One - Introduction and Overview

Abstract

From the local government perspective, many things beyond the control of local officials have major effects on local finances. These include policies by higher levels of government; natural phenomena, such as weather and disasters; the overall state of the economy; and economic development policies of neighboring states. The fiscal manager's work is to figure out what factors are truly beyond the scope of his or her influence and control versus the things he or she can do immediately and on an ongoing basis to improve their fiscal health. To have the capacity for fiscal health, local decision makers must have the ability to anticipate or think ahead about what will affect their finances over time. These influences include everything from demographic and climatic changes to changing demands for local services to changes in intergovernmental fiscal relationships. Local officials create policies that may enhance or hurt fiscal health. These policies may be geared toward economic development and public services that indirectly affect fiscal health or they may be explicitly designed to affect local finances. The programs that are developed and implemented rely on resources that must be absorbed by the government and managed well in order to be effective. In addition, continuous monitoring, improvement, and adjustment of policies help keep the fiscal health of local governments on track.