Making sense of the city budget

The good people at Asheville-based Urban 3 have produced an amusing, accessible video showing Josh McCarty and Maxine Eng walking through their city's budget. They make a number of points, including (Strong Towns 2020):

1. Pick your city and do an Internet search for the most recent version of your municipal budget. Cedar Rapids is working from the fiscal year 2021 budget, which comes in two parts. The most recent year for which actual numbers have been compiled is 2019. Alas, unlike Asheville, the first thing that comes up on an Internet search for "Cedar Rapids budget" is, indeed, Budget Rent-a-Car.
2. Open an Excel spreadsheet and get ready to scroll through the document until you see some charts. The spreadsheet is for note-taking, really, enabling you to find numbers from all over the document and place them together. For example, the budget for the police department is at volume I, page 102; that for street improvements is at volume II, page 202; and that for debt service is at I, 55.
3. Start noting the many different pots of money feeding your government. Cedar Rapids has a general fund, which draws on property taxes (22%), charges for services (30%), intergovernmental revenue (13%), and a variety of smaller sources like the local option sales tax (2%) and the hotel motel tax (<1%) (I, 60, 62). There is also an enterprise fund (dedicated revenue from water bills, golf fees, the Doubletree Hotel, e.g.), a capital fund (large one-time projects, see #10 below), and slightly smaller funds called special revenue and internal service. So, the general fund amounted to $147,598,125 in fiscal year 2019 (I, 97), but the total amount the city spent was $522,091,049 (I, 60).
4. Start tracking the relationship between income and expenses. 
5. Watch out for things like "interfund transfers" and debt. Over $180 million of city revenue was attributed to "transfers in" (I, 60). "The special revenue, internal service, and capital project budgets are balanced with current revenues or use existing cash on hand from past fiscal years to fund expenditures due to planned expenditures or the timing of expenditures," explains an explanatory note. "The use of fund balance or transfers in is decided by Departments and/or the Finance Department based on needs and availability. The Finance Department confirms if funds can be transferred or used given the circumstance of the expense and original source of the funds" (I, 71-72).
6. Pay attention to the planned vs. actual budget. I don't see that much difference between actual 2019 and planned 2021, but it's nice to know that the numbers you're looking at are based on experience not aspiration.
7. As you look through, note different types of revenue that might be vulnerable to economic shocks, like the pandemic. Actually very little of Cedar Rapids's budget relies on sales tax or its equivalents--see #3 above--although in a tight budget every cut hurts.
8. Because there are multiple local governments in any place, comparing expenditures on, say, police vs. mental health vs. schools requires looking at school district and county budgets as well as the city's. The school district's budget amounts to $282,329,202 (p. 10), almost half of the city's and, presuming all that goes for K-12 education, vastly larger than any specific city budget item. Looking strictly at the City of Cedar Rapids, police spending is $38,475,488, 31 percent of the general fund, but only 7.4 percent of total spending (I, 102). Spending on street repair beats police at $42,413,827--we have a lot of streets in Cedar Rapids--but it comes out of the capital fund, not the general fund, so it shows up on a different pie chart (II, 202). We spent more on streets and less on parks than Asheville does.
9. Debt service and debt limits: Iowa allows cities to borrow up to 5 percent of the total assessed property valuation... North Carolina allows up to 9 percent! Cedar Rapids paid $61,968,015 on its debt in 2019 (I,55), 11.9 percent of total spending, more than on police and fire combined.
10. Capital improvement plans: Cedar Rapids has one, too, detailed on pages 210-271 of Volume I of the budget. The five-year spending plan is for $865.8 million; the largest two categories are flood control ($249.6 million) and street improvements ($173.4 million) (I, 211). Funding sources include bonds and "other debt" (44%), grants (20%), and the local option sales tax (11%); the remaining categories are vague (I, 212). Specific projects are listed beginning on p. 214 with widening Collins Road, extending Tower Terrace Road, and punching through 6th Street from B Avenue to Ellis Boulevard NW. 

I learned a lot, but I found it difficult going, even with a high personal feeling of competence in this area. So be warned, and there is no way I would assign students to do this, which is too bad, because budgets are where the reality lives.

The Urban3 video: