AICP management Flashcards
Revenue Bond
•Revenue Bonds: commonly used for projects that generate revenue, these bonds are paid back through the money generated from the new service or project built using the funds from the bond. They are not supported by the full taxing power of the jurisdiction so these bonds do not need to be approved by the voters.
Capital Budget
A Capital Budget is slightly more complex in that it includes long-term capital expenditures such as major infrastructure projects or new buildings. Capital budgets make up the first year of fiscal programming for a Capital Improvements Program (CIP) which is typically a five to ten year plan of the capital needs of a jurisdiction. CIPs set the timelines and funding sources for major infrastructure projects based on the project long-term demand for physical improvements. An important distinction between a capital budget and capital improvement plan is that a capital improvement plan typically has no legal standing whereas a one-year capital budget can become part of a jurisdictions legally adopted annual operating budget
Line Item Budgets vs Performance Budgets
A line-item budget simply lists individual expense categories like salaries, rent, and office supplies, detailing how each dollar will be spent, while a performance budget focuses on the results achieved with that spending, measuring outcomes like customer satisfaction or reduced costs, essentially showing what each dollar will accomplish rather than just where it goes; making performance budgets more focused on achieving organizational goals and less on just managing expenses.
Key Differences:
Focus:
Line-item budgets focus on the specific cost of each expense category, while performance budgets focus on the results or outcomes achieved with those expenditures.
Information Provided:
A line-item budget provides a detailed breakdown of expenses, but lacks information on the effectiveness of those expenditures in achieving organizational goals. A performance budget includes performance indicators to measure the impact of spending on desired outcomes.
Evaluation:
With a line-item budget, evaluation is primarily based on whether spending stays within the allocated budget for each category. Performance budgets allow for evaluation based on how well the organization is achieving its goals relative to the allocated funds.
Lease-purchase
An agreement that agencies and departments can enter that allows them to “rent-to-own” major capital improvements typically built by a private entity, avoiding the need to borrow money to finance said improvement
Operating Budget
An Operating Budget is the most straight forward type of budget and includes all of the things needed to keep a business or government organization running. This includes everyday expenditures such as personnel salaries, supplies, equipment, software/ licenses, and maintenance of office space.
User Fees
are fees assessed on users of public facilities for their use of such facilities, such as utility payments.
Impact Fees
Collected when building permits are issued, used to fund capital facilities from new development (earmarked by purpose and can’t be used just anywhere)
Revenue Bonds
commonly used for projects that generate revenue, these bonds are paid back through the money generated from the new service or project built using the funds from the bond. They are not supported by the full taxing power of the jurisdiction so these bonds do not need to be approved by the voters
Current Revenues
Current Revenues: while it is not technically a financing method, current revenues can be defined as the money raised through traditional taxing efforts
Budgeting Process §
Financial Analysis and Policy Choices § Expenditure Estimates § Review of Expenditure Estimates § Revenue Estimates § Budgeting Forecasting § Budget Document § Budget Review and Adoption § Budget Execution
Fiscal Impact Analysis
Fiscal Impact Analysis is a tool used to measure the revenues and costs to be incurred by a local entity if a potential project or policy change were to be implemented. For example, a new residential development in a given town will require additional services for the new residents such as new utility lines, emergency services, additional road infrastructure, and transit service. These additional services provided to the new residents are calculated as a cost to the town. The revenue that the potential development would provide is calculated from the additional local and property tax revenues the town would receive from the additional residents. While the analysis allows for the net fiscal impact of a development or proposed policy change to be determined, critics claim that it often times does not fully represent the benefits and impacts a project may have. In its most basic form, fiscal impact analyses fail to recognize qualitative benefits of projects or policy changes. This occurs most frequently with affordable housing projects as they may result in a negative fiscal impact according to analysis but it does not take into account the intrinsic benefits of providing quality, affordable housing options to those who did not previously have it. Standard fiscal impact analysis methods also do not account for the extended benefit of new service beyond the proposed development for which they are being provided. For example, if a new transit line is implemented to serve a new mixed-use development, other people in that city will benefit from having this new option.
Economic Analysis
Floor Area Ratio (FAR) – floor space/lot size; Location Quotient (LQ); Economic Base Multiplier; Fiscal Impact Analyses; Net Present Value (monetary benefits outweigh costs); Benefit-Cost Analysis (used to compare alternatives); Fiscal Impact (such as Per Capita Multiplier Method)
Concurrence
growth model to control timing of development by linking approvals to Capital Improvement Plan (CIP). Requires infrastructure is available at specified level of service before development approvals are issues. Florida requires adequate infrastructure is either in place or will be soon
Exactions
Improvement or dedication of land, Fees in lieu, Impact fees
Line Item Budgeting
ine-item Budgeting: as one of the most simple methods for budgeting, lineitem budgeting is easy to prepare and understand. In this method, expenses are separated into different groupings such as personnel related expenditures or supplies, with emphasis being placed on projected expenditures for the following year. The disadvantages of this method include its short-term horizon and a lack of connection to other major plans such as a CIP or comprehensive plan, creating a disconnect between the budget and the identified objectives of an agency.
Special Assessment
occur when a geographic area is designated and then assessed a special tax to fund an identified project or improvement that will only benefit the residents within the specific area
Grants
often issued through grant programs, grants are money that is issued to a recipient that have specific conditions or guidelines that must be followed while spending the money but there is no expectation that the recipient will return the money. Grants are available to all levels of government but they usually require matching funds from the receiving agency.
Performance Based Budget
Performance-based budget: focuses on tying funding availability for projects and programs to set performance or evaluation measures. For example, improved performance for a certain activity or program will result in increased funding availability, especially if specific goals are met. This helps incentivize performance across a department and encourages the use of evaluation metrics. The downside of this method is that it is often complicated to prepare and it conveys an organization’s goals as quantitative evaluation metrics without incorporating quantitative results such as the improvement of quality of life for residents. Performance-based budgeting also requires a significant amount of data to complete, as it is necessary to include performance data on employee productivity and project outputs for all of the efforts across an organization. In the book The Practice of Local Government Planning, commonly referred to as “The Green Bible” and further detailed in our Significant People and Books in Planning resource, three types of performance-based budgeting are identified: Planning Programing Budgetary System (PPBS), Zero-Based Budgeting (ZBB), and the Dayton System.
Planning and Programming Budgetary System
Planning, Programming, Budgeting Systems (PPBS): is a budgeting method that is most similar to the standard performance-based method in that it focuses on funding allocation for programs and projects that work towards accomplishing the goals set forth by the agency. While this method allows for an evaluation of a programs performance in achieving departmental goals, it is a method that is not commonly used because it is difficult to prepare and requires significant data.
Funding from federal government for communities
requires a consolidated plan - through collaborative process where community members set vision for development. Should also account for local assets in coordinated manner that considers economic and physical development. Plan must- identify housing, homeless and community development needs- establish priorities and strategies to address planConsolidated because consolidated application between different grants and housing programs
Reserve Funds
Reserve Funds: these are funds that have been saved for the purpose of purchasing capital improvements that either cannot be accommodated in the current budget or for emergency purposes
Special Assessment
Special Assessments: occur when a geographic area is designated and then assessed a special tax to fund an identified project or improvement that will only benefit the residents within the specific area.
Tax Increment Financing
Tax Increment Financing (TIF) is a program that allows local governments to fund development projects in specific areas. TIF uses increased property taxes from the developed area to pay off the project’s costs.
How it works
A local government designates an area as a Tax Increment Reinvestment Zone (TIRZ)
The government issues bonds to fund the project
The government collects property taxes from the area
The increased property taxes are used to pay off the bonds and fund the project
Why it’s used
TIF can help revitalize areas that are unsafe, economically stagnant, or poorly planned
TIF can encourage private investment in an area
TIF can help create jobs and spur economic growth
Tax Increment FInancing
Tax Increment Financing (TIF): this financing method involves using revenue earned from increased tax on a specific area within a jurisdiction that has been redeveloped to pay back the bond used to finance capital improvements made in the designated area. This method is used to improve areas with significant blight through targeted infrastructure improvements that eventually spur redevelopment in the area. As the property values in the area increases, the property tax applied to the area is reassessed which results in additional revenue to the jurisdiction which must be used to pay back the bonds used to finance the initial improvements
Dayton System (Problem Strategies)
The Dayton System: is a combination of PBBS and ZBB, and is more commonly used than either, especially by larger jurisdictions. This simplified method involves listing an agency’s programs as rows on a budgeting spreadsheet that also includes various columns that identify program characteristics, such as the allocated funding for the program from previous years, the required staff time, and the proposed funding allocation for the current reporting period
Concurrency
the timely provision of public facilities and services relative to the demand for them. To maintain concurrency means that adequate public facilities are in place to serve new development as it occurs or within a specified time period
Tax Increment FInancing
this financing method involves using revenue earned from increased tax on a specific area within a jurisdiction that has been redeveloped to pay back the bond used to finance capital improvements made in the designated area. This method is used to improve areas with significant blight through targeted infrastructure improvements that eventually spur redevelopment in the area. As the property values in the area increases, the property tax applied to the area is reassessed which results in additional revenue to the jurisdiction which must be used to pay back the bonds used to finance the initial improvements
General Obligation Bonds
this method uses the tax revenue generated by the jurisdiction to pay back voter-approved bonds taken out for major capital improvements
Special Tax District
This type of public financing delineates a geographic area and then assesses a special tax to be used only in the area
Zero Base Budgeting
Zero-Base Budgeting (ZBB): this budgeting method requires the justification of all expenses for a reporting period, essentially starting from “zero” each time the budget is prepared. This requires a re-evaluation of programs on a regular basis to understand their effectiveness. It also allows organizations to analyze the outputs and costs for every effort they complete, resulting in a budget that focuses on programs that make the entire organization more efficient. A component of this budgeting method includes the compilation of decision package for each program that summarize the impact on an organization’s goals if a program were to receive low, medium, or high funding during that period.
Budgets & Financing – Public Financing Tools
v Special Taxing Authorities v Special assessments v User fees v Tax Increment Financing
Budget and Finance Options
Current revenues – cash Revenue funds/Fees vState and Federal grants Revenue bonds General obligation bonds
