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Best Practices
Provo Brings Employees and Citizens
Together to Identify Budget Cuts
By John Borget
Recommendations from
teams of employees and
citizens helped the City
of Provo make surgical
cuts that balanced the
budget during these
difficult economic times.
T
he City of Provo, Utah, has
taken a unique approach to its
budget process this year — a
team approach that uses partnerships
between employees and residents.
Given the fiscal challenges the city was
facing when its new mayor was elected
in November 2009, he wanted to get a
head start on the budgeting process for
the coming fiscal year. The mayor was
a newcomer to the public sector, coming from a private business and entrepreneurial background. He gathered
together some of the brightest financial
minds in Provo to serve as another set
of eyes and ears and to provide input
on how to prepare a budget in these
difficult economic times.
Provo, a city of 120,000 residents in
the heart of the Intermountain West,
has a young, dynamic population. It
is home to Brigham Young University,
which has 35,000 students, and to many
of the students at nearby Utah Valley
University, with 23,000 students. Provo
also has a strong and vibrant business
community, and has been recognized
as one of the most business-friendly cities in the United States.
But even with a robust local economy
and a rapidly growing metropolitan
area, Provo has been subject to the
challenges of the current global recession. Like most cities in Utah, the city
government’s general fund revenue is
largely dependent on sales tax and
other revenues that are similarly reactive
to the economy. During the boom years
of the first decade of the 21st century,
Provo’s governmental services expanded, and the city funded a number of
improvements in the quality of life of
its citizens, including a new performing
arts center, improvements to the city’s
aquatic center, new parks, and expanded police protection. So the city found
itself in mid to late 2009 with increased
demand for resources in an era of dramatically declining revenues.
DEVELOPING A
RECOMMENDATION
Before taking office, the mayor-elect
decided to form a Citizens Advisory
Committee that would include bankers,
budget officers, chief financial officers,
a former council member, and certified public accountants, all of whom
brought important and needed skill
sets to the table. During the transition
period between the election and the
inauguration, members of this committee met weekly in the early morning
hours, along with the city’s finance
team, to educate committee members
about the city’s financial status. This
included updates on revenues, expenditures, employee compensation and
benefits, budgeted expenditures, previous city budget philosophy, and budget
cuts already in place. Key staff members including the assistant director
of human resources, the public works
director, and the energy department
August 2010 | Government Finance Review 59
director were asked to present critical
budget information to the committee.
The education process took approximately two months.
a 15 percent reduction so the committee would have a complete understanding of the options available for balancing the budget.
Then, the mayor asked the committee to develop a recommendation to
balance the general fund budget for
fiscal 2011, which had an expected
$3 million deficit. The city’s largest
revenue source is sales tax, which had
declined more than 20 percent since
the start of the recession. When faced
with a budget deficit in the past, the
previous administration had espoused
a philosophy of reducing all department budgets by the same percentage
across the board. The incoming administration, however, was facing budget
cuts greater than 7 percent of operating
expenses and took the position early in
the process that it did not make sense
to do an across-the-board cut. Such cuts
would likely have a serious impact on
vital services provided to residents. The
new administration decided to take a
“surgical approach” by evaluating the
need for the city to continue providing
all current services, along with its ability to do so, and scrutinizing all levels
and functions of government. These
kinds of budget reductions would be
ongoing and should put the city in a
better position for future years if the
economy was slow to improve.
The budget teams were asked to
closely scrutinize and question all
services provided by the department.
They were also asked to seek input
from other employees in their departments, and to use any outside resources available. Each budget team was
given approximately four weeks to do
their analysis before meeting with the
Citizens Advisory Committee to explain
their recommended budget reduction
options at the three different levels, and
to answer any questions regarding their
recommendations.
SEEKING EMPLOYEE INPUT
The Citizens Advisory Committee
and the administration believed that
employee input into the budget-cutting
process would be valuable. They felt
that a cross-section of employees would
provide perspective and assist in analyzing the most effective ways of cutting
the budget and minimizing the impact
on services. Department directors were
60 Government Finance Review | August 2010
asked to recommend approximately
five employees, who were selected to
include front-line workers, supervisors,
and mid-level management. These
employees were respected by their
peers and had a good understanding of
the functions and services provided by
the city and by their departments.
A meeting was scheduled with the
mayor and the newly formed employee
budget teams to provide direction. The
mayor asked the budget teams to prioritize services and duties performed
by their respective departments and to
give the Citizens Advisory Committee
budget-cutting options to consider. The
options were for cutting the operating budget by 5 percent, 10 percent,
or 15 percent, and the recommended
cuts were to be focused on those services that provide the least value or
have the smallest impact to the citizens of Provo. While the administration
believed going into the process that
some departments might need to be
cut by 15 percent, and others by only
1 or 2 percent, the budget teams were
asked to consider options adding up to
The presentations were comprehensive and provided a number of viable options for the Citizens Advisory
Committee to consider. Many of the
ideas presented had not been previously considered. The budget team
reports provided detailed explanations
regarding the recommended reductions, including the related service or
function that would be eliminated and
the consequence of eliminating the
function or service.
In addition, the mayor provided a
method for employees to contact him
anonymously and provide any recommended ways to provide budget savings to the city.
ANALYZING THE OPTIONS
The Citizens Advisory Committee and
the mayor also established a Budget
Focus Committee, which consisted of
the assistant director of finance and
three other respected and innovative
employees from various city depart-
ments. The Budget Focus Committee
functioned on a parallel track to that
of the budget teams; it was asked to
do an in-depth analysis of the budget
saving ideas presented by the Citizens
Advisory Committee, the administration, the budget office, and the employees. The Budget Focus Committee then
presented its proposals to the Citizens
Advisory Committee. Ideas that were
considered included closing a fire
station, outsourcing fleet and parks
maintenance, reducing the use of city
vehicles for commuting, consolidating
customer service functions across city
departments, and employee furloughs.
After hearing all of the recommendations from the budget teams and the
Budget Focus Committee, the Citizens
Advisory Committee gave the mayor
a formal recommendation as to what
ideas should be used to provide approximately $3 million in budget cuts in the
general fund and another $2.4 million
in other city funds. The general fund
reductions consisted of approximately
$1.7 million in personnel expenses,
with the remainder coming from operational cuts or revenue strategies. Other
funds identified $1.8 million in personnel expenses, and the remainder was
derived from operational cuts and, in
some cases, revenue strategies. As a
result, 65 positions were eliminated –
31 through attrition 34 through voluntary and involuntary reductions.
CONCLUSIONS
One of the lessons learned through
this process is the need for government
to be dynamic. As the economy changes, government needs to be responsive.
If the economy is improving, government must be in a position to add
resources, but if the economy is slowing, government must be in a position
to cut resources. Jurisdictions need
to be nimble in times of economic
change, not only to be more responsive to economic changes, but in some
cases to do a better job of anticipating
the impact of such changes.
The recommendations that came
from the Citizens Advisory Committee,
employee budget teams and the Budget
Focus Committee were impressive, and
they were instrumental in helping the
administration balance the budget during these difficult economic times. The
decisions that were made as a result of
the in-depth approach to the budget
deficit were difficult and will affect the
lives of a number of the city’s employees. However, by making these difficult
decisions today, Provo is positioned
to effectively respond to the financial
challenges it faces in the future. The
city was successful in identifying cuts
that will have a minimal impact on
citizens because of the valuable input
from employees and citizens. A majority of the cuts will be recurring or
ongoing, thereby reducing the size of
the government and better enabling
the city to balance the budget in subsequent years.
Provo is truly a better community
and a better governmental entity as
the result of this process. By learning to be more nimble in responding
to changing economic conditions, by
bringing some of the best and brightest
minds among its employees, citizens.
and business leaders to bear on these
challenges, and by being willing to
make hard decisions to reduce ongoing costs and strengthen revenues, the
city has not only balanced its budgets
for the current and next fiscal years,
but it is poised to come out of the current recession stronger than before and
ready to maximize its opportunities in
the years to come. y
JOHN BORGET is director of administrative
services for the City of Provo, Utah.
August 2010 | Government Finance Review 61
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