One Way to Deal With Local Government Budget Shortfalls

Local governments are being hit by the economic downturn and have to shrink their budgets. Steve Goldsmith, with Harvard’s Kennedy School, knows innovation when he sees it. In his latest column he highlights the approach used in Somerville, MA to improve services and make sure they are getting the most bang for every buck they spend.

While budget cuts are an inescapable reality, public managers do have options as they determine what to cut. But to make informed decisions, officials need to know what is working and what is not. And, that starts with performance-based budgeting.

Talking about performance-based budgeting is particularly appropriate during Sunshine Week. A Reason Foundation study from a few years ago found that more transparent and performance-based local government led to more efficient service delivery–higher quality at lower cost. And this Reason report looks at some of the best examples of cities that have implemented a performance-based budgeting approach and lays out how other cities can go about it.

Citizens are demanding results—they want to know how their money is being spent, why it’s being spent that way, and how much they’re getting for their money. Pressure has been thrust upon policymakers to continually strive for better, more efficient service delivery. Strategic planning, performance-measurement budgeting and citizen surveys provide the framework for a government to be efficient, effective, and responsive to its citizenry.