On Friday morning City Hall welcomed a delegation of 20 finance professionals from the Chinese Ministry of Finance, eager to learn the ins and outs of the City of Lowell’s budget process and successful financial management policies.
The group, which included 16 Supervision Commissioners from the Office of the Ministry of Finance, from areas ranging from the province of Sichuan (population 87 million) to the “small” city of Dalian (6.1 million), began their morning with a tour of the City Council Chamber and brief introduction to the city’s Plan E government. They were quite astonished to learn Lowell was the first place in the world to utilize telephone numbers.
“Budgeting is a political process,” Lynch said. “Often times there is debate and friction. The City Council does not like to raise taxes, but they also do not like to cut services, which makes my job difficult; but we find that balance.”
The Chinese finance professionals paid close attention and took copious notes, asking detailed questions through a translator regarding the budget process including the role of citizen participation, the input of department heads and the source of revenues.
The budget process, working toward the June approval by the City Council, begins in January and is viewed as a multi-year plan, taking into account what has happened and taking steps geared toward meeting long-term goals. It is no longer strictly a one-year spending plan.
Comparing the 63-page 2007 fiscal year budget, the last prior to Lynch being hired as City Manager, to this year’s 374-page document, he made his point.
“The sole purpose of the 2007 line item-format budget was to control how money was spent, but it took away the ability to effectively manage departments,” he said. “At that time the city did not even explain where the revenues funding the budget were coming from.”
Lynch explained during his administration the goal has been to provide more information and increase transparency in city finances.
The budget document now includes narratives outlining the budget as a whole, as well as the achievements and goals of each department; revenues and expenditures are spelled out in line items as well as charts and graphs; organizational charts make it easier to understand how much staffing is in each department and to whom each employee reports.
“We give the department heads the flexibility to be innovative in how they utilize the funds allocated them,” Lynch said.
In the spirit of transparency, Lynch explained he and his staff travel to neighborhood, civic and business groups throughout budget season to “sell ” the spending plan to the city’s stakeholders, answer their questions and hear their concerns prior to the formal public hearings.
His Chinese visitors were surprised by the level of public input and participation in the budget process, but were much more stunned to hear the population of Lowell is only 106,000.
“You mean 1.6 million?” asked one of the delegates.
“Oh, you are a very small town,” responded the Chinese visitor, astonished to learn Lowell is the fourth largest city in Massachusetts.
On a more serious note, members of the delegation expressed how impressed they were by the city’s commitment to becoming more “green” and the energy efficiency improvements achieved through the $21 million Ameresco energy services contract.
The agreement has brought new heating and cooling systems, roofs, windows and other improvements to city and school buildings. The $21 million loan is repaid through the energy savings realized by the improvements, savings guaranteed by Ameresco.
In the end, the city could save up to $40 million in energy costs over the next two decades at no cost to the taxpayer; savings that can be used for other municipal needs.
Shao Min, the Deputy Director General of the Chinese Ministry of Finance’s Supervision Office, presented Lynch with a large, beautiful silk scroll adorned with ornate Chinese lettering before heading out to lunch and a tour of the Lowell National Historical Park.
The delegation was on a trip organized by the Triway International Group, a Washington D.C. based consulting firm that brings Chinese delegations to the United States in an effort to foster understanding between the two nations.
“It was a unique opportunity to meet with people from a completely different political system, a completely different culture interested in learning about how we present financial information and achieve transparency in the budget process,” Lynch said after the meeting. “It is great that this group of sophisticated fiance professional chose to visit Lowell to see what we have done and continue to do.”