The Municipal Financial Crisis: A Framework for Understanding and Fixing Government Budgeting

175 Pages·2022·1.422 MB·English

by  Mark Moses

MUNICIPAL
The
FINANCIAL CRISIS
A Framework for Understanding
and Fixing Government Budgeting
Mark Moses
The Municipal Financial Crisis
Mark Moses
The Municipal
Financial Crisis
A Framework for Understanding and
Fixing Government Budgeting
Mark Moses
California, USA
ISBN 978-3-030-87835-1 ISBN 978-3-030-87836-8 (eBook)
https://doi.org/10.1007/978-3-030-87836-8
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Acknowledgments
First,IwouldliketothankJeffBritting,along-timefriend,whowasprescient
inseeingthepotentialforthisprojectlongbeforeitcouldbecalledaproject.
Over dinner some fourteen years ago, Jeff suggested that I consider writing
aboutmyexperiencesinandperspective onlocalgovernment.Ittookseveral
years for that idea to gel and the past four to make it real. Jeff helped me
navigate a new professional terrain. I am indebted to him for his unwavering
personal and editorial support and for helping me articulate the value of
government.
Also critical to this book was DonWatkins. Don, an accomplished author
and communicator, took me on as a client during summer 2020 and taught
me invaluable writing and communication skills during a formative period
of this project. Don patiently coached me, reviewed my writing, and showed
me a way to better thinking and clearer writing.
AnotherpersonwhomIwasfortunatetomeetthroughthisprojectisMarc
Joffe. I have since become an admirer of Marc’s journalism, and I appreciate
the feedback he provided. I am also grateful to Marc for referring me to my
publisher. I thank Patrick Peterson for introducing me to Marc and for his
encouragement and useful book recommendations.
I would also like to thank Charles Berry for his edits to early drafts of
thebookandMaryalleneArsanto,JeriEagan,andTracyFullerfortakingthe
time to read and comment on a late draft.
v
vi Acknowledgments
None of the aforementioned individuals weighed in on the final draft.
Thus, the responsibility for the final content and formulations that follow
are mine.
It has been a pleasure to work with the editing team and production team
at Palgrave Macmillan. Everyone was amazingly supportive throughout the
process.
Finally, thank you to all of the dedicated people in and around the local
governments that I have worked with over the past few decades. You have
enriched my life as well as the lives of those in your communities.
Contents
1 Introduction 1
2 Cities in Crisis 7
Deciding Where to Start 13
Missions, Visions, and Decisions 16
Revisiting Assumptions 22
Faces of the Crisis 26
3 Inside the Crisis of Municipal Budgeting 27
The Finance Director 27
When Every Problem Is a Budget Problem 30
Governing the Modern Municipal Organization 31
Elected Officials and the Budget 33
The Budget Ritual 36
The Bankrupt Meaning of “Balanced Budget” 42
The Separate Worlds of Budgeting and Financial Reporting 47
Local Government Is Not a Business 50
The State of theTraditional Budgeting Process 51
4 Conventional Budgeting Solutions 53
Zero-Base Budgeting 54
Performance Budgeting 55
The Dark Future of Municipal Budgeting 61
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viii Contents
5 The Ritual of Financial Analysis and Its Failure 63
Financial and Economic Analysis Applied 64
The Invisible Source of City Revenues 67
TheTotal Cost of Municipal Monopolies and Franchises 70
TheTotal Cost of Municipal Ventures 75
Analyzing Other Services and Activities 80
Defining Financial Sustainability 84
Foreseeable Future 85
6 Bankrupt Financial Remedies 87
Operational Improvements (Technology and Process
Efficiencies) 88
Service Delivery Restructuring: Privatization
and Regionalization 90
Privatization 90
Regionalization: Consolidation and Shared Services 94
Community Engagement and Budget Participation 96
More and Better Information: Data andTransparency 98
Other FinancialTactics: Policies and Diagnostics 99
New Paradigms for Decision-Making 102
The Limits of Municipal Bankruptcy 104
AdditionalTax Revenues 105
Thoughts and Prayers 106
7 Discovering theValue of City Government 109
My Journey 109
What Is a City Government? 113
Evaluating and Classifying Municipal Activities 118
8 Municipal Decision-Making Understood 123
Group Force vs. Individual Freedom Decision-Making 124
Decision-Making Standards 126
Decision-Making Methods 131
Unintended Consequences and Merely Consequences 132
The Path Forward 134
9 Budgeting for Scope 135
Budgeting for Scope 136
ActivitiesThat Are Worth Retaining Are Worth Fixing 143
Scoping the Organization’s Internal Policies 147
When It IsToo Late 151
A Solution or Just Another Nonsolution 152
Contents ix
10 Municipal Government After the Crisis 155
Additional Recommendations, Blind Spots, and Deal
Making 156
Predictions 158
Fixing Municipal Budgeting 162
Bibliography 163
Index 167
About the Author
Mark Moses has consulted California municipal governments in the areas
of finance and administration since 2011. Also during that time, he served
municipalities in finance director roles. Prior, he spent two decades working
directly for local government in senior management positions. His early
career included small businesses consulting and banking.
Mr. Moses holds a Master of Business Administration in Finance from
Golden Gate University, San Francisco, and a Bachelor of Science in Indus-
trialEngineeringandOperationsResearchfromtheUniversityofCalifornia,
Berkeley.
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