The noted council directive speaks to two main components of the desired budget process: A Zero Based Budget component and a Participatory component. These are discussed individually below.

Zero-Based Budgeting (ZBB)

DEFINITION: Zero-Based Budgeting (ZBB): is a method of budgeting in which all expenses must be justified and approved for each new period. Developed in the 1970s, zero-based budgeting starts from a "zero base" at the beginning of every budget period, analyzing needs and costs of every function within an organization and allocating funds accordingly, regardless of how much money has previously been budgeted to any given line item.

True Zero Based Budgeting for the City would therefore necessitate establishing a zero budget to start for each service. Every service would then need to be considered by Council to determine whether the service should remain, and if so, at what desired service level. The desired service level would then be costed in order to develop an appropriate budget. It should be noted that such service levels are not established for all City services at this time. Should Council wish to pursue this method, all service levels would need to be defined and budgets would need to be built based on those desired service levels. This in and of itself would be an extremely large and time intensive exercise consuming scarce operational and financial staffing resources. There is no presumption that a ZBB process would lower or increase costs service delivery costs. It could be either, depending on the service levels eventually chosen by Council.

The City of Windsor nominally attempted zero based budgeting during the 2005 budget process with the intent of phasing-in all City of Windsor departments based on a 3-year schedule that included one third of the departments per year until the entire Corporation had been through the exercise. Given the many challenges faced that year and the criticism that true zero based budgeting was not being followed, the process was adjusted in 2006 and the Corporation attempted what was called a “modified zero based budgeting” process, whereby the targeted departments underwent a review during the development of their budget but costing of services was not developed from scratch. Even this modified approach proved to be challenging and impractical to the point that the remaining departments did not participate in the process in subsequent years as Council ended the experiment.

It is extremely important to recognize that even under the best of circumstances, a zero based budget process may not be feasible for a municipality of our size and complexity. Although this was nominally attempted in 2005 and 2006, it was never met with any level of success. Based on administration’s research ZBB seems to have very rarely been used by governments over the years. Administration is unaware of any other municipality that follows this process at the current time.

In the municipal environment there is a general misunderstanding of what true ZBB really represents. Often times it is misunderstood and associated with or perceived as any process that brings forth a zero percentage increase in the property tax levy year over year. Sometimes ZBB is confused with a budget process that entails a line by line review of budgets by Council or Committees of Council.