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NYS Comptroller


The Academy for New York State's Local Officials

Determining and Allocating the True Cost of Services: A Tutorial for Local Governments and School Districts

Module 1 - Annual Budget

By law, municipalities in New York State use the line item budget. A line item budget is primarily an accounting and control document and can be confusing for non-accountants. It is often hard for taxpayers and elected officials alike to pull out the information they need to understand the true cost of governmental services froma line budget. Also, this budget format focuses on the bottom line, the amount to be raised by local taxes, instead of focusing on the locality’s priorities and how to provide services in a cost-efficient way.

Because most elected officials are not involved in the day-to-day running of a department, they cannot be expected to know the true cost of providing a service. This makes it difficult for them to intelligently decide on the proper level of funding. Coupled with public pressure against tax increases, this can result in poor budgeting.

Contemporary budgeting is an intelligent analysis of the true cost of providing services and the best way to deliver them. Contemporary budgeting moves the focus away from the “bottom line” or “meat ax” approach.

  Next: Annual Budget Strengths and Weaknesses