ELLINGTON — The Board of Finance on Wednesday unanimously authorized the formal adoption of zero-based budgeting for the upcoming cycle, an accounting technique that’s primarily based on utilizing the present financial surroundings as a information, quite than previous practices.
Objectives, and the most effective methods to realize them, drive the idea, Chairman Michael Purcaro stated. This differs from former budgeting approaches which are usually produced by taking the earlier yr totals and including just a few proportion factors to account for wage will increase and inflation, he stated.
The time period zero-based doesn’t imply departments received’t be getting price range will increase, however simply that they need to not base requests on what they acquired final yr.
Division heads ought to take a look at why a selected program or piece of kit, for instance, must be included of their price range proposals, Purcaro stated.
Finance Board co-vice chairman Joseph E. Wehr Jr. stated division heads are anticipated to clarify how they got here up with a price range quantity and what they need to accomplish for the yr.
The board’s unanimous vote was to formalize an strategy to budgeting that city Finance Officer and Treasurer Tiffany Pignataro started when she first began her job with the city in April 2020, Purcaro stated.
The Finance Division began these efforts final yr to assist align the city’s working price range with the city’s short-term and long-term objectives and targets, Pignataro stated. Zero-based budgeting permits departments to plan for what they have to be profitable, quite than merely going with what they’ve all the time budgeted, “simply because,” she stated.
Peter Pyhrr, an accounting supervisor for Texas Industries, is credited with creating this technique of budgeting in 1969. The writer of “Zero Primarily based Budgeting: A Sensible Administration Device for Evaluating Bills” was appointed in 1973 by then-Gov. Jimmy Carter to handle Georgia’s budgetary course of.
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