Last updated on October 19th, 2020

As towns, villages, cities, and counties in New York deal with the economic fallout of COVID-19 in their own finances and on those of their taxpayers, it is a good time to consider an independent budget review to ensure that elected officials are doing all they can do to manage governmental funds properly.

Counties generally have budget departments, and often use independent reviews as a matter of course. In smaller municipalities, a municipal accountant or budget officer will generally ask department heads to submit budget requests, and then review those requests with them. The budget officer and the municipality’s chief fiscal officer must work together to create a realistic budget for the municipality’s governing board. This is intensive work in good times, and the pandemic has tightened finances across the board, creating new stresses and concerns.

New York State has projected an overall decline in sale tax revenues of 15 percent for April 2020 through March 2021, according to the State Comptroller’s Office. Some local municipalities will be hit even harder, especially with falling revenue from gasoline taxes due to lower prices at the pump. The New York Association of Counties has estimated that New York’s counties will see 22 percent drop in sales tax collections for the full year, a shortfall of $1.09 billion.

The Government Finance Officers Association notes that, particularly in difficult financial times, bringing in someone with technical expertise to review the municipality’s finances can provide reassurance to taxpayers that officials are acting responsibly.

An outside accountant can analyze the municipality’s operating results year-to-date, provide a clear-eyed perspective, and mediate the sorts of disagreements that inevitably arise among officials during budget negotiations.

At the same time, the reviewer can report any, identified deficiencies and inaccuracies in the municipality’s processes noted during his or her analysis and suggest solutions.

The independent accountant can review the budgeting practices of each department, and the assumptions on which planning is based. From there, the accountant can look at their projections of estimated revenues and appropriations and determine if they are reasonable.

For instance, town highway superintendents, who draw up their own budgets that require town board approval, may have disagreements with the town supervisor, and a neutral arbiter can help resolve the tension between what is needed to maintain roads and what the town taxpayers will bear overall.

In examining the overall budget process, the reviewer can look at the capital plan, and what expenditures are planned for the coming year or so; and the reviewer can look at debt projections. He or she can assess the fund balance plan and provide advice to officials on what they should use from those reserves

During the budget review process, the independent reviewer will meet with the members of the governing body to present comments, recommendations and findings and answer the officials’ questions. At the end of the process, the municipality receives a formal report.

An independent budget review can provide local government officials with assurances that they have done everything properly and responsibly for the taxpayers. The independent review also provides value and confidence for taxpayers, as they know someone with expertise in government accounting has provided input, and that there is a reasonable basis upon which their property taxes are determined.