Your city has a plan. Maybe it calls for attracting new businesses, improving downtown, investing in infrastructure, or creating more local jobs.

The council supports it. Community leaders are excited. The priorities are clear.

Then comes the question that can change the conversation: How are we going to pay for all of it?

An economic development strategic plan gives a community direction. But turning that plan into actual projects takes more than good intentions. It takes funding, coordination, financial oversight, and a clear understanding of what the city can afford, both today and several years from now.

For city managers, finance directors, and elected officials, that's where strategic planning and municipal financial management need to work together.

What Should a City Include in an Economic Development Strategic Plan?

An economic development strategic plan should identify a city's economic priorities, establish measurable goals, assign responsibilities, and outline how proposed initiatives will be funded and evaluated.

A useful plan generally addresses:

• Community priorities: What does the city want to accomplish, and why?
• Existing economic conditions: What do employment trends, local businesses, available properties, and infrastructure needs reveal?
• Specific projects: Which initiatives will help the community reach its goals?
• Funding sources: What financial resources are available, and what restrictions apply?
• Responsibilities and timelines: Who will lead each initiative, and when should milestones be reached?
• Performance measures: How will the city determine whether its efforts are working?

These questions matter whether a municipality has a dedicated economic development department, an economic development corporation (EDC), or a small administrative team handling several responsibilities.

A smaller community might focus on retaining existing businesses and improving infrastructure. A larger city may be considering industrial development, commercial corridors, and several incentive agreements at once.

Either way, a plan needs to reflect the community's actual financial and administrative capacity.

How Do Municipalities Fund Economic Development Projects?

Municipalities may fund economic development through legally available local revenues, dedicated economic development taxes, grants, bonds, and partnerships. The appropriate source depends on the project, state law, local financial policies, and any restrictions attached to the funding.

In Texas, for example, eligible Type A and Type B economic development corporations may use dedicated sales tax revenues for authorized projects. Cities may also use certain economic development incentive programs under Chapter 380 of the Texas Local Government Code.

Other communities may rely on capital improvement budgets, state or federal funding, or agreements with private organizations.

But identifying a possible funding source is different from having money available to spend.

Consider a city planning infrastructure improvements to support a new commercial development.

The project may involve road construction, utility extensions, engineering services, and ongoing maintenance. Some expenses occur immediately. Others may not appear until future fiscal years.

Before approving the project, city leaders need to understand the complete financial picture.

What funding is legally available? How much has already been committed? Will the city need additional appropriations? And what recurring expenses could follow construction?

A project that appears affordable in the first year may create financial obligations that extend well beyond the original budget.

How Can Cities Connect Economic Development Goals to Their Annual Budgets?

Cities can connect economic development goals to annual budgets by translating strategic priorities into funded projects, identifying responsible departments, establishing spending timelines, and reviewing financial progress throughout the year.

The challenge is that strategic plans and municipal budgets often operate on different schedules.

An economic development plan may cover five years, while the city adopts a new operating budget annually.

That means priorities established today must compete with future needs such as public safety, utilities, road maintenance, employee compensation, and equipment replacement.

For example, suppose a city approves a downtown improvement initiative that will take three years to complete.

The first year's budget covers engineering and planning. The second year includes construction. The third year may involve additional improvements and maintenance.

Without a clear connection between the strategic plan and the city's financial records, it becomes harder to see how much has been approved, spent, and committed across multiple budget cycles.

This is where regular budget reviews become valuable.

Rather than waiting until the next annual planning session, finance directors and city managers can compare actual spending against approved budgets, review available funding, and identify changes that may affect project schedules.

The goal isn't to make the budget control every economic development decision. It's to make sure decisions are based on accurate financial information.

What Financial Information Should City Leaders Track During Economic Development Projects?

City leaders should track approved budgets, actual expenditures, outstanding commitments, available balances, funding sources, and projected future costs. Together, these figures help determine whether a project remains financially sustainable.

A project can appear to be under budget even when much of its remaining funding has already been committed.

Consider a hypothetical infrastructure project with a $500,000 approved budget.

The city has spent $200,000, but it also has $250,000 in outstanding purchase orders and contractual commitments.

Looking only at expenditures, someone might assume $300,000 remains available.

In reality, only $50,000 remains uncommitted, assuming all those commitments are valid charges against the same budget.

That's a significant difference when council members are considering additional work.

For municipal finance teams, several figures deserve regular attention:

• Budgeted: The amount authorized for the project.
• Actual: Expenses already recorded.
• Committed: Outstanding purchase orders or other obligations not yet reflected in actual expenditures.
• Available: The remaining budget after applicable expenditures and commitments.
• Projected: Estimated future expenses, including costs extending into subsequent fiscal years.

Clear reporting helps administrators identify potential funding concerns before they become larger problems.

It also makes council discussions more productive. Instead of asking staff to reconcile several spreadsheets, elected officials can focus on what the financial information means for the project.

How Do Cities Track Economic Development Agreements and Financial Commitments?

Cities should maintain a reliable record of economic development agreements, including approved incentive amounts, payment conditions, performance requirements, deadlines, and remaining financial obligations.

These agreements can become particularly difficult to manage when multiple departments or organizations are involved.

In Texas, Chapter 380 agreements may provide authorized economic development incentives to encourage business activity and investment.

Depending on the agreement, a city may need to monitor project milestones, investment requirements, employment commitments, or scheduled payments.

Texas also requires applicable Chapter 380 and Chapter 381 agreements to be reported to the Comptroller's Local Development Agreement Database. Agreements entered into, amended, or renewed after January 1, 2022, generally must be reported within 14 days.

The reporting requirement is one reason accurate agreement records matter, but it's far from the only one.

Consider what happens when an agreement was approved three years ago and a payment request arrives today.

Can staff quickly determine the original terms? Has the business met its obligations? Was the payment anticipated in the current budget? Which funding source applies?

Those answers may involve the economic development office, finance department, city manager, and legal counsel.

A documented process for reviewing agreements and reconciling financial commitments can help prevent confusion when personnel change or projects span several years.

Financial systems can support the accounting side of this work, while agreement records and compliance reviews may still require separate administrative processes.

How Can Municipal Financial Management Software Support Economic Development Planning?

Municipal financial management software can support economic development planning by helping cities organize fund accounting, manage budgets, record expenditures, and produce financial reports used to evaluate projects.

The software doesn't create the city's economic development strategy. City leaders still establish priorities, evaluate proposals, and decide which investments serve their community.

What financial management software can provide is better access to the numbers behind those decisions.

For example, a finance director may need to review spending across several funds, compare budgeted amounts with actual expenditures, or prepare financial information for an upcoming council meeting.

When those records are spread across disconnected spreadsheets and accounting processes, preparing a complete picture can take additional time.

SmartFusion brings municipal fund accounting, budgeting, and financial reporting together in one system.

For finance teams supporting economic development initiatives, having these financial records available through a shared system can make it easier to review spending, prepare reports, and answer questions about municipal resources.

Of course, no accounting system replaces sound financial policies, proper approvals, or regular communication between departments.

Those responsibilities remain with city leadership and staff.

From Strategic Priorities to Financial Accountability

An economic development strategic plan should be more than a document that gets approved, published, and revisited several years later.

It should help guide decisions throughout the life of a project.

That means checking whether priorities still make sense, whether funding remains available, and whether actual results support the original goals.

A city may discover that an infrastructure project costs more than anticipated. A business recruitment initiative may take longer than expected. A grant opportunity may change which projects can move forward.

Plans should be flexible enough to respond to those changes.

But flexibility works best when city leaders have dependable financial information.

Before the next economic development planning meeting, consider asking one simple question:

If someone asked us today what we've spent, what we've committed, and what remains available for our economic development priorities, how quickly could we answer?

The answer may tell you as much about your city's readiness as the strategic plan itself.

Can Your Financial System Keep Up With Your City's Plans?

A strong economic development plan needs reliable financial information behind it.

SmartFusion helps local governments manage fund accounting, budgeting, and financial reporting, giving municipal finance teams a clearer picture of the financial activity supporting their communities.

Wondering whether SmartFusion might be a good fit for your city?

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