Budgets Flashcards
Budget
Allocation and expenditure of funds to provide service to the public. A budget serves to set spending priorities.
Operating Budget
Everyday expenditures of an organization, such as supplies, personnel, and maintenance of office space.
Capital Budget
One-year budget that includes long-term purchases, such as a new building, recreation center, water main, or major equipment.
Capital Improvements Program
CIP - longer range (5-7 years) look at the capital needs of a community. A CIP includes project descriptions, estimated costs, construction timelines, and sources of funding.
5 reasons for budgeting
1) Allocate resources 2) Financial control for assuring resources are spent by correct agency 3) Management control to improve efficiency 4) Communicate priorities 5) Planning revenues and expenses
Line-Item Budgeting
Standard budget. Easy to implement, but does not have an evaluation component and is not flexible
Planning, Programming, and Budgeting System (PPBS)
PPBS has budgets by program area, long-range goals, and policy/cost benefit analysis. Like a 5 year Con Plan. The advantage of this method is that it helps departments place their programs in perspective and evaluate efforts and accomplishments. The disadvantage is that it is time-consuming to prepare and requires that goals and objectives be stated in measurable terms.
Zero-Base Budgeting
All departments start from 0 and give decision packages to justify funding. Has regular evaluation and ranking of projects. The advantage of this method is that it requires a department to consider every aspect of its operation and concentrate on why it does things the way it does. This is also a disadvantage because it is time-consuming to justify every activity.
Performance-Based Budget
Performance-based budgeting uses traditional budget but adds in performance, either by outcomes or evaluation. For example, funding could be tied to the amount of time it takes to process plat applications or building permits. Meeting performance goals results in funding increases. The advantage of this method is that it helps departments develop and evaluate performance standards.
Pay-As-You-Go
uses current funds to pay for capital improvement projects
Reserve Funds
Funds that have been saved for the purchase of future capital improvements
General Obligation Bonds
Voter-approved bonds for capital improvements. GO Bonds use the tax revenue of the government to pay back the debt
Revenue Bonds
Fixed source of revenue to pay back the debt. For example, revenue bonds could be issued to pay for a new water main. The debt would be paid back through the water use fees. Revenue bonds are commonly used to finance utility improvements and special facilities, such as baseball stadiums.
Special Assessments
Allows a particular group of people to assess the cost of a public improvement.
Lease-Purchase
Allows a government to “rent-to-own.”
Three Tax Types
Progressive - The tax rate increases as income rises. For example, the federal income tax system taxes those with high incomes a higher tax rate than those with low incomes;
Proportional - The tax rate is the same regardless of income. For example, a property tax rate is the same regardless of the price of your home. A person who owns a $50,000 home pays the same proportion as a person who owns a $250,000 home;
Regressive - The tax rate decreases as income rises.
6 Criteria to consider when Taxing
- Fairness - A tax should reflect the ability to pay of those who bear its burden. Those who are poor, for instance, should not have to pay a lot in taxes;
- Certainty - A tax should be fairly applied (i.e., I know that every time I go to purchase a gallon of milk that I will be taxed at the same rate);
- Convenience - A tax should be convenient to pay. For example, vehicle registration taxes are mailed to vehicle owners’ homes;
- Efficiency - A tax should allow collection and enforcement to be a straightforward process;
- Productivity - A tax should provide a stable source of revenue;
- Neutrality - A tax should not change the way a government would normally use its resources.
Structural Chart
Org chart showing basic relationships between departments of an organization
Functional Chart
Structural org chart with added descriptions of specialized work done by segments of the organization. Functions common to all departments aren’t included.
Position of Personnel Chart
Org chart that gives a person’s exact job title
Flow or Process Chart
Not an org chart. Instead, a series of steps in the process.
