Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
¶ … Financial Condition
City Leadership
Re: Budget shortfall
While the current year sees a balanced budget for Centerville, an analysis of the five-year trends for the city show that there will be a budget shortfall in each of the next four years. This memo will help to explain the problem and analyze some of the critical issues. The following trends have been noted:
Revenue per household is declining
Costs per household are increasing
The percentage of tax-exempt households is increasing
The latter point is important. Tax exemptions are granted for low income households, and these represent an increasing percentage of Centerville's tax base. Sales tax represents the vast majority of the city's revenue, so when households are exempt from the sales tax, they are no longer contributing to the civic revenue stream. The structure of the sales tax exemption may be an issue. If this is based on income, retirees would typically be exempt from the sales tax, even if they are otherwise wealthy. There may be a need to revisit the structure of the sales tax exemption.
It is also concerning that with an expected slowdown in revenue growth -- including a couple of years of negative growth -- that the cost per household of service provision continues to increase. On the spending side, the city has to look at ways to reduce the rate of spending growth, and better align it with the rate of revenue growth. If the city is not growing, then costs associated with running the city need to be constrained in terms of growth as well. Budget controls...
An analysis of the city's cost structure should also be undertaken, in particular before new commitments are made. The city has a certain amount of fixed costs -- contracts and labor agreements already in place, and physical infrastructure costs. The city at this point needs to know where it can cut on some fixed costs, and more importantly where there is flexibility to cut on variable costs. The latter are important for short-term reductions, but there is a long-term budgetary problem that will require cuts to fixed costs to reflect the lower level of economic activity in Centerville.
The decline of sales tax as a percentage of revenue hints that the city may be facing economic challenges. If there are few other revenue sources -- presumably user fees -- then a decline in the contribution that sales tax makes indicates a slowdown in economic activity. If the city is experiencing such a slowdown, that would also put more people into tax-exempt status, because the unemployment rate would be expected to rise. This has considerable implications, in particular that spending per household needs to be constrained in a structural way --one-time cuts will not address the long-run economic issues that the city is facing. Attempts to increase revenue may also fail, if the city is faced with a depressed economy, because the people have no ability to pay more. Potentially, Centerville needs to find new means of economic growth that can increase incomes and…
The company's promotional literature emphasizes the synergistic effects of this corporate structure: "IAG combines the two leading airlines in the UK and Spain, enabling them to enhance their presence in the aviation market while retaining their individual brands and current operations. The airlines' customers benefit from a larger combined network for both passengers and cargo and a greater ability to invest in new products and services through improved financial
Thus, the Board ultimately had little control over this particular cost, which is how it is found itself in a difficult financial position this year. The general lack of control over the budget is a definite weakness for the Bridgeport Board of Education. In lieu of financial statements, there were two main resources available to help assess this organization's health. Its budget book was the primary source, as it detailed
The report reflects the actual figures. Variance columns are presented in comparing the actual with the revised budget. There is reconciliation between the budgetary basis and GAAP are presented on the comparison schedule. The major differences are in how they are reported. There are budgetary comparison schedules provided for reserve funds. All special reserves are included. ("Comprehensive Annual Financial Report," 2012) 3C. Look at the note that describes the basis
Financial Stakeholders in a Business Main financial stakeholders, their power and influence in a business Stakeholders refer to people affected or have an interest in the objectives and operations of the business. The business has a variety of stakeholder segments, which have been broadly categorized as follows: The classification of stakeholders varies in terms of interests to the activities of the business and their power to influence key decisions. The fact is
Chapter 1: The Accounting Function in Microsoft Background of the Organization Microsoft Corporation is an American technology organization whose main center of operations are situated in Redmond, Washington. Founded by Paul Allen and Bill Gates in 1975, the company key operations encompass the discovery and development of manufacturing and licensing goods and services that are associated to computing (Bellis, 2017).In accordance to Statista (2017), the company has 124,000 employees across the world.
Financial Feasibility Bull Run, Virginia Pleasant Valley Estates is envisioned as an upwardly mobile community - located in Bull Run, Virginia - and targeted toward the young, single professional and young families. Cash Flow Statement Overview The cash flow statement constitutes a financial document, which details the exchange of cash between a business and the outside world while strategically demonstrating the in and outbound logistics. Flow is traditionally categorized as: flow "in" from Operations -