Cities Cannot Budget Their Way Out of Mission Problems
California cities continue to struggle with recurring fiscal stress.
Los Angeles recently closed a budget gap approaching $1 billion. San Jose addressed a shortfall of roughly $50 million while acknowledging that structural challenges remain. Oakland reopened its two-year budget to address a gap of roughly $265 million while continuing to wrestle with insolvency concerns. Across the state, local officials confront rising costs, growing service demands, pension obligations, infrastructure needs, and persistent pressure on public finances.
When budget problems emerge, the debate usually follows a familiar pattern. Fiscal conservatives call for spending restraint, better budgeting, greater transparency, stronger accountability, and more efficient operations. Local officials discuss staffing levels, service reductions, tax increases, reserve policies, and long-term financial planning.
These discussions matter.
But after three decades working in local government finance and administration, I came to believe they largely focus on symptoms rather than causes.
Most reform efforts focus on improving how cities do what they do, while leaving largely untouched what cities do and why.
That distinction is critical.
Budget debates naturally focus on costs. But costs are driven by activities. Activities are undertaken to achieve goals, and goals are justified by mission.
Mission justifies goals.
Goals determine activities.
Activities drive costs.
Budget debates occur at the cost end of this chain, where the most important decisions have already been made.
This helps explain why so many reform efforts disappoint. Better budgeting, stronger oversight, increased transparency, improved incentives, and greater efficiency may improve administration. But they do little to address the missions and goals that generate spending in the first place.
Many observers would argue that the real problem is political will—that elected officials simply lack the discipline to make difficult choices. Political leadership and fiscal discipline certainly matter. But even leaders committed to restraint operate within missions that continually generate new goals, activities, and spending demands. Without examining mission itself, fiscal discipline becomes an exercise in managing expansion rather than questioning it.
I spent much of my career advocating these reforms. I still believe they matter. But over time I came to realize they improve how cities pursue their missions without examining whether those missions themselves are appropriate.
To understand why, consider how cities describe their purpose.
The City of San Jose describes its mission as creating a “great place to live, work, learn and play.” The City of Fremont describes its purpose in terms of enhancing quality of life through responsive government and community partnerships.
Whatever their appeal, these statements provide no principled basis for determining where governmental responsibilities begin and end. The problem is not merely their breadth. It is that they assume an unbounded role for government.
Mission statements do more than describe goals. They embed assumptions about what government is, what it should accomplish, and how broadly its powers should be employed.
Mission statements read like aspirational poetry—broad enough to encompass almost anything and vague enough to exclude almost nothing.
They are not limiting principles.
They are blank checks.
And accounts that issue blank checks cannot be balanced.
If a city’s mission excludes nothing, it limits nothing. Every activity defended by appealing to a purported public benefit acquires a presumption in its favor. Every new problem invites a governmental response. Every new response creates new costs.
Mission creep is not an accident or a simple lack of restraint. It is the predictable consequence of an unbounded mission. Eventually fiscal pressures emerge.
Those efforts may improve administration. But they leave the underlying mission intact. At that point, it is worth asking a question that rarely appears in municipal finance discussions:
What activities properly belong within the scope of local government?
Cities are not merely service providers. They are governmental institutions possessing powers that individuals and private organizations do not possess. They can tax, regulate, and compel compliance through legal authority.
Those powers require justification. That is why questions of mission matter.
State mandates, pension obligations, and other externally imposed costs can intensify fiscal pressures. But they do not explain why cities increasingly define their missions in expansive terms.
When cities assume broad and unbounded missions, they increasingly undertake activities that do not require governmental powers. Political solutions begin replacing voluntary ones. Activities that might otherwise be undertaken by businesses, entrepreneurs, charities, churches, civic associations, and neighborhood groups become governmental responsibilities instead.
The consequences are not merely fiscal.
Government expansion often crowds out private initiative, investment, innovation, entrepreneurship, charitable effort, voluntary cooperation, and problem-solving. Yet these losses are often invisible because attention remains focused on the activities government performs, rather than the alternatives that never have the opportunity to emerge.
This helps explain why recurring fiscal stress has become so common. Expanding missions generate expanding activities, larger budgets, growing expectations, and new constituencies. Eventually financial pressures emerge, and the cycle begins again.
The next debate will focus on taxes, spending, pensions, reserves, efficiency, transparency, and incentives. Such conversations are necessary. But they are not sufficient.
If California cities are to escape chronic budget scarcity, they must confront questions that conventional reform efforts often avoid. What activities properly belong within the scope of local government? What goals justify the use of governmental power? What limiting principles define a city’s mission?
Until those questions receive greater attention, cities will continue addressing fiscal problems downstream while leaving their primary drivers upstream.
No budget process can solve a problem created by an unbounded mission.
Mark Moses is a senior fellow with the California Policy Center. He has thirty years of experience in local government administration and finance. His book, The Municipal Financial Crisis – A Framework for Understanding and Fixing Government Budgeting, was published by Palgrave Macmillan and is available from major online booksellers.
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