The Power of Words. Twenty tips for covering and writing about budgets

4/8/98
Dave Herzog: Twenty tips for covering and writing about budgets

Part 2: Writing better budget stories

      Spring in New England means the arrival of the tulips, the Red Sox and town meetings and municipal budgets. Recently reporters at the Journal-Bulletin sat down to discuss how they could do a better job of covering municipal finances, especially budgets. Dave Herzog, a veteran city hall and investigative reporter, led the discussion. Herzog worked recently with several other reporters on an indepth look into how the Town of Johnston, R.I. has gotten into financial trouble.
       This week we present twenty tips Herzog has compiled on how to cover and write about a municipal budget.
       Next week we will present the ideas that were raised during the discussion on how to write about budgets.

      Twenty tips for covering budgets
      1. Break out of the mindset that a budget is a dry collection of numbers that you report on a couple of times during the financial season. Remember that it is a document that charts your town's plan for the coming year and reflects the political values of the people who put it together.
      2. Approach the budget and town financial reporting as a cycle that unfolds during the year. As you do the event-driven stories, keep an eye open for possible enterprise stories.
      3. Look at the bottom lines. If spending is greater than income, your town will run a deficit.
      4. Look for stories you can do before the budget is released. For example, you can analyze the budgets from the past five or ten years and discover trends that are important to readers.
      5. Always adjust for inflation when looking at budgets over time. This will save you from making the embarrassing mistake of writing that spending has doubled in your town. The best way to adjust for inflation is by using the Consumer Price Index. The formula for adjusting 1988 spending to 1998 dollars would be: (1988 amount X 1998 CPI) / 1988 CPI. In the example below, you can see that what looks like a 50 percent rise over the past decade really is a 5.7 percent rise. (The CPI for the New England region is available on the U.S. Bureau of Labor Statistics web site: http://www.bls.gov/ro1home.htm.

             1988              $1,000,000
             1988 adjusted     $1,418,624
             1998              $1,500,000
             CPI 1988               119.2
             CPI 1998               169.1
             Real difference    $81,375.8
             Real change              5.7%

      6. Put your budget-day stories into context by telling readers whether taxes will go up and by how much. Illustrate by showing what would happen to the tax bill of a "typical" property.
      7. Make budget day stories meaningful for readers by telling them what services they're going to be getting or losing. Find out who are the winners and losers.
      8. Reduce clutter in your stories by taking some of your numbers out and putting them into graphics.
      9. Get wish lists from department heads and check to see whether their priorities got into the budget. If not, what are the implications?
      10. Pick one interesting or unusual part of the budget and write about it some time during the budget cycle. Tell readers something they didn't know before.
      11. Look at independent audits. These documents cast a cold eye on a town's spending and show what really happened in a fiscal year. Look for deficits in all the funds -- not just the general fund.
      12. Check whether the budgeters are moving functions into enterprise funds. These funds are supposed to pay for themselves and cover government functions that you can measure. An example: providing water service.
      13. Read the management letters in the audits. There's where you will find criticism of the towns policies and practices.
      14. Read credit reports and bond official statements. The bond official statements will report, in gory detail, the financial condition of the town and possible risks to investors. The credit reports, available from ratings agencies (Moody's and Standard & Poor's), do a nice job of outlining a town's finances in clear terms.
      15. Learn how to use a spreadsheet and use it to analyze your budgets.
      16. Get reports from the Rhode Island Public Expenditure Council and read them. They contain useful information about town finances and taxation. Talk to Peter M. Marino, RIPEC's director of policy & municipal affairs: (401)521-6320.
      17. If your town has big year-end surpluses, ask why. They may say it's from conservative fiscal practices. It may be because they're intentionally asking for money in the budget and not spending it.
      18. Look to see if the town is setting aside money for legal fees and settlements. If that's happening the town may be planning to close a lawsuit by settling with a plaintiff.
      19. Find out whether municipal contracts are set to expire. If the town is negotiating contracts, what effect will these contracts have on the budget (and vice-versa)?
      20. Remember that the budget is a living document that has application year-round. Keep it on your desk and refer to it often.

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