Cities are responsible for the allocation of public funds to improve infrastructure, provide key services to residents, and attract businesses and tourists. To do so effectively, governments must practice good financial stewardship of these funds to the benefit of residents. But in small cities, seemingly small oversights in the distribution of funds can have far-reaching consequences for constituents. With rising suburban poverty and increasingly sparse federal funds for rural communities, cities depend on fiscal transparency and accountability to invest in residents’ quality of life.
More than a big city problem
Smaller cities in the US, particularly those located in rural areas, face declining populations, resulting in less revenue and less funding for government services. The misallocation of public funds can be harmful in any city, but residents of small towns & cities where public servants or officials misallocate funds are disproportionately affected by a lack of fiscal accountability.
Consider, for instance, this common budgetary oversight: Say a City department requests an allocation of $20,000 for a new municipal car for housing inspections, even though the same budget item was approved (and the funds allocated) the year prior. While a misspent $20,000 may be a drop in the bucket in the billion dollar budget of a major metropolitan area, those funds represent a much larger slice of a small-town budget. In a city with a population of 20,000, it’s easy to see how that much misallocated funding could have an impact on the government’s service delivery.
Such circumstances can raise suspicions not only of waste, but corruption as well. A simple lack of regulatory oversight may account for any number of budget deviations, but also opens to door for corrupt actors both in and outside of government to take advantage. Misspent public funds are often accompanied by violations of procurement protocols, or were executed by those inside city government who stood to benefit from the action. Some examples of this would be bids are made in an non-competitive manner for a particular contract, or if a certain budget request was approved by a government official connected to a service provider. Oftentimes this type of corruption occurs because it’s considered accepted practice, or perhaps because no one was looking.
Financial stewardship for well-managed communities
The unique challenges related to financial stewardship for small cities became clear when I attended the National League of Cities, National Black Caucus of Local Elected Officials (NBC-LEO) Summer Conference in Jackson, MS, to speak on a panel entitled – “Balancing the Books – Financial Stewardship in the Public Sector.” One of the goals of the conference was to develop the capacity of a group of local elected officials to better serve their cities. The panel itself sought to present resources and strategies they could employ to better manage public funds in their communities.
The attending officials cared deeply about their communities, and were eager for tools to help them be better financial stewards. The circumstances of the financial difficulties their cities were facing varied. Some towns were still recovering from natural disasters like tornadoes, others faced pressure from obligations related to their municipal finance arrangements. With few resources, the officials needed solutions that were impactful, cost effective, and could help build trust.
Our strategies for transparency and accountability can go a long way in creating the conditions for good financial stewardship in small towns and beyond. Passing a robust open data policy that employs best practices will not only help unearth the information needed to counter financial abuse, but will also provide the framework to organize information with an emphasis on transparency and accessibility to residents. Research suggests cities that thoroughly implement these strategies for transparency benefit – saving time and money through fewer public records requests.
Basic financial reporting and standardization published as open data can help on a wider scale. Tools like Ohio Checkbook, a database of financial records for cities and towns in Ohio, can be instrumental in facilitating this type of transparency. Our experience shows us that open data, open contracting, and an overall culture of transparency are not just helpful for large metropolises, but for small towns as well.
With small cities facing significant challenges, and some on the precipice of serious financial crisis, governments need every tool and resource at their disposal to use public funds wisely and make their communities as viable for current and future residents. The transparency that the Sunlight Open Cities team seeks to establish when working with local governments is not only necessary but imperative for these smaller cities, and can be instrumental in creating fiscally responsible environment.
When applied to financial stewardship, transparency provides the building blocks for a more functional, trustworthy government. We invite local officials and other interested parties to work with us and make technology driven transparency and good financial stewardship a reality for all the cities in America, no matter their size.