The Purpose of Fiscal Policies
Setting (and then following) clearly articulated fiscal policies is one of the most prudent financial management tools available for preserving long-term financial health. They:
• Help prevent problems from arising in the good times, and respond to bad times when they do occur.
• Establish a strong foundation for long-term fiscal health, the underlying basis for case-by-case decision making.
• Provide continuity as elected officials and managerial staff change.
• Make effective decision making easier by articulating the organization’s standards before it is put under financial stress.
• Provide context for what kind of decisions should be made, as a road map rather than a limitation.
• Provide guidance as to levels of debt the community’s taxpayers can handle balanced with infrastructure needs.