Revenue sources and budget analysis in Waukesha County

Introduction All local governments prepare budgets. A budget shows the estimates of revenues and expenditure over a specified future period. Budget analysis can be done weekly, monthly or annually. A government is at its best when it balances its budget (Hyman, 2014). A balanced budget refers to a situation where revenues are equal to expenditures. Waukesha County, Wisconsin has a balanced budget and has never filed a petition for bankruptcy. Local governments file for bankruptcy when they are not in a position to pay off debts. This paper will analyze the distribution of income in Waukesha County with a view of highlighting trends, ethical practices, challenges and opportunities of revenue sources.

Revenue Sources for Local Government Budgeting Governments require funds to perform their statutory functions to the people (Hyman, 2014). From 2016 to 2018, there were ten main sources of revenue in Waukesha County. Table 1, below, displays a list of all sources of income ("Village of Summit, Waukesha County, Wisconsin – Official Website of the Village of Summit," n.d.)
Total Revenue. Refers to the sum of all sources of revenue. The City’s revenue increased from $3.4 million in 2016 to $3.5 million in 2018. Increased taxation leads to growth in revenues.
General property tax. Refers to taxes levied on real estate. Property tax is the leading source of funds in Waukesha County.
Woodland tax. It is a tax imposed on commercial woodlands. Woodland taxes are insignificant.
Aurora Pilot Payment. Refers to taxes imposed on pilots. Pilot payments have remained constant at $150,000 and represent approximately 4 percent of total revenue.
Operating grants and contributions. Grants are subsidies or gifts extended to Waukesha County by higher levels of government (Hyman, 2014). It is the third leading source of revenue, representing 11.9 percent of total revenues in 2016, 13.22 percent in 2017 and 11.97 percent in 2018.
Licenses and permits. Business licenses and permits is an authorization that allows entrepreneurs and companies to start a business within a given geographical jurisdiction. It is issued by the local governments. Revenues from licenses and permits are declining from 7.95 percent of total revenue in 2016 to 4.70 percent in 2017 then to 3.59 percent in 2018.
Fines, Forfeitures and Penalties. This refers to revenues resulting from violations of Waukesha laws or damages to the county's property (Hyman, 2014). In 2016 it accounted for 2.38 percent of total revenues. Fines, penalties, forfeitures revenues then reduced significantly to 1.52 percent and 1.42 percent in 2017 and 2018 respectively.
Public charges for services. The city uses charges to fund services such as highways, parks, and bridges. It is the second-largest source of revenue, amounting to 14.23 percent of total revenue in 2016, 14.34 percent in 2017 and 12.92 percent in 2018.
Intergovernmental charges for SER. Refers to intergovernmental aid. It is the fourth largest source of revenue. It accounts for approximately 13 percent of total revenues.
Investment income. Refers to the amount of money the government earns from an increase in the value of investments.1n 2016, it constituted 0.18 percent of total revenue. It increased to 0.29 percent in 2017 then declined to 0.26 percent in 2018.
Other revenues. It is the revenue that the County derives from other sources other than its operations. Other revenues are decreasing steadily from 0.61 percent in 2016 to 0.14 percent in 2018.
Table 1
Waukesha County Revenue Sources, 2016 - 2018
Source
2016
2017
2018

General Property tax
$1,543,140.85
$1,567,053.97
$1,840,124.76

Woodland tax
$136.24
$100.00
$100.00

Aurora Pilot Payment
$150,000.00
$150,000.00
$150,000.00

Operating grants and contributions
$408,971.25
$435,987.00
$421,689.00

Licenses and permits
$271,088.81
$154,920.00
$126,650.00

Fines, Forfeitures and Penalties
$81,232.86
$50,100.00
$50,100.00

Public charges for services
$485,329.42
$472,980.00
$456,250.00

Intergovernmental charges for SER
$443,838.66
$453,357.00
$465,285.00

Investment income
$6,074.39
$9,500.00
$9,000.00

Other revenues
$20,874.39
$5,000.00
$5,000.00

Total revenues
$3,410.686.87
$3,298,977.97
$3,524,198.76

Source: Village of Summit, Waukesha County, Wisconsin. Trends of Revenue Sources for Local Government Budgeting General property tax has been increasing for the past three years. In 2016, it constituted 45.24 percent of total revenue. In 2017 and 2018, it represented 47.50 percent and 52.21 percent of total revenues respectively. The increase in property taxes led to increasing overall revenue.
User charges decreased from 14.23 percent of total revenue in 2016 to 12.95 percent in 2018. It is an alternative to taxes. So, a decrease in user charges increases taxation and vice versa.
In 2016 there was a surplus of $0.58 million. A budget surplus is the excess of revenue over expenditures. Surpluses increase savings and investments and lower interest rates. In 2017 and 2018 the budget is balanced with neither a surplus nor a deficit. A budget deficit is the excess of expenditure over revenues. Balanced budgets stabilize the economy reducing fluctuations in revenues (Bland, 2013).
Waukesha has a rainy day fund. Funds cater for unexpected expenditures. In 2016 and 2017 the fund balance was $0.97 million and $0.77 million respectively. Debt service estimates in a given fiscal year largely depend on available funds. A decrease in funds results in debts increases and vice versa. Ethical Practices in Financial Policy Financial policy on taxes, fees, and charges act as a foundation to sound fiscal practices. Ethical fiscal practices include diversification of revenue sources, equity in taxation, keeping user charges in line with costs, appropriate cost recovery and pricing strategies, public participation in budget process and code of ethics for county officials.
The City has managed to diversify revenue sources to include taxes, fees and charges hence cushioning itself from fluctuations of individual sources of income. Residents also pay taxes, charges, and fees based on their level of income (equitable taxation). Furthermore, the county has a legal cap on property taxes. Statutory caps on taxes protect residents from exploitative taxation.
To ensure user charges are in line with costs, Waukesha Country regularly reviews fees. Appropriate cost recovery and pricing strategies help the County determine the optimum cost of providing services. Ideally, fees imposed should not exceed the cost of providing a service (Bland, 2013).
Public participation fiscal policy increases transparency in the budget-making process. A more transparent budget process improves county credibility and accountability. Also, the code of ethics requires City’s officials to disclose any direct or indirect conflict of interest. Challenges and Opportunity of Revenue Sources Problems that the city faces in raising revenue include citizens’ opposition to tax increases and increasing government expenditure. The city’s expenditure has been increasing from $2.8 million in 2016 to $3.5 million in 2018. Globally, citizens are averse to tax increases.
Licenses and permits pose a challenge in future revenues. Licenses and permits revenues have declined from $271,000 in 2016 to $127,000 in 2018.
User charges is the only reliable source of revenue in the future. Local governments will tend to increase non-tax revenues such as user charges because citizens are opposing tax increases. Also, technological advancements have made it easier to administer charges (Hyman, 2014). Therefore, there is a high likelihood that user charges revenues will increase. Conclusion Waukesha County, Wisconsin is a government at its best. The budget office has managed to maintain a balanced budget despite the tough economic times.

References Bland, R. L. (2013). A Budgeting Guide for Local Government. International City/County Management Association (ICMA). Hyman, D. N. (2014). Public Finance: A Contemporary Application of Theory to Policy. Boston, MA: Cengage Learning. Village of Summit, Waukesha County, Wisconsin – Official Website of the Village of Summit. (n.d.). Retrieved from https://summitvillage.org/