Budgeting A Guide - transformgov.org

1 Third EditionRobert L. Bland ABudgeting Guide for Local GovernmentThird EditionRobert L. Bland ABudgeting Guide for Local GovernmentICMA advances professional local government worldwide. Its mission is to create excellence in local governance by developing and advancing professional management of local government. ICMA, the International City/County Management Association, provides member support; publications, data, and information; peer and results-oriented assistance; and training and professional development to more than 9,000 city, town, and county experts and other individuals and organizations throughout the world. The management decisions made by ICMA s members affect 185 million individuals living in thousands of communities, from small villages and towns to large metropolitan of Congress Cataloging-in-Publication DataBland, Robert L.

2 A Budgeting Guide for local government / by Robert L. Bland. -- Third edition. pages cm Includes index. ISBN 978-0-87326-767-0 (alk. paper)1. Local budgets--United States--Handbooks, manuals, etc. I. Title. 2014 82140973--dc23 2013021354978-0-87326-767-0 Copyright 2013 by the International City/County Management Association, 777 North Capitol Street, , Suite 500, Washington, 20002. All rights reserved, including rights of reproduction and use in any form or by any means, including the making of copies by any photographic process, or by any electrical or mechanical device, printed, written, or oral or sound or visual reproduction, or for use in any knowledge or retrieval system or device, unless permission in writing is obtained from the copyright proprietor. Design: Erika AbramsComposition: United Book PressPrinted in the United States of America2020 2019 2018 2017 2016 2015 2014 201354321 About the AuthorRobert L.

3 (Bob) Bland is professor of public administration at the University of North Texas, where he has been on the faculty since 1982 and teaches graduate courses in public finance, governmental accounting, and Budgeting . He is the author of A Revenue Guide for Local Government (2nd ed., 2005) and A Budgeting Guide for Local Government (2nd ed., 2007), both published by ICMA, as well as of several articles on the municipal bond market, property taxation, and municipal Budgeting . In 2007 he was the first recipient of the Terrell Blodgett Academician Award presented by the Texas City Management Association; he also received ICMA s Stephen B. Sweeney Academic Award in October 2007. In 2012, Professor Bland was elected as a fellow in the National Academy of Public Administration. He received his BS from Pepperdine University, his MPA and MBA from the University of Tennessee, and his PhD from the Graduate School of Public and International Affairs at the University of Pittsburgh.

4 He can be reached at book is dedicated to Charldean Newell, PhD, and Chet Newland, PhD tireless champions of good Books Authoritative source books on local government managementICMA s Green Books (a designation derived from the original bright green cloth covers) have a long history as the authoritative source on local government management. They are used by local government managers in cities and counties worldwide, by university professors and students as textbooks for undergraduate and graduate courses, and by public safety professionals in preparation for promotional exams. The Green Books cover the range of local government functions, linking the latest theories and research to specific examples of day-to-day decision making and the nuts and bolts of management. Current titles in the Green Book series includeEmergency Management: Principles and Practice for Local Government, 2nd editionLocal Government Police Management, 4th editionLocal Planning: Contemporary Principles and PracticeManagement Policies in Local Government Finance, 6th editionManaging Fire and Emergency ServicesOther recent titlesCapital Budgeting and Finance: A Guide for Local Governments, 2nd editionCitizen Surveys for Local Government: A Comprehensive Guide to Making Them MatterEconomic Development: Strategies for State and Local Practice, 2nd edition The Effective Local Government Manager, 3rd editionEffective Supervisory Practices, 5th editionHomeland Security: Best Practices for Local Government, 2nd editionHuman Resource Management in Local Government.

5 An Essential Guide , 3rd editionLeading Performance Management in Local GovernmentLeading Your Community: A Guide for Local Elected LeadersManaging Local Government: Cases in EffectivenessManaging Local Government Services: A Practical GuideService Contracting: A Local Government GuideStatistics for Public Administration: Practical Uses for Better Decision Making, 2nd editionLearn about these and other titles at vContentsAcknowledgments xForeword xi 1 The context of local government finance 1 The economic nature of government services ..2 The importance of local budget decisions.

6 4 Trends in local government finance ..5 The legal basis for local revenues ..11 Factors influencing local financial decisions ..13 Conclusion ..19 Review questions ..21 PART I: Revenue Sources to Finance the Local Budget 2 Revenue choices: Principles to Guide the manager 25 The three pillars of support ..25 Choices that promote fairness ..26 Choices that strengthen the local economy ..31 Choices that facilitate effective administration ..40 Putting it all together: Creating a more resilient local economy ..43 Conclusion ..47 Review questions ..49 3 The property tax 53 The changing role of the property tax ..54 Benefits of the property tax to the budget process ..60 The property tax cycle ..62 The continued unpopularity of the tax ..67 Conclusion ..75 Review questions ..77 4 Other tax revenue 79 Consumption taxes: The sales tax.

7 80 Consumption taxes: Excise taxes ..90 Income-based taxes ..95 Conclusion ..101 Review questions ..104 5 Service charges and regulatory fees 107 The role of service charges and regulatory fees in local government ..108 Policy issues in the adoption of service charges ..114 Administering service charges and regulatory fees ..121 Development charges ..122 Special assessments ..123 Conclusion ..125 Review questions ..127vi Contents 6 Strategic choices: Using taxes for economic and political purposes 129 Taxes and economic development: Finding the balance ..130 Tax relief for business investment ..132 Tax incentives for professional sports and the arts ..139 Guidelines for using tax incentives ..141 Tax relief for citizens ..142 Conclusion ..147 Review questions ..150 PART II: Preparing and Approving the Local Budget 7 Budget choices: Principles to Guide the manager 153 A century of budget innovations.

8 155 Discovering budget linkages ..161 Lessons for The budget office ..163 The budget cycle ..168 Conclusion ..169 Review questions ..170 8 The budget cycle: Preparation and legislative approval 171 Preparation phase ..171 Legislative approval ..180 Conflict in budget deliberations ..186 Managing conflict through a budget policy ..192 Conclusion ..204 Review questions ..206 Excel exercises ..207 9 The budget cycle: Executive implementation 209 Financial controls in local government ..209 Communicating budget information ..211 Maintaining budget compliance ..216 Altering budget authority ..219 Budgeting in times of fiscal crisis ..223 Conclusion ..226 Review questions ..228 Excel exercise ..22910 The budget cycle: Accounting and auditing 231 The Budgeting -accounting interface ..232 The accounting framework ..232 The accounting process.

9 242 Auditing ..248 Conclusion ..248 Review questions ..251 Excel exercise ..253 Contents vii11 Planning and Budgeting for capital improvements 255 The context of capital The capital Budgeting process ..261 Conclusion ..276 Review questions ..27812 Budgeting for improved performance 281 The context of performance measurement ..282 Performance expectations and perceptions ..285 Limitations to performance measurement ..294 Meta measures of performance ..297 Conclusion ..297 Review questions ..301 Glossary 303 Name Index 325 Index 329 SidebarsChapter 1 The context of local government finance Methods for awarding contracts to third parties.

10 9 How people view local government: Ten significant observations ..14 Chapter 2 Revenue choices: Principles to Guide the manager California s nonneutral property tax ..33 Tips for would-be tax reformers ..39 Chapter 3 The property tax Getting to value ..59 Strategies for improving property tax collection ..66 Chapter 4 Other tax revenue Sales tax holidays ..84 Local taxation of nonresident professional athletes earnings ..97 Getting to tax liability ..100 Chapter 5 Service charges and regulatory fees Raising revenue: Proprietary versus regulatory powers ..109 Advantages of service charges ..110 Services for which local governments commonly charge a fee ..112 Activities commonly regulated by local governments ..113 Strategies for improving collection of charges and fees ..121 Chapter 6 Strategic choices: Using taxes for economic and political purposes Summary of research on local taxes and business location.