City of Wheat Ridge’s Experience with Priority Based Budgeting
The Takeaways
Priority-based budgeting is a budgeting method used by local governments to align their financial resources with community goals.
This method enables communities to do a critical analysis of the true costs of programs allowing them to think critically about priority areas of work.
To do the budgeting process effectively, there needs to be information gathered city-wide, which means it needs to be made a priority to get broad buy-in support.
The Case Study
Wheat Ridge is a city of around 31,000 residents located in the suburbs of Denver. For the past seven years, the City has used priority-based budgeting when developing its annual budget. Using a priority-based budgeting process has allowed the City to align its resources and assets with budget priorities to link financial needs with the City Council’s Strategic Goals.
Priority based budgeting is a budgeting method used by local governments to align their financial resources with community goals. Rather than basing a budget off of revisions to the previous years’, local governments take a holistic approach to developing a budget that prioritizes programs and services to invest in, preserve, and enhance those most valuable for the community.
The City primarily uses the process to focus on budget variances from year to year when project costs don’t align with actual costs. For example, variances may occur in years with heavy snowfall where funds were not adequately appropriated for snow removal, etc. The City tracks any program with a $5,000 or more variance to help improve future need projections. The City has also used the process to develop and manage and $100,000 contingency fund for allocating needed funds for unexpected costs.
Wheat Ridge has seen a number of benefits from using priority-based budgeting over the last seven years, including:
Using priority-based budgeting has helped shape budgeting conversations across departments to meet City goals
The City’s 2018 budget saw a reduction of $657,000 in budget requests to fund critical programs.
By not over-budgeting programs, the City is able to allocate the right amount of resources in the right place, which helps avoid cutting funds from programs.
Officials are seeing a positive return on investment through the budgeting process.
To do the process effectively, there needs to be information gathered city-wide, which means it needs to be a priority to get broad buy-in support. However, this can lead to a positive shift in thinking about programs and budgets, enabling communities to do a critical analysis of the true costs of programs and providing them an opportunity to think about things they can stop doing if there’s not a big enough impact and shift focus to other priority areas of work.