Each summer, City of Carmel department leaders begin preparing their budgets for the upcoming year, but this time around they’re taking a new approach.
Carmel Mayor Sue Finkam has implemented zero-based budgeting, a process that requires every dollar to be justified rather than basing a new budget on the previous year’s allocations. She promoted the idea during her 2023 mayoral campaign to reset the budgeting process.
“Our directors are excellent at what they do, so they know their numbers, but we want them to have to think through and justify and fight for what they think is most important,” Finkam said. “There’s always more projects to go around than you have money for, because our directors are really focused on providing a high level service to the community. But we need to make sure that it all fits within the overall budget at the end of the year.”
City of Carmel Chief Financial Officer Zac Jackson, who began working for the city in April after serving as state budget director for Indiana, is leading the process. He said he tells city department leaders to imagine their budget as an empty shopping cart.
“You’re going to tell me which goods you’re going to put in the cart and justify why they belong in the cart,” Jackson said. “Then, before the shopping cart gets to the city council, the mayor and I are going to work with each department head to come to a decision about whether that’s going to stay in the checkout lane or whether it needs to go back on the shelf.”
The city will not use zero-based budgeting for staffing and personnel costs.
“We didn’t want to make any city employees feel like potentially their job might be on the line,” Jackson said. “So, we approached it with more traditional incremental-based budgeting.”
Finkam said zero-based budgeting will provide increased financial transparency and encourage innovation and streamlining.
Because this is the first time the city is using zero-based budgeting, Finkam said it’s too soon to know whether department allocations will change substantially from previous years. She said her top funding priorities include public safety and infrastructure.
Jackson said he does not expect any departments to have their budget significantly decreased through zero-based budgeting. But he does anticipate engaging discussions and opportunities to shift where some dollars are spent.
“To the extent that departments ask for more than what we have available, we’re going to have to potentially say no to some of our lower-priority projects or programs,” Jackson said. “Carmel taxpayers can take comfort knowing that we’re taking a more critical look at every expenditure rather than just kind of saying, ‘Yeah, it’s OK if everybody grows everything by 2 percent for next year,’ or whatever that historical approach has been.”
Finkam said she intends to use zero-based budgeting throughout her time in office.
Carmel’s budget for 2024 was nearly $209 million.
Carmel City Councilors will meet with department leaders to review budgets and will hold budget workshops, which are open to the public, Sept. 25 and 26. The 2025 budget will be introduced at the Oct. 7 city council meeting, with a vote expected at the Oct. 21 meeting. Members of the public will have an opportunity to comment on the budget at both council meetings.
