One of the joys of summer is planning the annual road trip for our family vacation. The planning process starts long before the actual trip. First we discuss where we would like to go and what we want to do at our final destination. Next, we select accommodations. After booking accommodations, the discussion shifts to what we would like to see along the way. We make sure to build in some flexibility into our schedule, to make allowances for any unexpected detours we may take.
With a plan in place we can relax and enjoy our time away, as each of us knows how we are getting there, where we are staying, what we are doing at each major stop, and that we have contingency plans for the unexpected.
City staff, three councilmembers and three citizen volunteers have formed the Long-range Financial Planning Committee and are currently working on a “road map” for the city. However, the map we are working on is a “financial road map,” called a Long Range Financial Plan (LRFP).
Each year, the city produces financial documents such as the annual budget, annual financial report, and the quarterly and monthly financial reports. These documents provide an important window into city finances; however, they all have a limited view of where the city has been and where it is going financially.
Why does Edmonds need a financial plan? The strong economy we are currently enjoying will not last forever. By combining financial forecasting with financial strategizing that can be used to anticipate problems and opportunities and prepare for them, the LRFP Committee is drafting a Long-Range Financial Plan that we will use to help plan for where the City wants to go financially.
Formulation of a four- to five-year plan bridges the gap between the short-term perspective provided by an annual budget and the 20-year perspective provided by the city’s Comprehensive Plan. This in turn improves fiscal sustainability.
In addition, an LRFP is a communication tool we use to share information with citizens, staff, and rating agencies. For example, when council or staff receive questions about finances, the LRFP will: 1) help provide an answer, 2) provide a document to support the answer and 3) provide a consistent answer. Additionally, a financial plan can be used as a benchmark that citizens and council can use to measure how well we are meeting our goals and service level objectives, and it imposes discipline on decision makers by making the effects of their decisions more transparent. With an LRFP, stakeholders can see how today’s decisions will affect tomorrow’s bottom line.
As Edmonds moves forward over the next few years, having effective long-range planning in place will help us as citizens to relax and enjoy our time, confident that the city will continue to be financially strong. On our journey we will know where we are going, how we are getting there, and that we will have the financial strength and flexibility to accommodate unexpected detours along the way.
— By Scott James, Finance Director, City of Edmonds