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Best Practices - General Expenditure Principles

July 14, 2026

Definition  

General expenditure principles refer to the foundational guidelines that dictate how government entities should allocate and manage their financial resources. These principles are designed to ensure that spending decisions are made responsibly, transparently, and in alignment with the government’s stated goals and legal obligations.  

Why it matters  

Responsible fiscal management ensures that taxpayer money is used responsibly and transparently. When governments adhere to sound expenditure principles, taxpayers can have greater confidence that their money is being used effectively. Effective general expenditure principles: 

  • Create a common standard for fiscal accountability that protects against mismanagement of funds or corruption; 
  • Ensure taxpayer confidence and public trust in local governments; 
  • Support long-term fiscal planning rather than short-term budget solutions; and 
  • Implement consistent and effective public service delivery. 

What good looks like (criteria) 

  1. Avoid using borrowed funds or loans to pay for operational costs 

Using borrowed funds to pay for operational expenses forces governments to pay for costs assumed and benefits enjoyed today over the course of decades or more. Borrowing funds adds substantial interest costs that must be paid over time.  

  1. Implement targeted spending cuts instead of across-the-board reductions  

Across-the-board reductions provide little incentive to departments and elected officials to proactively manage and reduce their budgets. Additionally, such initiatives reduce funding for effective programs alongside less effective spending and are therefore inefficient. Targeted cuts directed toward underperforming and lower priority programs do require strategic effort on the part of public officials and staff, including identifying goals and using evidence-based measurements to prioritize funding allocations and ensure the effective and efficient use of resources. 

  1. Avoid redundant efforts in government services 

Civic Federation has long supported the consolidation of governmental functions and taxing bodies to eliminate duplication. Properly implemented, these efforts can yield cost savings and increase operational efficiency. 

Common pitfalls 

Some of the most pervasive pitfalls when it comes to government expenditure principles include:  

  • Filling structural budget imbalances with one-time fixes like asset sales or long-term leases, use of tax increment financing increment, fund transfers, or borrowing; 
  • Compounding liabilities due to deferred capital maintenance and costs including aging infrastructure, deteriorating facilities, and obsolete technology; 
  • Underfunding pension liabilities to provide short-term budget flexibility; and 
  • Inadequate or underfunded funds or reserves that constrain the ability to fund contingencies or emergencies. 

Examples (Chicago/regional) 

The following examples demonstrate how general expenditure principles  have been applied in Civic Federation research and commentary. 

Avoid Using Borrowing for Operations 

Government Consolidation:  

Sources (GFOA, NACSLB, etc.) 

Government Finance Officers Association: Best Practices in Expenditures 

Long-Term Financial Planning 

Align expenditures with long-term fiscal sustainability and forecast future spending needs. 

Multi-Year Capital Planning 

Prioritize capital expenditures through a comprehensive Capital Improvement Plan (CIP) that reflects community priorities and available resources. 

Capital Asset Management 

Budget for the full life-cycle costs of infrastructure, including maintenance, replacement, and rehabilitation. 

Budgeting for Results and Outcomes 

Allocate expenditures based on desired outcomes and organizational priorities rather than historical spending patterns. 

Performance Management 

Link expenditures to measurable performance indicators to improve efficiency and accountability. 

Financial Policies 

Adopt formal policies governing reserves, debt, capital funding, and recurring expenditures to promote fiscal discipline. 

Budget Monitoring and Forecasting 

Regularly monitor expenditures and update forecasts to identify emerging fiscal issues. 

Infrastructure Investment 

Make infrastructure spending part of a long-term capital strategy rather than responding to short-term needs. 

Debt Management 

Use debt strategically for long-lived capital assets and ensure repayment remains affordable. 

Operating and Capital Budget Integration 

Consider both construction costs and ongoing operating and maintenance expenses when approving capital projects. 

Priority-Based Budgeting 

Direct limited resources to programs and projects that best advance community goals and strategic priorities. 

Over reliance on borrowing:  

  1. “Civic Federation Urges Cook County Commissioners to Reject Borrowing That May Cost Taxpayers an Additional $214 Million,” 2009 
  2. “City Council Approves Major Debt Restructuring and Future Capital Borrowing,” 2015 
  3. “Chicago Transit Authority FY2018 Budget Analysis,” 2017 
  4. “City of Chicago FY2006 Budget Analysis,” 2005 

Targeted Spending Cuts: