Budget Prioritization: Needs vs. Wants

Budget Prioritization: Needs vs. Wants

Defining Needs and Wants

I’m a minimalist at heart. The government cannot and should not do everything, nor should it ever prioritize wants before needs. Still, there are and will always be varying opinions as to what constitutes a need and a want. Something I really want Eagle Mountain to have doesn’t simply become a ‘Need’ by virtue of my wanting it so badly.

Let me explain how I break down how to prioritize funding. For this explanation, I will use three broad categories: Needs, Priority-Wants, and Wants.

Needs: This category contains items and services I consider to be essential government functions. These items are make-or-break for public safety as well as basic quality of life. Some items I place in this category are: roads, water, sewer, storm water, garbage, (gas and electric, though Eagle Mountain has previously sold these services to the private sector), maintenance, and other similar items/services. This would also include the staff fixed-costs and capital resources to execute them.

Priority Wants: These items are customary for cities to have, they provide great benefit and build community, but come in second to ‘Needs’. Some items in this category would be: the library, parks, community events, and youth sports. Many of these items can, are, and should be privatized where the private sector offers a comparable service.

Wants: Everything else that a government could, might, or does do. I am, and will continue to be, wary when considering adding any additional services

The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves in their separate, and individual capacities.Abraham Lincoln

Funding the ‘Wants’

These are the ‘great-to-have’ items, but can be trimmed and/or cut when times are tough. My criteria for considering and funding such ‘priority wants’ are:

  • Needs must be provided for to the greatest extent possible before funding wants.
  • ‘Wants’ should not be funded through bonding (loans), meaning I will not bond to build a park, recreation facility, or other non-essential facility or service, despite how nice it would be to have one.
  • ‘Wants’ should be limited to facilities and services that are not already reasonably provided in the private sector.

Taxes and Fees

I have NOT raised taxes during the past four years, and I see no reason to do so in the next four years. I am also committed to NOT using the legal, but all-too-common and unethical practice of hiding tax increases in fees. This process is executed through excessive ‘Interfund Transfers’ and is effectively a tax-hike (see below for more on Interfund Transfers).

Eagle Mountain is extremely well-managed financially. Every year during budget visioning, I ask staff to max out the rainy-day fund we are allowed to keep at 25% over the General Fund balance. We have been near or at that 25% every year I have been on the council. Eagle Mountain is a lean organization and we regularly absorb cost increases through our growth and prioritization of needs over wants.

However, if we do not continue to prosper, the first course is to systematically cut ‘wants’ and ‘priority wants’ as I have outlined above before ever even considering a proposed tax increase.

More on Interfund Transfers: Hidden Taxation

There is a common practice in government finance that abhor; taxation through interfund transfers. Let me preface, Eagle Mountain does not use this method to pad it’s budget, but you’d be surprised at how many Utah Cities do and how easy it would be for Eagle Mountain to begin using the practice at any time if not kept in check. The process of interfund transfers goes something like this:

  • A city needs or wants tax revenue
  • City officials don’t want to cut budgets or raise taxes through the appropriate channels
  • The city charges higher-than-normal utility and service rates above and beyond what it takes to fund the utility/service and administration
  • The city transfers the excess funds from the utility/service
  • The city spends the transferred money however it wants without restriction on whatever essential or non-essential service it deems worthy.
  • Congratulations! Your taxes have been raised without a ballot vote!

Ultimately, I believe strongly that interfund transfers (as used in this method) is a means of taxing residents while intentionally hiding the tax. I will not participate in it and will continue to make sure Eagle Mountain doesn’t do it.

The utility/service you pay for should only cover the actual service and administration costs actually required to execute it.