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Budget Execution. 57.508-201 The Budget as a Policy, Planning and Information Tool Week 5 - Spring 2011. Budget Process. Executive and staff preparation Submission to policy body budget committee Policy deliberations, amendments and revisions Adoption Execution Evaluation Audit.

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budget execution

Budget Execution

57.508-201

The Budget as a Policy, Planning and Information Tool

Week 5 - Spring 2011

budget process
Budget Process
  • Executive and staff preparation
  • Submission to policy body budget committee
  • Policy deliberations, amendments and revisions
  • Adoption
  • Execution
  • Evaluation
  • Audit
2 submission
2. Submission
  • Draft budget with message sent to policy body
  • City council, county legislature, town board, etc.
  • Finance committee reviews budget requests
    • Sometimes invites in all department heads
    • Sometimes executive represents all requests
    • Sometimes conflicts between executive & departments
    • Politics and reality at play
3 policy deliberations
3. Policy Deliberations
  • City council or board of aldermen
  • Town council or board of selectmen
  • County legislature or board of supervisors
  • School board
  • Regional council or COG governing board
  • NGO Board of directors
4 adoption
4. Adoption
  • “Ways & Means” looks at expected revenues
  • Public hearings held
  • Fixed costs & entitlements vs. discretionary
  • Council or board members propose changes
  • Changes voted on individually
  • Consensus achieved on bottom lines
  • Full council or board adopts with amendments
budget process1
Budget Process
  • Executive and staff preparation
  • Submission to policy body budget committee
  • Policy deliberations, amendments and revisions
  • Adoption
  • Execution
  • Evaluation
  • Audit
role of the budget office
Role of the Budget Office
  • Management controls
  • Accounting system operations
  • Reviewing agency or department procedures
  • Setting rules for consultants or travel
  • Protecting against fraud & waste
  • Overseeing agency or department compliance
  • Reporting on organization performance
subsystems of budget execution
Subsystems of Budget Execution
  • Revenue Administration
  • Cash Management
  • Procurement
  • Risk Management
revenue administration
Revenue Administration
  • Taxes
    • Determining the tax
    • Applying the tax
    • Collecting the tax
    • Enforcing the law
  • Fees, sales, grants, gifts, loans, etc.
  • Investment management
cash management
Cash Management
  • Depositing revenue promptly
  • Expenditure planning
  • Paying bills promptly
  • Short term borrowing
  • Contingency funds
  • Investment planning and management
procurement
Procurement
  • System with unambiguous and precise policies
  • Centralized vs. decentralized
  • Group or contract purchasing
  • Low cost, timely delivery, quality product
  • Bid procedures, RFPs
  • Purchase vs. lease
  • Outsourcing & privatizing
  • Contract management
  • Efforts to ensure competition, public notice, etc.
  • Can further policies like…
    • MBEs & WBEs
    • Energy efficiency or environmental quality
risk management
Risk Management
  • People, property and records to protect
  • Liability, exposure to litigation
  • Faulty equipment or hazardous location
  • Identify probability of extreme events
  • Insurance vs. self-insuring
  • Premiums, awards, settlements, etc.
revenue administration1
Revenue Administration

Taxes & Fees

  • Determining the tax (fee)
  • Applying the tax (fee)
  • Collecting the tax (fee)
  • Enforcing the law

Remember the “centrality of revenue constraint”

legal basis for collecting taxes
Legal Basis for Collecting Taxes
  • Taxing powers
    • Percentage of income
    • Consumption (sales)
    • Wealth (investments & property)
  • Proprietary powers
    • Operation of enterprises yielding fees-for-service
  • Regulatory (or police) powers
    • Regulation of land use & code enforcement
    • Licensing of various professions or activities
    • Inspection and certification of food establishments
three pillars of taxation
Three Pillars of Taxation
  • Equity
  • Neutrality
  • Effective Administration
equity in theory
Equity in theory
  • Horizontal equity
  • Vertical equity

or

  • Progressive distribution
  • Proportional distribution
equity in practice
Equity in Practice
  • Benefits-received principle
    • Motor fuels taxes
    • Hotel/motel occupancy taxes
    • Property tax
  • Ability-to-pay principle
    • “From those to whom much is given, much shall be required.”
elements of a fair policies
Elements of a Fair Policies
  • Levies are benefits-based
  • No favors to special groups
  • Ease the burden on the poorest but don’t punish the wealthiest
  • Tailor tax structure to community’s age, income distribution, and preference for public services
neutrality in theory
Neutrality in Theory
  • Public goods and services
    • (education, public safety)
  • Private goods and services
    • (utilities, public transit, solid waste)
  • Merit goods
    • (municipal airport, local library)
neutrality in practice
Neutrality in Practice
  • Broader base
  • Flatter tax rates with fewer exemptions
  • Benefits-based taxes and charges
  • Smaller tax rate differentials (loopholes)
  • Carefully designed taxes on business
tips for tax reformers
Tips for Tax Reformers
  • Improving the equity and neutrality of existing taxes is better than introducing new taxes
  • Long term, increasing tax neutrality stimulates economic prosperity more than reducing tax rates
  • An equitable tax structure is the best tool for creating a favorable business environment
trends in local revenues
Trends in Local Revenues

Q: What’s been happening?

trends in local revenues1
Trends in Local Revenues
  • Devolution & downshifting
  • Greater need for financial self-sufficiency
  • More charges and fees for services
  • Increased intergovernmental competition (e.g., for new development)
  • Citizen distrust of government
  • Increased economic uncertainty
factors escalating competition
Factors Escalating Competition
  • Increased mobility of business
  • Stagnant growth, particularly in manufacturing
  • Reduction in revenue sharing
  • Greater service responsibility shifts
advantages of the property tax
Advantages of the Property Tax
  • Provides a stable source of revenue
  • Reaches nonresident property owners
  • Finances property-related services
  • Is easy to administer & difficult to evade
  • Promotes local autonomy
disadvantages of the property tax
Disadvantages of the Property Tax
  • Not horizontally or vertically equitable
  • Not progressive in distribution
  • Not based on ability-to-pay
  • Not benefits based
  • Not broad based

Q: What happens in areas of declining values?