Budgeting can be among one of the most stressful tasks for any organization as a variety of unknowns must be accounted for in the planning process. It can be especially tedious for municipalities and state governments that must follow strict parameters for how money can be spent. As unpredictable as life can be, however, no one could have predicted the uncertainty caused by a global pandemic and the ripple effects it would have on the budgeting process.

These uncertainties generate many questions for municipalities. How will it impact local government leaders in charge of developing a budget for the next fiscal year? What does it mean if sales tax revenue drops significantly? How will the unemployment numbers affect income tax revenue? What if the local economy doesn’t bounce back quickly? What does that mean for the budget, and ultimately, the community?

Despite all of these “what ifs,” municipalities can take measures now that can help account not only for the unpredictability of the upcoming fiscal year, but also leave a community in healthy financial shape.

The need for agility and flexibility

Like any tentative plan, budgets are subject to change. An avalanche of new information is coming into municipalities daily, if not hourly. A crucial quality that financial leaders will need is to be adaptive, agile and flexible to changes as they come. It is not unreasonable to expect that the municipal budget will change often as new line items must be accounted for, like public health initiatives and social-distancing measures versus the more traditional budget items of infrastructure, education, salaries and more. Municipalities have an opportunity to utilize this time to examine how COVID-19 will impact these broader spending trends moving forward so they can be more agile in shifting resources and budget items should another crisis arise.

Do more with less

Municipalities that are faced with budget uncertainties often must either increase their revenue or decrease spending. However, in the unique circumstances around COVID-19, where unemployment rates have reached historic highs and tax revenues have dropped significantly, neither option is an immediate nor sustainable avenue for municipalities.

This is a period for municipalities to demonstrate its ability to withstand the coming financial storm. One way to do so is by leveraging technology as a force multiplier. Whether it’s within public works or the finance department, tools to streamline financial reports can help reclaim time by automating time-consuming tasks and saving municipalities money.

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Plan for the long haul

Pandemics don’t usually have official end dates, but deadlines for submitting budgets do. Municipalities can’t afford to wait for more “normal” times or even wait for modelling projections to help them plan a budget, as the COVID-19 projections too have changed frequently. Now is the time for municipalities to make a purposeful move toward investing in agile technology. This will help develop a sustainable budget that will meet their community’s needs, while mitigating future hardship caused by any “what if” uncertainties.