Budget plan is a quantitative expression of planned income and expenses for a given financial year. A budget contains an estimated projected expenses and revenue for a financial year. A budget also reveals the estimated costs, expenses, liabilities and assets and the cash flows for a fiscal year. Syracuse is an historic city based in Sicily, and the city budget for 2011-2012 fiscal years is to achieve a balanced between the expenditures and the revenues.
Objective of this report is to present the analysis of Syracuse budget. The Syracuse budget contains the detailed operating financial data that consist of the revenue and expenditure for a financial year. The budget analysis contains the evaluation of the strengths and weakness of the 2011/2012 operating budget document of Syracuse city. Moreover, the report will contain the evaluation of capital budget as well as recommendations for the improvement of the budget process and public presentation.
Strengths and Weakness of 2011-2012 Syracuse Operating Budget Document
Operating budget is an organizational planned revenues and expenses over a given fiscal year, and the operating budget includes the projected expenses, and revenues. In controlled term, an operating budget expresses the standard that an organization aims to achieve from the annual revenues and expenses, and this assists the management to compare the actual operating data with the projected revenue and expenses. Syracuse City developed the annual operating budget for the 2011-2012 before starting the fiscal year, and the Syracuse City 2011-2012 budget consists of financial data that reveal the method the City will raise revenue for the fiscal year and the strategy that the City will employ to implement the expenses for the fiscal year.
Overview of the Syracuse 2011-2012 budget reveals its operating budget has several strengths. One of the strengths of the City operating budget is that it assists the City to set the performances standard for which the City attempts to achieve for the 2011-2012 fiscal year. Moreover, the operating budget assists the City management to consider the alternative plan in order to achieve better goals for the City's objectives. With the operating budget, the City management has been able to devise a strategy to increase the revenue for the 2011-2012 fiscal year. The operating budget for the year also assists the City to devise a strategy to reduce expenses for the given year. Thus, the operating budget assists the City management to set performance standard to meet the budget objectives. Thus, the budget has also assisted the City to control the budget process by comparing the budget plan with the actual results. By evaluating the efforts of the past budget, the City has been able to implement the corrective action to improve on the revenues that the City will realize for the given fiscal year as well as reducing expenses for the fiscal year. (Raymond Schmidgall, Hayes, et al. 2003).
Overview of the 2011-2012 Syracuse budgets reveals that the budget consists of the projected revenue and expenditures. Thus, the report reveals the strategy the Syracuse employ to generate revenue to enhance greater understanding on strengths of the City operating budget for the year.
The strength of the Syracuse City budget shows the strategy the City employs to generate revenue for the given year. The major sources of revenues for the city consist of:
The city revenue consists of $10.8 million from sale tax based on the new tax distribution formula. Moreover, the aim is to receive $13 Million from City's reserve in order to stabilize taxes. Part of the revenue is from $1.5 million Federal reimbursement from ERRP (Retirement Reinsurance Program). More importantly, the aim is to maintain an inter-fund $4 Million transfer from Water, Aviation and Sewer Funds. Moreover, the city aims to receive $400,000 from parking meters. (The table 1 and table 2 present the City revenue and expenditure for 2011-2012 budget).
Part of the strengths of the operating budget is by revealing the strategy the City generates special funds. Special funds are another source of revenue for the City. The special funds refer to the funds the City gets from certain departments that are performing extraordinarily than others. In the 2011-2012 budgets, the City does not increase the rates of water and sewer because the City believes that current revenue generated from water and sewer is sufficient. (The table 1 and table 2 consist of the City revenue and expenditure for 2011-2012 budgets).
More importantly, the budget reveals the revenue generated from aviation funds. The revenue that the City generates from Aviation fund is on a break-even basis because the projected revenue is equal to the projected expenses. Moreover, the city operating budget shows that there will be no changes in the Crouse Marshall assessment and Special Committee will be on the same funding level.
Part of the operating budget also shows the method the City generates fund for the City School District. The City places more emphasizes to the growth of younger generation. Thus, the City lays more important to the school district. In the 2011 and 2012 budget, the Board of Education requested for the fund totalled 331.7 Million; however, the City provided the nominal increase to the fund requested to $334.1 Million based on the following pleas:
A cut of 14% of overall staff or a reduction of 500 of the existing positions.
Total closure of Bellevue Middle School.
Adopt early retirement incentive to minimize layoffs,
Request for a wage freeze coming from all bargaining units,
Full implementation of education in the entire city with the goal of" say yes to education."
The City operating budget also reveals the method City implements its operating expenses. The city 2010/2012 budget is approximately $617.8 Million with an increase of $5 million yearly. The fringe benefits and employee wages are far the most important expenditure in the 2011/2012 budget expenditures. Major growth in the expenditure is the increase in the retiree and employee costs for health insurance. There is also an increase in the expenditure on employee's pensions, which are the key costs driver in the 2011/2012 plan. Thus, the City needs to reduce expenditure in the 2011/2012 budget plan.
The anticipated expenditure includes:
$0 for allowance for the increase in negotiated wages;
Wages of city employees will be stopped;
The City will implement department expenditure savings, which is 1.8%($2,344,430) over 2010;
There would also be $500,000 appropriation decline of housing demolitions.
(The table 1 and table 2 present the City revenue and expenditure for 2011-2012 budgets).
Despite the strengths identified with the Syracuse operating budget for the 2011-2012 fiscal year, there are still weakness identified with the budget.
One of the weaknesses of the City's operating budget is the external factors that hinder the success of the budget objectives. Economic downturn is one of the important external factors that could hinder the success of an operating budget. Typically; an operating budget could be easily affected by the economic problems in the country. Overview of the Syracuse operating budget for the 2011-2012 fiscal year reveals that City estimated it would collect the revenue of 0.7% ($4.2 Million) from the real property tax because economic downturn has affected the growth of mortgage in the City. As being stated in the budget "Mortgage tax revenue will be less than anticipated due to the economic downturn, which resulted in fewer issued mortgages." (Syracuse City, 2012 P. 1).
Moreover, operating budget could not resist recession in the country. The economic recession could affect the overall result of the operating budget which may affect the overall budget objective. Thus, "the effects of the national, state and local economy have challenged the City and the School District programs in the 2011-2012 budgets as presented." (Syracuse City, 2012 P. 1). The effect of the national economy makes the pension in the city to constantly increase making the City to struggle with the increase in the pension costs. Coupled with the health insurance benefits for retired employees and health insurance benefits as well as stagnant property base, the City has faced significant challenges in balancing its operating budget.
With the recession in the country, the aid to the City has declined by $1.8 million from the amount the City received in 2010/2011. Typically; the aid received by the City dropped from $81.7 Million to $71.8 Million. More importantly, revenue to be derived from mortgage tax is anticipated to decline due to the economic downturn because of the anticipated fewer issued mortgages. Moreover, four of the city parking garage are not generating revenue up to the anticipated budget level. Thus, the city has adjusted the anticipate revenue to $500,000, and the revenue to be generated from parking ticket receipts is adjusted to $300,000.
Additionally, operating budget is a projected revenues and expenditure for a given year, and the City may not be able to achieve the target revenues and expenditure due to several factors such as economic factors, political and socio-cultural factor.
Based on these limitations, the City has faced significant…