Priority-based Budgeting Helps Benicia Achieve Goals
Two years ago, when Benicia city staff was crafting the 2017-19 budget, they were shorthanded. Important projections weren’t available until May—late for a budget that would be adopted by the city council within a few weeks.
Plus, its revenue shortfall had to be covered by dipping into reserves. City Manager Lorie Tinfow didn’t want that to happen this year. So last year, she introduced a new approach—Priority-Based Budgeting (PBB), described as a tool to help Benicia achieve its objectives and strengthen a “fragile” budget. Several public meetings explained the concept and welcomed public participation.
“We just finished setting up the Priority-Based Budgeting structure in early 2019, so we haven’t been able to optimize using it for this budget cycle,” Tinfow said. “However, Priority-Based Budgeting is being used in several ways.” This approach clarifies how staff time and funding help achieve the six results established by the city based on citizens’ comments. Those six are: to protect community health and safety, maintain and enhance a high quality of life, preserve and enhance infrastructure, strengthen economic and fiscal conditions, protect and enhance the environment and have a high-performing government.
City staff can talk about expenditures by department and at the program level, she said. The latter is an easier “translation” of the budget that communicates its big numbers in ways that make better sense, she said. “For example, it’s challenging to understand the Fire Department’s total budget of $8.8 million and easier to see what we spend on Fire Department programs, such as emergency preparedness, weed abatement, etc.
In addition, the city has been developing an online portal so the public can see how much funding goes toward each program, such as pothole repair, in a particular fiscal year. Once again, the city’s pre-budget preparatory projections indicated revenue would fall shy of anticipated spending levels—1.8 million in fiscal year 2019-20 and another $1.5 million in fiscal year 2020-21. Tinfow and other city employees knew they had their work cut out for them.
“Since then, we have been working to bridge the shortfall so we can bring forward a balanced budget,” the city manager said. Benicia Industrial Park is one of the city’s most significant economic drivers, and two businesses there have experienced troubles. In March, Valero Benicia Refinery enacted a controlled shut down after a release of emissions containing coke carbon particles that prompted a brief health advisory.
Late in December 2018, the Federal Bureau of Investigation shut down DC Solar and its related companies, which this year declared bankruptcy after an FBI agent said its owners were involved in a Ponzi-type defrauding scheme.
Fortunately for the city, Tinfow said, “We are not anticipating any negative impacts from activities in the Industrial Park.” Still, Benicia needs to increase its revenues and find ways to deliver its services more efficiently, she said. “I would agree that ‘fragile’ is a good descriptor of the city’s finances,” she said.
The 2019-21 budget may not reflect many changes, “because there hasn’t been time to develop them fully yet,” she said. “I would say that we have a good handle on the problems and are actively working on figuring out the solutions.”
A tool that will help them look even farther ahead is the recently updated general fund five-year financial forecast that extends into 2024. Tinfow called it a dynamic tool to create “a sustainable financial vision” based on multiple “reasonable outcomes.” The forecast sets the groundwork for the new budget, she said.
Tinfow had some good news about the new budget. “We are not expecting to rely on reserves or other one-time funds to balance the 2019-21 budget,” she said. “Our goal is always to have a balanced budget by June 30, and we expect to achieve it this year as well.”