Finance Planning.
Planning the finances of a local government is a sophisticated exercise requiring the skills of an accountant as well as the vision of a public administrator. The “finance plan” envisioned here is not the annual budget, not even the five-year capital plan. The finance plan is both long-term and comprehensive.
- Long-term means decades. At least twenty years, better thirty. Think of the life of most physical infrastructure; it is at least thirty years when well planned, constructed and maintained. In many cases, some infrastructure systems last a century.
- Think of municipal bonds. Even though they are re-financed occasionally, their face-value term is usually thirty years. There is currently talk of one-hundred year bonds.
- It seems to make sense to give more than passing attention to these long-term financial obligations even though the political life of elected officials is much shorter.
- Comprehensive means comprehensive. All service and facility revenues and expenses need to be included in the finance plan. A complete analysis of all sources and uses of funds ensures that everything is on the table, including deferred maintenance and reserve funds. Once the complete balance sheet and income statement is available, planning can begin.