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Funding and Budgeti
Plan Implementation, Funding and Budgeting, AICP Nov 2022 Test
| Term | Definition |
|---|---|
| Budget | allocation and expenditure of funds to provide a service to the public |
| Two types of budget | 1. Operating Budget - incl everyday org expenditures (supplies, personnel and maint of office space) 2. capital budget - 1 year budget w long term purchases (new bldg, recreation center, water main or major equipment.) |
| Capital Improvement Programming or Planning | Local gvmt officials schedule and program physical plans and facilities of a community over a certain period of time. long range forecast of 5-7 years. Some require public approval. |
| Capital Improvement Programming Process | 1. Budget Development, 2. Citizen Engagement, 3. Budget Adoption 4. Budget Communication |
| Capital Improvement Program Components | 1. Prioritized list of projects, equip and major studies, 2. Cost estimate and operation and maint for each project, 3. Funding sources, 4. Financing plan, 5. Project Descriptions 6. Nomination and Evaluation Process |
| Three finance types | 1. debt issuance/ financing, 2. pay as you go (includes grants) 3. public-private partnerships |
| Pay as you go (cash on hand) | Pros: future funds are not tied up in servicing debt payments, interest savings can be put toward other projects, greater budget trans. Cons: Long wait time for new infra, large projects might exhaust budget, inflation risk |
| Debt Issuance/ Financing | Pros: Infra is delivered when needed, spreads cost over useful life of asset, increase capacity to invest. Cons: Potentially high borrowing rate, debt payments limit future budget flexibility, diminishes choices of future |
| Public Private Partnership | Pros: risk transfer, accelerated project delivery, external funding, lower operating costs, higher revenues. Cons: loss of operational control, changes in scope or perf can delay project. |
| Line item budgeting | emphasis is on projecting the budget for the next year while adding inflationary costs. short term focused. lack of flexibility with budget requests and org objectives. not linked with future plans |
| Planning, Programming, Budgeting Systems (PPBS) | Planning through goals set by each department. helps quantify programs and evaluate accomplishments. time-consuming and requires measurable goals (number of permits issued). has limited success |
| Zero Based Budgeting (ZBB) | Requires depts to consider every aspect of its operation and justify the "why". Time consuming to justify every activity. Agency prepares decision packages w low, medium high funding for CC to approve. has limited success w no benefit to mgr |
| Performance Based Budget | Focused on linking funding to performance measures. Meeting performance goals results in funding increases. (funding could be tied to amt of time it takes to process plat or bldg permit). Might miss that customer satisfaction is more important |
| Finance for Major Capital Expenses | 1. Pay as you go - uses cash to pay for CIP 2. Reserve funds - setaside $ for future CIP 3. General Obligation Bonds - voter-approved bonds for CIP. Use tax revenue to pay debt 4. Revenue Bonds (enterprise funds) - fixed source to pay back bond |
| Tax Increment Financing (TIF) | Allows designated area to have tax revenue increases used for CIP in that area, usually in a blight area. Increase of property value leads to increased tax revenue. |
| Value Capture | Increases in land value bc of investment in public infrastructure or reg changes can fund societal benefits (provide capital for transit investments to revitalize specific urban districts). |
| Special Assessments | Allows a particular group of people to assess the cost of a public improvement of a general service (corba lights) or customized service. (ornament lights at the expense of the homeowners) |
| Lease-Purchase | Allows gvmt to "rent to own" |
| Grants | Allows all or portion to be paid by someone other than the local gvmt. Usually require a match from the local gvmt. |
| Three types of Taxes | 1. Progressive - tax rate increase as income rises (higher income equal higher tax rate, lower income, lower tax rate) 2. Proportional - tax rate is the same regardless of income (property tax of 2.5) 3. Regressive - tax rate decreases as income rises. |
| Tax write-off | Loss of revenue. Gvmts offer tax incentives to attract economic development. |
| Considerations for Applying Taxes | 1. Fairness - adjustment for income 2. Certainty - fairly applied each time 3. Convenience - mail or pay online 4. Efficiency - clear collect and enf rules 5. Productivity - stable source of rev 6. Neutrality - not change the way a gvmt uses res |
| Cost revenue analysis | Determines the full cost of delivering a service or group of services. Could be used for economic feasibility of annexing various types of land uses into a city. Use operating costs compared to the tax yields |
Created by:
cristinemshoff
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