1. As a consultant for a citizens’ association, you have been asked to determine

Question

1. As a consultant for a citizens’ association, you have been asked to determine whether there have been significant changes in the way the city acquires and spends its resources. Prepare a schedule in which you compare the mix of revenues and of expenditures of 2014 with that of 2015. Note and comment on any items that might distort a straightforward comparison of revenues and expenditures.
2. Comment on any changes between the two years that you consider significant.
3. Expenditures for debt service increased significantly. What are the most likely reasons for the increase? Is it necessarily a sign of increased financial stress?

2014 2015 9 (amounts in thousands) Revenues Sales and use taxes General property taxes Other taxes Charges for services Intergovernmental Proceeds from bonds $41,941 9,501 9,673 5,004 10,114 $18,750 4,900 3,756 2,524 6,840 and notes Other Total revenues 8,246 $84,479 16,330 5,692 $58,792 Expenditures General government and administration Public safety $10,222 17,466 16,472 $ 3,975 10,786 7,499 Public works Housing and human Culture and recreation Acquisition of real estate 6,195 16,764 4,093 9,016 services 11,706 2,886 and open spaces Debt service Other Total expenditures 11,315 10,816 2,323 $91,573 $49,961

Explanation / Answer

1. The following schedule shows the revenues and expenditures as percentages of total revenues or expenditures:

2014

%

2015

%

Revenues:

Sales and use taxes

$41941

49.65%

$18750

31.89%

General property and taxes

$9501

11.25%

$4900

8.33%

Other taxes

$9673

11.45%

$3756

6.39%

Charges for services

$5004

5.92%

$2524

4.29%

Intergovernmental

$10114

11.97%

$6840

11.63%

Proceeds from bonds and notes

16330

27.78%

Others

$8246

9.76%

$5692

9.68%

Total revenues

$84479

100%

$58792

100%

Expenditures:

general govt and admisnistration

10222

11.16%

3975

7.95%

public safety

17466

19.07%

10786

21.58%

public works

16472

17.98%

7499

15.00%

housing and human services

6195

6.76%

4093

8.19%

culture and recreation

16764

18.30%

9016

18.05%

acquisition of real estate and open spaces

11315

12.35%

11706

23.43%

debt service

10816

11.81%

2886

5.78%

other

2323

2.53%

-

total

91573

49961

With the adjustment, sales and use taxes increases but it is offset by the decrease in intergovernmental revenues and other revenues. Generally intergovernmental revenues are considered to be less reliable than the revenues from government own sources.

2. Expenditures like the general government and administration and debt service are the ones that changed a great deal whereas purchase of real estate and open spaces remained constant. Increase in government and administration may be an indication of decreased productivity. Outlay for the purchase of real estate and open spaces is the expenditure type that fluctuates from year to year.

3. Increase in debt service is likely to increase in outstanding debt. Increase in debt related to revenue should be concerned and the reason for the needs to be discerned. It is not necessarily an indication of increased financial stress. Growing communities assume the additional debt to expand the infrastructure.

Particulars

2014

%

2015

%

Revenues:

Sales and use taxes

$41941

49.65%

$18750

31.89%

General property and taxes

$9501

11.25%

$4900

8.33%

Other taxes

$9673

11.45%

$3756

6.39%

Charges for services

$5004

5.92%

$2524

4.29%

Intergovernmental

$10114

11.97%

$6840

11.63%

Proceeds from bonds and notes

16330

27.78%

Others

$8246

9.76%

$5692

9.68%

Total revenues

$84479

100%

$58792

100%

Expenditures:

general govt and admisnistration

10222

11.16%

3975

7.95%

public safety

17466

19.07%

10786

21.58%

public works

16472

17.98%

7499

15.00%

housing and human services

6195

6.76%

4093

8.19%

culture and recreation

16764

18.30%

9016

18.05%

acquisition of real estate and open spaces

11315

12.35%

11706

23.43%

debt service

10816

11.81%

2886

5.78%

other

2323

2.53%

-

total

91573

100%

49961

100%

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