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Effective Revenue Forecasting for Fire Service Budget Management

Learn how to create accurate revenue forecasts for your fire department budget, avoid budget cuts, and maintain essential services. Discover key steps in revenue estimating, including tax forecasts, grant opportunities, and the impact of new user fees. Stay informed of changes that could affect your budget. Understand the implications of revenue shortfalls on operations, personnel, equipment, training, and prevention programs. Improve decision-making by aligning revenue projections with operational needs.

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Effective Revenue Forecasting for Fire Service Budget Management

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  1. 91-406 : Week 5 Financial Management of the Fire Service

  2. Revenue forecasts • Steps in revenue estimating (keep it simple!) • Last year’s budget + % increases + inflation • Issues: • Understanding tax forecasts • What State will pass back to local governments problematic • What grant monies will be garnered in the coming FY • How new user fees may change the forecast • How can FD budget mgr. help? • Advise City budget mgr. of any new strategies being implemented at FD • Be aware of possible changes in last year’s budget that could affect the forecast – communicate those to the City budget mgr.

  3. Revenue forecasts • Forecasts don’t affect fire department operations until… • Revenue shortfall creates budget cuts • Budget cuts create loss of services, or… • Conflict occurs over which services should be cut • Personnel loss: layoffs, furloughs, open positions • Equipment replacement: equipment ages, money for replacement is cut • Training: lost training time, lost access to particular training (out of town training, specialty training) • Prevention programs: fewer inspections, less public education

  4. The meaning of budget cuts… • Loss of a Chicago fire station: • 24 personnel cut = $820,000.00 • Savings on fringe benefits (@25%) = $205,000.00 • Ongoing expenses cut (heat, power, supplies, training, etc.) = $154,000.00 • Sale of building & equipment = $2,680,000.00 • Total savings = $3.9 million

  5. Why revenue forecasts affect operations • Overstated revenue at beginning of budget year creates false assumptions and poor decisions • More personnel hired than affordable • Supplies purchased upfront because of “rich” budget • Overtime expenditures may be increased as supervisors lose some control of OT dollars • Mid-year adjustments based on unforeseen, lower revenues • Overtime cuts • Training cuts • Delayed expenditures for new equipment • That apparatus that was scheduled to be purchased in the 2nd half of the year – now it may be delayed!

  6. References • Mikesell, J. L. (2011). Fiscal Administration: Analysis & Applications for the Public Sector. (8th ed,). Wadsworth. • Chen, G.C; Forsythe, D.W.; Weikart, L.A.; Williams, D.W. (2009). Budget Tools: Financial Methods in the Public Sector. CQ Press.

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