This article was written for the Michigan Counties magazine

It is often the case for governments that demand for public services outstrips available resources. That is why public budgets are really a reflection of a community’s priorities. With the revenue constraints created by the pandemic, county commissioners are going to have to examine, even more closely than before, those priorities they want to fund and at what level. 

They would be well served to apply a systematic budgeting methodology for this exercise, such as zero-based budgeting. The titular “zero” is a reference to the zero-sum game budget makers play at times when more money for one function by necessity leaves less funding for others.

Zero-based budgeting involves the development of three decision packages for each public function and service.  A base-level package meets only the most basic service needs.  A current services package maintains the status quo. An enhanced service package provides funds for functions sufficient to meet changing, increased, and unmet needs. Those decision packages can be as granular in line-item details as those involved deem warranted. 

Zero-based budgeting seems well suited for Michigan counties. As administrative arms of the state, counties, more than cities or townships, have a clear demarcation between required and discretionary services. Broadly, county spending can be categorized as a requirement to meet constitutionally and statutorily mandated services, as a requirement to fulfill obligations created by extra-voted millages for specific services, or as completely discretionary. Don’t let this categorization predetermine the development of the budget decision packages.

Various state laws mandate that counties provide courthouses, jails, health departments, medical examiners, fund the circuit courts, create family divisions within the circuit courts, and other functions. County officials are mandated to train local elections officials, maintain vital records, and record real estate transactions. Similarly, decisions to levy voter-approved special-purpose millages remove the latitude to reduce or redirect spending for other purposes.

While recognizing the budget restrictions created by these internal and external mandates is helpful, it only plays a minor role in developing the decision packages. Budget makers retain latitude to adjust spending levels for mandated services similar to the obvious discretion enjoyed for other services. 

Several court cases have pitted the independently elected county officials and courts against commissions over questions of funding for mandated services. In response, the courts have established a “minimally serviceable level” standard that says counties are not required to fund mandated services at specified, optimal levels. Instead, counties can provide all services, mandated or otherwise, in a barely adequate manner.

Discretionary services (parks, libraries, emergency response) should not be treated differently than activities associated with mandated services. While county sheriffs are required to maintain jails and serve the courts, other activities such as drug enforcement units, domestic violence units, DARE programs are discretionary. 

While identifying a base-level package may seem intuitive, recognize that few department heads or elected row officers (“row” officers refers to the constitutionally established county offices of sheriff, prosecutor, clerk, treasurer, and register of deeds) want to self-identify a minimal level of funding. What is offered as a base-level package may not be a “true” base level.

A current services package is self-explanatory. What would it cost to deliver the same, current-year service level over the next fiscal year? This can be done with or without inflationary adjustments but should take into account caseload adjustments. The simplicity in preparing this service package must be weighed against the realization that this model fails to acknowledge that needs and priorities change.

Enhanced service packages can be aspirational or reflect changing circumstances. Aspirational packages may include ideas proposed by county commissioners or solicited from department heads, bureau chiefs, and team leaders.

Changing circumstances make “discretionary” spending feel very necessary. A little more than a year ago, the need for personal protective equipment for public safety workers and frontline staff may have seemed frivolous. Similarly, many shoreline counties currently are fighting erosion caused by rising lake levels. For the foreseeable future, these “discretionary” services are high priorities.

The concepts of zero-based budgeting are not new. County apportionment boards are relics of an exercise rooted in these concepts. In the days before the Headlee Amendment’s voter approval requirements for most tax levies, these boards were tasked with allocating the constitutionally-limited 15 mills among the county, townships, and school districts. County boards of supervisors had to manage appropriations within their millage allotment, and they knew that requests to alter apportionments would cause townships and schools to have less.

Whether driven by the tenets of zero-based budgeting, a results-oriented process such as is laid out in David Osbourne and Peter Hutchinson’s The Price of Government, or another method, county commissioners are well served to adopt a methodology that allows budget makers to systematically assess wants and needs. What activities must be provided and what levels? What activities are not mandated, but cannot realistically be cut? And where is the wiggle room to develop budgets that find compromises?