Chapter 6 – working with the budget

Question 1

An annual ………… is a local government single most important financial responsibility.

Answer 1

Budget

Question 2

The ……… is where an organization allocate its resources to accomplish its vision and carry out agreed-upon strategic priorities.

Answer 2

Budget

Question 3

In most local governments, the budget ultimately determines the level of……….

Answer 3

Taxation

Question 4

The local government budget serves three important functions:

Answer 4

• Control
• Management
• Planning

Question 5

Most local governments have two separate budgets, which are the …….budget and the ……budget

Answer 5

Operating budget

Capital budget

Question 6

This budget is the local governments plan for allocating resources for personnel, supplies, equipment, and operation of facilities during a fiscal year.

Answer 6

Operating budget

Question 7

This budget covers revenue sources and planned expenditures for non-recurring, multi year items such as construction, equipment acquisition, or improvement of public facilities.

Answer 7

Capital budget

Question 8

Of the operating budget, the most traditional budget format and is often used by smaller governments, which provides a clear explanation of what will be purchased with tax revenues, offer a strong central control over department expenditures, and helps elected officials compare the new budget with previous budgets.

Answer 8

A line item budget

Question 9

Generally there are two broad expenditure categories in a line item budget:

Answer 9

Salaries

Other expenses

Question 10

This budget format shows the purposes for which money will be spent, focusing on program goals and outcomes rather than expense categories such as salaries and supplies.

Used by many large-and medium size local governments

Answer 10

Program budget

Question 11

This budget formats focus is on what the local government will do during the fiscal year rather than what it will buy

Answer 11

Performance budget

Question 12

Performance measurement involves collecting data in a systematic and objective way to determine the efficiency and effectiveness of service delivery.

Performance measures generally fall into these categories:

Answer 12

• inputs: Resources required to accomplish an activity
• Outputs: Quantitative measures of what the activity produces
• outcomes: Impact Or results of the activity focusing on service quality
• Efficiency: Cost per unit of output and outcomes
• effectiveness: Quality of the work performed

Question 13

A multi year plan for financing major equipment or infrastructure improvements including new budgets, additions, or improvements; new roads or bridges; a sewer expansion; or new information technology equipment that will be used for several years.

Answer 13

Capital improvement plan

CIP

Question 14

The ……….budget, developed in conjunction with the annual budget, explains the spending plan for one year of the CIP and its impact on the current fiscal year.

Answer 14

Capital budget

Question 15

Major components of a local government budget include:

Answer 15

-The budget message

Communicating to citizens, the governing body, and the media the major elements of the budget

-Revenue estimates

 Showing both resources and total amount of projected revenues necessary to fund government operations

-Program expenditures

 Showing where the money is being spent and for what purposes

Question 16

The six steps in the budget process:

Answer 16

1. Budget planning
2. Department budget preparation
3. Internal budget review
4. External budget review
5. Implementation
6. Plan for next year