States exert control over four areas of local government
financial management: 1) budgeting; 2) raising
revenue; 3) issuing debt; and 4) financial reporting.
These four inter-related categories are essential to local
governments’ budgeting and management decisions;
yet, few states require a comprehensive approach to
financial management. Most states’ legislation requires
local governments to enact an annual budget and sets
requirements for that budget. The required budget
information may range from a simple summary of revenue
and expenditures to a detailed line item budget
format. Local governments are commonly required to
follow a three-step procedure—first submitting the
proposed budget to the local governing body, then providing
for a public hearing, and finally formally adopting
the budget by motion and vote of the governing
body. The enacted budget is often required to be filed
with the state.
State-required budget actions include prescribing
budget content, level of detail, timing, and processes.
Some states encourage using program or performance
budget formats. Other states may specify using a
fiscal year or impose a calendar for considering and