A review of the issue/topic selected
In history, budget reduction has become one of the most frequent and unlikable means of dealing with nonprofit organizations (Cogan & Timothy 112). Despite the fact that the practice has always comprised of the usual cycles of deficit and surplus, operating under reduced budget has become very common habit in the current financial crisis.
Considered that most institutions have little unfounded spending to be corrected, managers should identify new and innovative ways of reducing spending in their organizations.
Through this process, care should be taken to ensure that the provision of service and organizations’ goals are not compromised at the expense of reducing spending. This article focuses on local government budget reduction processes, its background information, its common practices, its desired practices, its shortcomings, and its recommendations.
Nearly, every local government in the US is dealing with the want to decrease their budgets and carefully examine their expenditures (Bartle 12). Usually, budget reduction processes have been carried out for decades in several local governments. As such, the processes have been a routine for most governments.
Notably, budget reduction varies from local government to the other, from an institution to the other, and from a state to the other. The processes include the combinational of short term and long term advances.
In most local governments, the stress is on decreasing their expenditures and not filling vacant positions. On the other hand, other local governments have emphasized on the focusing on their core functions and outsourcing other functions.
Selected background information
As early as 2000, enhancing the use of performance information in government budgeting processes was getting a worldwide attention (Cogan & Timothy 132). However, high levels of attention and activity did not necessarily translate into progress in achieving the needed goals for performance-informed budgeting.
In the year 2008, the fiscal crisis in the US left the federal government and the local government with many challenges. To overcome these challenges, practical policies such as budget reduction processes, were adopted. After the year 2008, most local governments in the US were on the cutting edge of implementing reforms to promote performance measurement in budgeting and share good practices.
Why the issue was selected
For every local government, budget is a crucial economic policy tool. Budget interprets government’s strategies, political pledges, and objectives into choices on how much revenue to collect. Equally, the budget indicates the plans of collecting these revenues and their applications in meeting the local government responsibilities.
After the year 2008, budget reduction processes have become important fiscal management factors for every local government in the US.
Compared to other fiscal management factors such as capital planning, expenditure controls, revenue analysis, forecasting and investing public funds, the budget reduction process is vital to the creation of sustainable financing strategies and economic developments during economic crisis such as recessions. In this regard, the topic on budget reduction process was focused on in this article rather than on other fiscal management topics.
Equally, the topic on budget reduction process has been selected because currently there is an increasing need for an efficient budget to control local government’s spending in the face of dormant revenue growth.
It is a fact that during slower revenue collection periods, measures that enhance budget reduction should be put in place to attain a financial equilibrium. Given the fact that most local governments in the US are experiencing slower revenue collections, the topic was highlighted in this article to stress on its relevance.
It is vital for every local government to adopt budget reduction processes not only to reduce on their spending, but also to ensure that quality services are provided to its residence without cutting back on the number staff. Therefore, this process compared with the other fiscal management factors will come in handy during such crucial times.
Although budget reduction processes are unique to every local government in the United States, there are some common practices applicable to all the organizations. These practices are reengineering current operations, outsourcing, and use of technology.
By reengineering their current operations, local governments are supposed to come up with innovative ways of maximizing on their labor force for increased production.
Through this approach, managers may be required to serve more than one organization, professional growth can be shared with other local governments, and service delivery may be distributed in conjunction with other local governments. By doing so, transportation cost, administrative cost, and other relevant cost will be reduced.
Through outsourcing, local governments are required to specialize on their core functions and let external companies provide non-core functions (Cogan & Timothy 135). Local governments can focus on providing education services, health care services, transport and communication services, and security services, and let external companies provide services such as payroll services and maintenance services.
Although this method is the most efficient means of the budget reduction process, dismissal of the current employees undermines its reliability (Pierre 167). When putting this practice into effect, local governments should negotiate with these external companies to hire the current local government employees displaced by the enforcement of the practice.
Another common approach of the budget reduction process is the adoption of technology as a tool of offering services. With appropriate technology, local governments can ease how their residences access some of their services. For instance, residences registering for the delivery of these services should be done online.
Similarly, customers should be able to transact their payments online. Through these, queues and personnel required to serve the customers will be bypassed.
The above practices have enabled the local governments to reduce their budget spending. However, more desired practices should be adopted to enhance budget reduction processes. These desired practices are optimizing revenue generation, improving program efficiencies within and across agencies, facilities’ optimization, and managed application services.
With the appropriate use of modern information technologies, revenue collection agencies should be able to come up with an efficient collection management process to increase the amount of revenue collected (Keith & Allen 134).
New technologies will provide the agencies with advanced means of collecting revenues and detecting tax defaulters. Through this, they would be able to optimize their resources towards revenue collection for increased returns, enhance their relations with taxpayers, and get better forecasting abilities.
Another ideal practice is improving program efficiencies within and across agencies. Through the rapid process improvement, local governments can be able to gather cross-functional teams in their organizations with the aim of attaining focused and hasten enhancement processes.
By doing so, they will be able to recognize challenges to implementing an operational efficiencies, adopt effective ways to decrease process-related inefficiencies, and center their organizations on their chief functions.
A different ideal practice is facilities’ optimization. Through this practice, local governments can reduce on their budget at the same time offer key prioritize.
The practice can be achieved through process improvements such as automating most services, professional real estate assortment supervision, and adopting energy management programs. In the long term, this practice will lead to a decrease in operating costs, maintenance costs, energy costs, and carbon dioxide emission.
Through managed application services, local governments will enhance their IT operations while reducing on their cost. Currently, most local governments’ IT departments are faced with multiple challenges. These challenges are aging IT facilities, reduced IT budgets, and augmented demands for them to meet their mandates.
Therefore, through managed application services they can be able to center on their primary missions, reduce operation cost, increase the value of their IT facilities and their performance, and increase their innovative abilities.
It should be noted that the above practices of budget reduction process have their own shortcomings if they are not implemented appropriately. For instance, when optimizing revenue generation, failure to assess all the cases recognized through analytics will cost the local government huge returns from lost returns collection chances.
Similarly, through some of the above approaches such as outsourcing, some of the local government employees may be retrenched because of their roles being outsourced. This would increase cases of the unemployment, which the local governments should be fighting.
Usually, outsourcing has been challenged with heated debates from the affected individuals. Although the employers view the approach as beneficial, the employees believe that the approach will cause them agony.
Another approach of the budget reduction process is that during its implementation process there is risk of local governments and related agencies cutting back on some essential services to reduce on the cost of operations (Kemp 147). If the service affected is very essential to the customers, tension will arise between the customers and the service provides.
During these serious financial times, local governments should not only center on uplifting their financial situations, but also on amendments that will add to their long-term viability. In this regard, the below recommendations should be implemented.
It is crucial that local governments adopt new mindsets. Based on the above practices, the need for a new mindset in these organizations is apparent. Local governments cannot only focus on providing quality services; they must also ensure that the services are provided at a lower cost.
Similarly, local governments should increase their scales to increase on their savings (Ffolliott & Luis 45). This implies that these organizations must adopt new strategies to improve on service delivery and cut on the cost of production. Therefore, local governments and other relevant agencies must consider working together to ensure that projects are administered, deliberated, and trailed at the local levels.
Through this approach, local governments and the relevant organizations can ensure that value addition and cost reduction are consolidated at the same time getting rid of the possibilities of establishing new inefficiencies. Local governments should act with immediate attention.
It is pleasing to note that more local governments are discovering ways of reducing their budget with each passing year. However, those local governments who will continue to reduce on their service production in the future will soon find themselves in situations where they will be left with no service to cut back.
In conclusion, it should be noted that budget reduction processes in our local governments are unavoidable if they must remain viable in the near future. Nearly, every local government in the US is dealing with the want to decrease their budget and carefully examine their expenditures. As such, budget reduction varies from local government to the other, from an institution to the other, and from a state to the other.
In this article, common practices and desired practices of budget reduction processes have been highlighted. Common practices are reengineering current operations, outsourcing, and use of technology. By reengineering their current operations, local governments are supposed to come up with innovative ways of maximizing on their labor force for increased production.
Through outsourcing, local governments will be required to specialize on their core functions and let external companies provide non-core functions. With appropriate technology, local governments can ease how their residences access some of their services.
On the other hand, the desired practices are optimizing revenue generation, improving program efficiencies within and across agencies, facilities’ optimization, and managed application services.
Through these serious financial times, local governments should not only center on uplifting their financial situations, but also on amendments that will add to their long-term viability. Therefore, they must adopt new mindsets and increase their scales to increase in their savings.
Through this approach, local governments and the relevant organizations can ensure that value addition and cost reduction are consolidated at the same time getting rid of the possibilities of establishing new inefficiencies.
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Cogan, John F., and Timothy J. Muris. The budget puzzle: understanding federal spending. Stanford, Calif.: Stanford University Press, 2001. Print.
Ffolliott, Peter F., and Luis A. Tapia. Natural resources management practices: a primer. Ames: Iowa State University Press, 2001. Print.
Keith, Robert, and Allen Schick. The federal budget process. New York: Nova Science Publishers, 2003. Print.
Kemp, Roger L.. The municipal budget crunch a handbook for professionals. Jefferson, N.C.: McFarland & Co., 2012. Print.
Pierre, Jon. The SAGE handbook of public administration. London: SAGE, 2012. Print.