Local Governments Are Ready to Rethink Budgeting

by Michelle Kobayashi on July 2, 2025

Polco Rethinking Budgeting Survey Report 2025

As demands on local governments evolve, so too must the budget processes that guide them. That’s the core insight from the latest Rethinking Budgeting Survey, conducted by Polco in partnership with the Government Finance Officers Association (GFOA). Drawing responses from over 200 finance officers and budget leaders—many from GFOA Distinguished Budget Award-winning communities—the 2025 results offer a revealing look at how forward-thinking local governments are adapting their approaches and where gaps still remain.

The Good News: Satisfaction and Strategic Alignment Are Strong

Nearly 90% of respondents rated their budgeting processes as good or excellent, with strong marks for value to taxpayers, clarity of financial rules, and operational usefulness. More governments are aligning budgets with strategic plans and increasing collaboration with elected officials—a critical shift from reactive to proactive governance.

But Residents Are Still on the Sidelines

Despite these strengths, resident engagement remains a major shortfall.

While staff and elected official input are well integrated, fewer than 4 in 10 survey respondents said their processes included strong constituent engagement, and just 25% felt residents had meaningful influence in trade-off decisions. These gaps represent a missed opportunity to build public trust and shared accountability.

Performance and Technology Lag Behind Aspirations

Only 57% said their budgets focused meaningfully on outcomes, and fewer than half use performance measurement tools. While many want to use modern technology to streamline and elevate their budget work, traditional tools like Excel still dominate. The biggest obstacles? Limited funding, lack of staff training, and inflexible legacy systems.

Encouraging Signs of Change

Time since last important change to budget style or focus chart

More than half of respondents made significant changes to their budget approach in the past two years—up from just one-third in 2023. These changes span technology adoption, new budgeting methods like outcome-based budgeting, and closer alignment with strategic goals. Yet leaders acknowledge they have further to go.

GFOA’s Rethinking Budgeting Initiative Is Gaining Ground

About two-thirds of respondents are now aware of GFOA’s Rethinking Budgeting initiative, though only one-third feel confident in their knowledge of it. Encouragingly, nearly 9 in 10 are interested in improving in areas such as innovation, staff empowerment, strategic alignment, and resident engagement. They’re also asking GFOA for practical tools, templates, and more flexibility in award criteria to help foster experimentation without risking recognition.

The Bottom Line

This year’s survey shows local governments are not just ready for change—they’re actively moving in that direction. But realizing the full promise of rethinking budgeting will take more than willpower. It will require purpose-built tools, modern practices, and above all, a renewed focus on inclusion, outcomes, and public trust.

Polco: A Partner in Civic Engagement and Performance Insight

As local governments push toward modern budgeting, platforms like Polco are playing a vital role. Through tools for community engagement, performance measurement, and data-driven decision-making, Polco helps public agencies better understand resident priorities, measure progress on key outcomes, and build trust through transparent communication. The company’s suite of tools—including budget simulations, community surveys, and integrated dashboards—supports hundreds of local governments across the country in aligning budgets with community values.

Polco’s involvement in this survey and GFOA’s broader Rethinking Budgeting initiative reflects its commitment to making budgeting more inclusive, strategic, and future-ready.