The Joy of Government Finance

My son is taking a government finance course at a nearby university and, understandably, asked me for some help with a recent assignment.  His task was to explain aspects of the federal budget process, and I think he was disappointed that I didn’t have more direct answers to his questions.  The unfortunate truth is that government finance is complicated; and the larger the unit of government is, the more complex the budget it produces.  The complexity of government finance is not, in my opinion, the result of a desire to obscure facts or confuse the public.  Recording accurate and precise financial information about a large enterprise requires specialized knowledge and training.  Understanding this information requires effort.

Albany compares favorably to the federal budget; but in the current fiscal year (2009-2010), we budgeted over $180 million.  Accounting for a sum this large makes it possible to paint many different pictures of financial reality, which explains why the state requires cities to have an independent auditor look at their books every year.  This year, thanks to the good work of our Finance Department and budget administrators in all departments, Albany received a completely clean audit report.

Keeping accurate financial records is one part of maintaining our citizen’s trust in the City, while making them understandable is perhaps the more difficult task.  People routinely complain about why we are spending money on one thing when we should be spending it on something they believe is more important.  Much of the money we receive is limited by restrictions imposed at the state or federal level; so at a given time, there may be money available to rehabilitate a train station annex and no money to build a new fire hall.  I am old enough to remember when cities received federal Revenue Sharing dollars that were not so encumbered.  In the good old days, communities could expect an allotment that would be used for whatever purposes local policy makers decided.  The program went away, probably because someone raised the question of why citizens should send money to Washington, only to have it shipped back to local governments for use as the town saw fit.  The current system presumably allows national priorities to be furthered through the use of financial incentives.

Regardless of how it’s done, government finance is rarely simple, and most people do not like what they do not understand.  The City of Albany launched an extraordinary new tool when our Dashboard was put on our Web site last year.  This tool allows anyone to see how much the City budgeted for all our programs and how much we have spent as of the preceding day.  As much as I appreciate and value the Dashboard, I fear very few people actually take advantage of it.  My hope is that as more citizens become adept at taking advantage of Internet information, more will find their way to this great resource.

Reaching a common understanding of government budgets is not an easy task, even with impressive new tools and technology.  I believe I have an obligation to make our process as transparent as possible, but there is no substitute for the effort required to tackle a complex subject.