Summer & Maintenance Season!
🦩 Welcome to the Summer and Maintenance Season for Washington State local governments! Time for vacations and warm sunny beaches. Oh wait, all plans have been canceled. Thanks, COVID…😷
Local governments are taking the changes that the pandemic has brought forth in stride and are adapting to the new normal resulting from the epidemic. As a result of COVID-19 and a changing economic environment, local governments should scrutinize budgets. When reviewing budgets, be sure to consider potential cash flow impacts as a result of an unstable economy due to this pandemic. For example, I would expect sales tax revenues at a minimum to be volatile.
Now, I am neither a doomsday prepper nor a Personal Financial Specialist, so please don’t take this statement as a doomsday profession or investment advice. However, this is a word of caution that unstable economic conditions may be coming, and local governments should understand steps that they can take to ensure continued financial health.
Those involved with local government finance should brush up on potential steps for future action to resolve cash flow issues. Recently the Washington State Auditor’s Office published a newsletter with a link to a GFOA paper on steps governments can take to cope with cash flow issues. Early action by local leaders may be the difference between weathering the storm and sending out an S.O.S. signal.
Local governments need to continue to provide essential services effectively and efficiently. The GFOA paper offers numerous strategies to implement that can reduce cash outflows and increase cash inflows. Depending on the size, nature, and circumstances of your entity, your plan may differ.
Be sure to assess your entity’s financial position regularly to determine whether corrective actions are needed. Being able to evaluate your entity’s financial position begins with the month-end reconciliation and close process. Check out this article on the reconciliation and month-end close process if you need a refresher.
Finally, you will want to stay up to date on the latest economic trends and the pandemic impacts on local governments. The Washington State Municipal Research Center (MRSC) has a specific webpage dedicated to COVID-19 Local Government Fiscal Impacts. Sound financial management practices are critical, and maintenance season is an opportune time to make any process or procedure changes that are necessary to maintain the sound financial health of your entity.
Thanks for reading, stay safe out there!