The normal functioning of a modern city is practically unimaginable without a city budget. At the same time, the development of budget is a very complicated process because the city budget has to meet needs and interests of the local community and distribute the budget funds effectively in order to maximize the use of funds received from the taxation of the local community mainly. Today, an effective city budget should meet basic criteria of GFOA. In fact, GFOA are considered to be reliable and the city budget meeting this criteria can be effective (Tobin, 72). In this respect, it is possible to analyze the city budget of the City of Hollywood on the basis of GFOA criteria.
First of all, it should be said that there are four basic GFOA criteria: the budget as a policy document; the budget as a financial plan; the budget as an operating guide; the budget as a communications device (Dow and Hillard, 174). On the basis of these criteria, it is possible to analyze the budget of the city. The application of these criteria is essential because it provides larger opportunities for the creation of a balanced budget which can be achieved through the focus on policy, finance, operations and communications. In addition, it is worth mentioning the fact that peer review can be important in budgeting, where there are recommended practices instead of established standards.
Finally, the GFOA criteria help to recognize needs and interests of the wide variety of stakeholders directly or indirectly involved in the budget process.
Speaking about the budget as a policy document, it should be said that the budget of the city provides basic information on the policy of the city and the use of city budget funds. To put it more precisely, the budget provide a summary of financial policies and goals, which the budget is supposed to achieve (DeCanio, 231). Moreover, the budget presents all financial goals in one place that is very important because it allows to assess and evaluate basic financial goals and find all essential information of the goals which are set and, therefore, which the budget should meet. On the other hand, the budget of a city as a policy document has a considerable drawback since it does not clearly define the balanced budget. In such a way, in spite of the definition of basic financial and goals and policies, the extent to which the budget is balanced is still unclear. On the other hand, the budget contains both short-term and long-term goals that is very important because it ensures the stable development of the city and the normal processing of the city budget since the stable development ensures stable revenues and allows developing reasonable policies concerning spending budget funds.
Furthermore, the budget as a financial plan is also an important criterion which influences the effectiveness of the budget. In this respect, it should be said that the city budget basically meets this criterion because the budget provides detailed financial plan, including revenues and spending of the budget as well as basic changes (Holcombe, 126). It is worth mentioning the fact that the budget contains the comparison with basic financial data of the city budget of previous years. In such a way, with the help of this data it is possible to trace the changes that occur to the city budget this year. Thus, the budget provides staffing changes with explanations which clarify the budget process and the basic changes in revenues and expenditures of the budget.
At the same time, the city budget basically meets the criteria which define the budget as an operations guide. In fact, the budget defines operations which are involved in the budget process and in the process of distribution of budget funds. In addition, the budget contains information on the operations oriented on the short-term and long-term development of the city and local community (Friedman, 45). Moreover, the city budget even includes anticipated fiscal opportunities and challenges which should be taken into consideration while developing budget not only for one year but for several successive years.
However, the city budget apparently lacks the communication opportunities. What is meant here is the fact that the city budget does not really involve the local community, which is probably the most interested party in the budget process, into the discussion of the budget (Coates, 190). In fact, the city budget just presents basic data, goals, financial objectives and budget policies which the community should rather take for granted than discuss or introduce its own suggestion or give recommendations concerning the budget process. At any rate, the possibility of communication is extremely limited that is probable the major drawback of the city budget along with poorly developed balanced budget, which is not clearly defined.
Hence, it is possible to recommend eliminating the aforementioned problems, including the clear definition of the balanced budget and clear plan which can prove that the budget will be balanced. At the same time, it is important to involve the public discussion in the budget process. For instance, it is possible to involve the community into discussion of the budget by means of Internet or special meetings within the community. Nevertheless, overall the budget is good and worth winning the GFOA award.