begins to rebuild the County's General Fund reserves rather than draw from them. It is also a remarkable 3.6 percent lower than the revised FY 2015 budget. By complying with the county board's fund balance policies to cover the maximum difference between expenses and revenues—and still set aside a percentage of expenses for unforeseen circumstances—Peoria County's strong financial footing is not only restored, but reinforced.

The County was able to accomplish these goals—reducing expenses and rebuilding fund balance—without increasing taxes and fees. This significant accomplishment can be attributed to the diligent efforts of the County Board, elected officials, administration, and the County's finance and management staff, who worked together to ensure the organization's continued stewardship of taxpayer dollars by balancing expenditures with revenues, seeking alternate sources of income and spending responsibly. I look forward to embarking on a similar budget process this spring, with the same sense of conservative spending and the same successful results. iBi

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