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Shifting Priorities? Resource Nimbleness is Key

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Chris Fabian
November 11, 2022

The chart of local government’s shifting priorities between 2015 and 2022 in this year’s National League of Cities (NLC) “State of the Cities” report is a fascinating look at the way the needs of cities have changed and it would likely resonate with many readers at any level of government. Infrastructure is now ranked the number one priority, having beaten out economic development which held that slot for years. Meanwhile, public safety, now number four in the ranking, swings up and down like a roller coaster.   

An interesting question that the chart provokes is whether our budgets have shifted commensurately. Priorities change, sometimes rapidly (think COVID). But do our budgets?

Not necessarily. In fact, according to the Government Finance Officer’s Association’s (GFOA’s) Why Do We Need to Rethink Budgeting, “local governments have long relied on incremental, line item budgeting where last year’s budget becomes next year’s budget with changes around the margin. Though this form of budgeting has its advantages and can be useful under circumstances of stability, it also has important disadvantages. The primary disadvantage is that it causes local governments to be slow to adapt to changing conditions.”

This is an unfortunate state of affairs. But one important step in the drive to budget in a way that reflects the changes in an entity’s perceived needs does exist. Commonly known as Priority Based Budgeting (PBB) it offers a way to measure the alignment of resources with priorities, and in doing so encourages a nimbleness in resource allocation to improve alignment with priorities as they shift.

Seeing the Budget from a Results Perspective

In most budget documents, there is ample data on departmental budgets as well as line-item projections for personnel costs, travel and training and office supplies. But, historically, a relatively small number of state and local governments show how these numbers are aligned with creating public safety, economic vitality or other key priorities.

Fortunately, a growing number of governments are delivering that information with PBB including the cities of Pittsburgh, PA, Flagstaff AZ, Longmont CO and Battle Creek MI. Their shift to Priority Based Budgeting provides for a:

  • replicable path to organize line-items around programs and services
  • replicable path to measure the alignment, influence and causality between programs and priorities
  • comprehensive measurement and visualization of the investment in priorities

Ways to apply this approach have been well documented and are helping local governments that take the time and effort to utilize it. But though measurement tools are an important first step, the question remains: How does an organization improve its alignment by making resource allocation changes at the program level?

How to Improve Alignment With Priorities

Realigning and repurposing resources to better align the budget with priorities is a strategy championed by organizations from McKinsey & Company to What Works Cities (and written about here in the PA Times to showcase PBB implementers reallocating 10 percent or more of their budgets).

When a community’s resources are limited, investments into every service and every project require persistent and thoughtful consideration and reprioritization. And to ensure that our budgets are best aligned with shifting priorities, the practice of evaluating and prioritizing annual investment decisions relative to priorities is imperative.

Flagstaff Arizona provides a strong example of the way this can work. This city, in northern Arizona, with a population of about 75,000, brought a priority-based analysis of budget proposals into its FY 2022-23 budget development process. Imagine every budget proposal for additional personnel, or operating line-item enhancements associated with the programs they influence and therefore linked to the priorities they’re intended to impact—that’s exactly what budgeters, elected officials, advocacy groups and citizens of Flagstaff can see as they evaluate budget proposals across the organization.

Going one step further towards specific priorities, Flagstaff adopted a Carbon Neutrality Plan (CNP) and applied a priority-specific lens on every budget request to prioritize resource requests with the greatest impact on the plan. The result included over two million dollars in new CNP investments.

Towards Resource Nimbleness

The breakthrough of Priority Based Budgeting is the repeatable path to identify the link between programs and priorities. Since its first application in 2008, over 300 local governments have implemented the process—inventorying programs and services, and rigorously evaluating the influence of those programs on priorities such as those identified in the NLC report, for the last decade.

A growing number of practitioners of PBB are now applying the techniques of resource nimbleness to reallocate millions to fund climate action plans (just as Pittsburgh PA did), and transform the budget process to purpose more equitable communities (as in the 28 city, City Budgeting for Equity and Recovery initiative).

Priorities shift, and budgets must as well in order to come through on fulfilling the promise of priority commitments. Priority Based Budgeting is the path to do it.


Author: Chris Fabian is CEO of ResourceX, a software company which aims to enable the local government, health care, and education industries in ways to implement Priority Based Budgeting. This article was written under the auspices of Barrett and Greene, Inc.

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