City Council Management of Finances


City council members and mayors have the important responsibility of managing the city’s funds. With that responsibility comes difficult decisions on how to best use the city’s revenues and fund necessary community services and capital projects. Elected officials must balance the needs of the citizens while also keeping the tax rate at an acceptable level. Careful planning and prioritizing is often helpful as cities identify future revenues and expenditures.

Planning

The council and mayor play a critical role in protecting public funds and putting them to good use. Having a plan in place as well as appropriate budgeting and purchasing policies help with the financial management process. The size of the community may dictate the formality and complexity of the various plans that a city can install. However, the key is that the plans be in writing and reviewed on a regular basis to ensure they are up to date to reflect the activities within the community and monitored to insure progress is being made towards agreed upon goals.

In many communities, the capital planning for projects and purchases of equipment is done during preparation of the annual budget. This is also the time that many communities set their goals for the next year. This is always a good management exercise, but with the uncertainty of the economy and recent mandates by state and federal regulations, this planning must have a multi-year vision. Most projects are so large they will have to be done over multiple years. The council needs to project a number of years into the future for completion of projects, when they will occur, how they will be funded (grants, loans, cash on hand), and at what cost to the citizens (taxes or user fees). Waiting until a project is underway would put undue stress on the citizens with possible spikes of increased taxes or user fees or both. Multi-year planning can be used as a method of smoothing out this process. Understanding the big picture of the community will also focus energies where and when they are needed.

Monthly Reports

One way to monitor the financial status of the community is through the use of monthly reports. The city clerk or finance officer should present monthly reports to the council. One of the reports (commonly called the Treasurer’s Report) indicates cash balances and investments by fund type: general, road use tax, water, sewer, etc. The other important monthly report is a budget report. The budget report will summarize the revenue and expense activity of the previous month and include year-to-date comparisons with the adopted budget. The council should also review the road use tax report, investment policy, outstanding debt and end-of-year budget reports annually for compliance and overall review of activity. These reports are prepared for various state requirements and it is important for the mayor and council to see and understand the information.

Status Reports

Regular status reports from other staff and engineers also give the council information on current projects and work assignments, keeping accountability in all areas. These reports should indicate if projects are on time, within budget as well as note any barriers that have been discovered. Too often only the balance of money in the bank is considered for financial management when, in fact, the safe keeping of all city assets contributes to the community’s financial health.

Training

Best practices indicate that independent training for government officials adds a measure of autonomy to the information provided. This does not imply that staff-conducted orientations are not critical to the council; they certainly are the best resource for the local financial status and reviews of existing policies. However, additional training available through the Iowa League of Cities, the Institute of Public Affairs, Iowa Finance Officers Association (IMFOA) and the Office of State and Local Government Programs at Iowa State University give independent training to city officials.




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