5 Key Takeaways

• Municipal budgeting is increasingly complex due to changing revenue sources and growing reliance on intangible and digital assets.
• Local governments should avoid overdependence on fines and fees and instead adopt diversified, data-driven revenue strategies.
• Small towns often face staffing and resource constraints, making automation essential for accuracy and efficiency.
• Modern budgeting software and cloud-based systems help municipalities transition away from manual, outdated processes.
• Public trust depends on transparent budgeting, clear communication, and strong record-keeping practices.

Curtis Coonrod, a Certified Public Accountant based in Indianapolis, has spent more than four decades helping municipalities, counties, and townships navigate the complexities of government finance. As principal owner of Curtis L. Coonrod & Company since 1991, he oversees financial reporting, compliance, and budgeting processes that must meet stringent requirements set by state agencies such as the Indiana Department of Local Government Finance. His background includes serving as elected auditor for Marion County, accounting manager for BKD, LLP, and holding senior auditing roles with national accounting firms including Ernst & Young and KPMG.

A longtime member of the Government Finance Officers Association, Curtis Coonrod brings extensive expertise in public budgeting, fiscal oversight, and regulatory compliance. Drawing from this experience, he provides insight into the most common challenges municipal finance leaders face today and the strategies that can help local governments adapt to shifting revenue landscapes, staffing limitations, and rising public expectations for transparency.

Overcoming Common Municipal Budgeting Challenges

Municipal officials face many challenges when developing and maintaining budgets, especially finance leaders in small towns, who may manage several additional roles in local government. Preparing for the most common challenges in the budgeting process can help towns resolve issues and avoid budget crises.

Changing revenue landscapes represent a key challenge for many towns, cities, and districts. In the past, property taxes have served as the primary source of revenue for municipal governments. Increasingly, intangible assets have influenced town revenues, from financial instruments to digital goods. Town finance leaders must understand how to tax and optimize value using these intangible assets. Newer legislation has applied sales taxes to online sales, but these taxes cannot keep pace with the rapidly growing online service sector.

As towns search for solutions to shifts in the local revenue landscape, they should avoid relying too heavily on fines and fees, which can upset citizens. Instead, governments must embrace a more comprehensive shift in revenue strategy. Key steps toward effective budget strategies include carefully analyzing existing revenue sources, innovating new revenue streams for the modern economy, and testing different revenue streams using data-driven, multi-year models.

As mentioned, small-town finance leaders often fill multiple roles in local government. This underscores a larger challenge all small governments face: a lack of time and resources. The fewer resources a town has, the more finance professionals must stretch the town’s budget. Town governments must automate whenever possible, as manual tasks such as data entry, spreadsheet consolidation, and budget reconciliations are poor uses of time, particularly given the error rate associated with manual entry compared to automated software.

Automated budgeting software is just one example of new technology that can drive positive change in local government. However, the rapid pace of technological change can also pose a unique challenge for small governments. Budget professionals who have spent multiple decades working in town governments may even remember processes and strategies from before the advent of the internet.

Transitioning budgets from paper to spreadsheets represents the first step in modernizing a municipal finance department. Adopting cloud-based software is another crucial step. Of course, these changes require town leaders to develop new skills and, more broadly, to demonstrate a willingness to change legacy systems and outdated strategies. Additional benefits of integrating modern technology and budgeting software include streamlined training processes and continuous updates that keep governments abreast of the latest technological advances.

Finally, while many municipal budget challenges may feel like they exist only in the office, town finance leaders cannot forget their fiduciary responsibility to the community. Over the years, average citizens have shown greater interest in municipal budgeting processes, partly due to technological advances. They demand more transparency than ever and expect direct communications from an accountable local government.

Unfortunately, studies suggest that about 50 percent of Americans hold a “less than favorable view” of the trustworthiness of their local government. A separate poll found that many government employees believe municipal budgeting processes do not effectively involve residents, address citizens’ most pressing needs, or communicate budget decisions to the public. With this in mind, towns must invest in diligent record-keeping and reporting processes, or else they risk losing the trust and support of the community.

FAQs

What are the most common challenges in municipal budgeting?

Common challenges include shifting revenue landscapes, limited staffing and resources, outdated systems, and rising public expectations for transparency.

Why are traditional revenue sources becoming less reliable for towns?

Property taxes alone no longer keep pace with modern economies, as digital services and intangible assets are harder to tax consistently.

How can automation improve municipal budgeting?

Automation reduces manual data entry errors, saves staff time, and allows finance professionals to focus on analysis and long-term planning.

What role does technology play in modern public finance?

Technology enables cloud-based budgeting, streamlined training, continuous updates, and more efficient financial reporting processes.

Why is transparency critical in municipal budgeting?

Transparency builds public trust by ensuring residents understand how funds are allocated and how budget decisions align with community needs.

About Curtis Coonrod

Curtis Coonrod is a Certified Public Accountant and principal owner of Curtis L. Coonrod & Company in Indianapolis. With experience spanning roles at Ernst & Young, KPMG, BKD, LLP, and as elected auditor of Marion County, he specializes in municipal budgeting, financial reporting, and regulatory compliance. A member of the Government Finance Officers Association, he continues to support local governments through expert fiscal guidance and public accountability.