Funding and budgeting Flashcards
Budget
The allocation and expenditure of funds to provide service to the public. A budget serves to set spending priorities.
Operating budget
includes everyday expenditures of an organization, such as supplies, personnel, and maintenance of office space.
Capital budget
Includes long-term purchases, such as a new building, recreation center, water main, or major equipment. A capital budget is a one-year budget for capital expenditures,
Capital improvements programming
scheduling of selected physical plans and facilities for a community over a certain period of time, typically 5-7 years. Permit a long range forecast of expenditures.
Line-item Budgeting
The emphasis is on projecting the budget for the next year while adding in inflationary costs. lacks flexibility and has a short-term focus. Not linked to CIP, comprehensive, or strategic -plans.
Planning, Programming, Budgeting Systems (PPBS)
PPBS is focused on planning through accomplishing goals set by a department. Focuses on already defined long term goals. Time consuming to prepare.
Zero-Base Budgeting (ZBB)
ZBB emphasizes planning and fosters understanding within all units of an organization.
Performance-based budget
Performance-based budgeting is focused on linking funding to performance measures.
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
Use a fixed source of revenue to pay back the debt. For example, revenue bonds could be issued to pay for a new water main.
Tax Increment Financing (TIF)
Allows a designated area to have tax revenue increases used for capital improvements in that area. Typically used for blighted areas.
Value capture
A group of planning tools that secure societal benefits from increases in land value that happen because of investment in public infrastructure and/or regulatory changes.
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.” The benefit is that the government does not have to borrow money to finance the acquisition of a major capital improvement.
Grants
Allow for all or a portion of the cost of a public facility to be paid for by someone other than the local government.
Taxes
Used to generate revenue to finance government and redistribute income.
Three types of taxes
- Progressive
- Proportional
- Regressive
Progressive taxes
The tax rate increases as income rises.
Proportional taxes
The tax rate is the same regardless of income.
Regressive
The tax rate decreases as income rises.
Tax incentives
Favorable change or reduction in taxes. Used in order to attract economic development. This loss of revenue is known as a tax write-off
Tax considerations - Fairness
A tax should reflect the ability to pay of those who bear its burden.
Tax considerations - 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);
Tax considerations - Convenience
A tax should be convenient to pay.
Tax considerations - Efficiency
A tax should allow collection and enforcement to be a straightforward process
Tax considerations - Productivity
A tax should provide a stable source of revenue
Tax considerations - Neutrality
A tax should not change the way a government would normally use its resources.
