THE ANNUAL BUDGET
A prime responsibility of council is to set the annual budget. The budget shows how the activities in the council plan will be resourced for a particular year, including service performance outcome indicators for monitoring performance. This is outlined in Section 127 of the Local Government Act 1989.
Because the budget is the annual articulation of the Strategic Resource Plan, many of the issues which apply to this plan, are also relevant to the annual budget.
ROLE OF COUNCILLORS AND THE ANNUAL BUDGET
Councillors need to endorse a budget preparation process and be involved early on to ensure that they have the appropriate high-level input into budget development. The budget preparation process should meet statutory and strategic timelines. A well-managed process will ensure that the next year’s budget is adopted by the end of the current financial year.
Because the annual budget should link with the council plan and the Strategic Resource Plan (SRP), councillors need to be aware when there are significant differences and understand how this will affect both plans.
There should also be early discussions with the administration about the assumptions around issues such as debt management, rates strategy, charges strategy and capital works.
While the councillors’ role is to primarily focus on the strategic and policy elements of the budget, they will also naturally be interested in specific projects and issues. This can result in tensions which need to be recognised and given the adequate time to be addressed.
Key questions for councillors
Some of the questions that councillors should ask themselves during the process of preparing the budget:
- Do we have a budget preparation timetable and process that meets statutory requirements and gives us enough time to resolve major issues?
- Has the budget been prepared within the framework provided by the SRP? If not, what are the consequences for the SRP? Will it be reworked to incorporate the long-term impact of current decisions?
- How will information be presented to enable us to make the appropriate informed decisions?
- Is the proposed level of debt management appropriate?
- What opportunities will we have to work through the key issues?
- Will the community have opportunities to provide input into the budget early in the process?
- Is the income from the rates which was envisaged in the SRP, still acceptable?
- Is council’s rating strategy reflected in the proposed Budget?
- If differential rates are proposed, do they meet statutory requirements?
- Does the budget deliver the council plan outcomes that were envisaged?