Budget making in the town of Athabasca Unit

BUDGETS

Budgetmaking in the town of Athabasca

Unit

Thebudget making process at the municipal level is a very sensitiveissue politically. This is because the budget allocates resourcesaccordingly and thus impacts delivery of service to the people. As alevel of government, the municipal council is mandated to chargelevies, tariffs and taxes and deliver services as outlined in thebudget. Residents of a municipal can voice their concerns about abudget and any taxes levied through various forums provided. In TheTown of Athabasca, there are regular meetings held between thecouncil and the public. The council has thus to meet the obligationsof collecting revenue and budgeting for the same. As such, it playstwo significant roles of adhering to sound financial managementprocedures and also allocating resources sufficiently to deliver theneeded services. This matches well with Aaron Wildavsky’s (1988)concept of spender versus guardian role. Thus in the Town ofAthabasca, the municipal government engages in a balancing gamebetween the institutional role of guardian of public resources andspender as provider of services as discussed in this paper.

Thecouncil has to operate within a budget. Given that resources arescarce and are surpassed by needs, needs which the public has beenvery vocal in pointing out, mean that the council requires a guardianto ensure that spending does not go beyond available resources. TheCouncil must also ensure that it does not go into deep debt.Additionally, the guardian has to ensure that municipal resources arenot embezzled by various entities working in the council. To makesure of this, the council has to carry out the spending role andagain carry out the auditing role to make sure that resources areutilized for their intended purpose. The guardian role that involvesamong other processes the auditing of council books seeks to limitthe spender role of the council.

Thisguardian role is also involved in preparing a revenue budget. Arevenue budget is common in local governments as it details theanticipated sources of revenue. These governments have multiplesources of revenues in form of taxes, licenses, levies and finescharged to the people and businesses. Parking fees, garbagecollection and water and other services may also be regulated bylocal governments depending on the government structure. Some estatesin the US and other countries form their own estate companies thatare responsible for providing these services exclusively to theresidents of the estate. Local governments in Canada also receivegrants from provincial or territory governments. In other countries,the grants can be sourced directly from the central government.Whichever the case, these grants are part and parcel of the revenuebudget. In the same way as the spender-guardian interplay the revenuebudget must be equated to the expenditure budget.

Theexpenditure element of the council is handled through the spenderrole of the council. Given that this role is oriented towards servicedelivery, it will always call for allocation of more resources tohelp it deliver services. Given that there are somehow infinite needsthat the council can address, there is constant demand for moreresources to be allocated to each department. However, due to limitedresources, the council has to address the most pressing of theseneeds. To address more needs, the council can contemplate increasedtaxation and levies. However, this could be counterproductive. Thespending arm of the council is likely to push for higher taxes andlevies charged to the public but the guardian arm is required toguard the public from exorbitant taxation and levies (Thompson,1998). Therefore, the interplay of the guardians and spenders isexhibited once again in the budget process in the revenue collectionplanning. Despite the conflicting roles, the two functions of thecouncil must operate in concert for the local government to achieveits objectives.

Inthe case of the Town of Athabasca, the guardian-spender interplay areevident. In the case of addressing needs within the limits ofavailable resources, the council responds to changes in resourceswith changes in services. Given that the council also relies onprovincial government through grants and other allocations, changesin the province’s budgeting may also affect the Town of Athabasca.For instance, in response to austerity measures adopted by thecentral government through the Toronto G20 Summit, some localgovernments raised their taxes. With austerity limiting the abilityof some council governments from meeting some of their obligations,the spending arm of such councils can call for an increase intaxation to meet the deficit. However, the guardian arm can preventexcessive increment in taxes in minding the welfare of the people andopt for austerity by cutting budgets across the board or evensacrificing capital projects.

Thetown of Athabasca has not been affected by the budget cuts. In fact,the government recorded a marginal increase in revenue collected in2014 at $6, 637,260 from the previous year’s $6,424,929. It ishowever interesting to note that the government recorded deficits inits budget in that the expenditure was higher than the revenue bothin 2013 and 2014. However, government transfer for capital hasenabled the government to address the deficits and in fact create asurplus. This surplus stood at $775,517 in 2014. However, for the2015 budget, this surplus has been factored in the budget to addresscapital projects and donations to some charitable organizations (Towncouncil passes, 2015).

Inmaking the budget for the town, several strategies are adopted toensure that there is balance between guarding public resources andspending adequately to deliver required services. In the Town ofAthabasca, the municipal administration or secretariat is chargedwith running day to day affairs of the town while the councilors arerepresentatives of the people. Therefore, the representatives asspenders demand more and better services for the people while theadministration is charged with guardian role of ensuring the budgetis within means. Accordingly, the administration drafts both arevenue and expenditure budget and forwards it to the council fordeliberations and approval. The deliberations may take a few weeks oreven months as is the case with the 2015 budget which was partiallyapproved in April. The proposed budget by the administratorssuggested a 2% hike in salaries for all employees which was rejected.The draft also suggested a 2% increase in taxes with revenues of$33.62 million generated through operations and expenses anticipatedat $33.61 million. This is yet being debated by the council.

Thiscaptures how the council has utilized various strategies to ensure abalance between the spender and guardian role. However, there areplans underway to improve public participation in the budget makingprocess. Such attempts have failed in the past because the councilrests with the final decision thereby making public participation inthe budgeting process irrelevant (Fenn 1998). The new approach seeksto change the role of the council from a decision maker to one offacilitating the decision making process (participatory budgeting2015). The most important aspect of the budget to the public is boththe revenues and expenditure part. For instance the decision toincrease water and sewer charges for the average household by $30.54and with an additional $18 (or $1.50 per billing cycle) for wastepickup has drawn public outcry (Town council passes, 2015). Thisshows that public participation in the budget making process willhave a huge impact on local government politics and financialmanagement.

Inconclusion, the Town of Athabasca’s budgeting process acknowledgesthe different aspects of the budget to be considered. From thefinancial records, it is clear the council adheres to specificfinancial reporting standards. As is expected of local governmentfinancial reporting, the government matches the revenues collectedbudget to the expenses budget. Again, the budgeting process forcapital projects is different from the rest of the budget.

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