intro budget & finance. revenues vs. expenditures revenues ◦ money coming in to the agency ◦...

Intro Budget & Finance

Revenues vs. Expenditures

Revenues◦Money coming in to the agency◦Income

Expenditures◦Money going out◦Bills, staff, equipment, facility

utilities

Income SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts

Compulsory Income

Secured by government organizations

Collected through taxing & regulatory

powers at different government levels

Why do commercial agencies care??

Types of taxes…??

Compulsory IncomeReal property taxPersonal property taxSales taxExcise taxIncome taxLocal option tax

Compulsory IncomeReal property taxes

◦Land & whatever is developed or growing on the land

◦Different rates for different levels

◦96% of property taxes stay locally


◦Understand assessed value, tax abatement, tax base

◦Value defined by a realtor/appraiser/tax assessor Fair market value Assessed value – 30-50% lower than FMV

(1/3 in IL) A.V=Taxable worth


◦Tax abatement


◦Tax base Total assessed property value of all

taxable property in a community

Bloomington vs. Hudson

Exemptions – NPOs, churches, universities, museums….


◦Tax rates formula

Tax rate = Required taxes / net assessed valuation

Required taxes = * Set from budget (ie. $5,000,000)

* Expenditures – revenues (excluding taxes)

* Where does a city get revenue?



Tax rate = Required taxes / net assessed valuation

Net assessed valuation=

Total assessed valuation of com.410,500,000

Tax exempt property (abatements)- 10,500,000Net assessed valuation $400,000,000



Required taxes/net assessed valuation=tax rate

$5,000,000 / $400,000,000 = 0.0125 (1.25%)

Also read as $1.25 per $100 assessed value



Tax rate = 0.0125AV: $100,000 home x 0.0125 = $1,250 tax bill

AV: $150,000 home x 0.0125 = $1,875 tax bill

Compulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax

Compulsory IncomePersonal Property taxes

◦Allowed in 41 states (not IL)

◦1. Household tangible property

◦2. Business tangible property

◦3. Intangibles

Town of Normal Eg0.75% Use tax on titled items

◦cars, boats, motorcycles ◦Supports General fund

Compulsory IncomeSales taxes

◦Largest source of state tax revenue◦Second largest for cities◦Imposed on the sale of tangible

goods◦Range 4-10%

Compulsory IncomeSales taxes

◦Dedicated sales tax

◦Used to fund Bank One Ballpark & renovate Packer Stadium

◦Rural towns vs. tourism towns

Tourism Town Comparisons

Normal, IL Honolulu County

Tax rates $7.46/$100 AV $0.33/$100 AV

Taxes paid on AV $60,000

$4,476 $197.40

HA property tax on same home*

$7490 $329

•Honolulu County gives $80,000 credit to FMC. Rest is taxed. Must pay a minimum of $100 in taxes

•$180,000-$80,000=$100,000 AV

Town of Normal EgThe State of Illinois collects a sales tax

at a rate of 7.5%, which is distributed as follows:

◦5% to the State of Illinois ◦0.25% to McLean County ◦1.00% to the Town of Normal◦1.25% B-N home rule tax Used for General Fund with a small

% to support the Uptown Renewal Program.

Compulsory IncomeExcise taxes

◦Imposed on specific goods, services◦Hotel-Motel tax

CVB’s Sports facilities

IL Sports Facilities Hotel Tax…

Why do this?

Illinois Sports Facilities Hotel Tax

The Illinois Sports Facilities Authority imposes a tax on gross receipts from hotel operators within the City of Chicago. Receipts from permanent guests (occupants of 30 days or longer) are not taxed. Proceeds are used for the corporate purposes of the authority, including construction costs for the Comisky Baseball Park.

Funding

2% of hotel/motel tax goes to CVB

Compulsory IncomeExcise taxes

◦Car Rental tax

◦Sin taxes

Town of Normal Eg

Tax % Supports

Hotel & motel tax 12% 6% to the state; 2% to CVB; 4% city (Interstate Center & Uptown Normal)

Food & Beverage (for immediate consumption)

2% General fund

Liquor tax 4% Police

Utility tax (ie. cable, gas, elec)

5% General fund (one of largest revenue sources)

Motor Fuel Tax ?? Collected by state to fund local roads

Compulsory IncomeIncome taxes

◦Municipal, state & federal levels IL = 3% flat tax with 1/11 going to

municipalities

◦IL = no state property taxes, rely on income taxes

Which is more fair, property or income tax?

Compulsory IncomeLocal option taxes

◦Applied at the local level◦Legislatively enabled at the state

level◦Ie. Local home rule sales tax added

to the state sales tax (1.25% in B-N)

Gratuitous IncomeReceived without expectation of

return◦Grants, bequests, sponsorships

Most often giver does not receive a direct benefit or compensation

Gratuitous Income

Grants

◦LWCF – development of outdoor rec

resources

◦OSLAD - Open Space Land

Acquisition and Development

◦Illinois Transportation Enhancement

Program

Gratuitous IncomeBequests

◦Life insurance

◦Wills

ELM fund

Sponsorships & Donations

◦$$, land, equipment, stocks, bonds

◦See examples….

Gratuitous IncomeNonprofit agencies

◦Rely on gratuitous

Public agencies◦Rely on some forms of gratuitous◦Grants & the need for a foundation

Commercial◦Gives gratuitous income

Earned IncomeCash resources generated from

fees & charges◦Impacts all sectors

Earned IncomeEntrance fees

Admission fees

Rental fees

User fees

Sales

Special service fees

Investment Income

Invest unneeded revenue

◦Stocks, mutual funds, money

markets

All sectors do this

NRPA earned $1,287,643 in 2007

from investments = 10% of their

overall budget

Contractual ReceiptsRevenue generated from

contractual agreements◦Concessions◦Golf pro shop

All sectors use this

Eg….

Contractual ReceiptsAustin PARD

◦$200,000 in revenue annually from contracts

◦Barton Springs Food and Beverage in Zilker Park

Overview by SectorSector/ Income Compulso

ryGratuitous Earned Investme

ntContractual

Market Sector

None Minimal Major source

Major source

Can be a major source

NPO None Major source

Major source

Limited, based on available cash

Growing importance

Public Sector

Essential

Growing importance

Major source

Limited, based on available cash

Growing importance

ExpendituresOperating Expenditures

Capital Expenditures

Operating ExpendituresRegularly occurring costs

◦Personnel◦Supplies◦Equipment◦Utilities◦Services

Capital ExpendituresUsed to finance projects that are

costly

◦Land acquisition

◦New facility

◦Major improvements

Capital Improvement PlanZoo – Continuation of Master Plan 1,000,000

Park Acquisition & Development 500,000

Small playgrounds 100,000

Security Park Lighting 100,000

Subtotal Parks: 1,700,000

Gym floor 100,000

Golf sprinkler system 400,000

High & Low Ropes Course @Nature Center 125,000

Total Recreation: 625,000

Total Capital: 2,325,000

Capital $$$$ - PublicPublic - Bond programs

◦Money borrowed by the

government

◦2 types….

Capital $$$$ - PublicPublic Bond programs

◦ 2 types

General obligation bond

Revenue bond

Capital $$$$ - NPO/Comm

Pay as you go◦Have money up front◦Nonprofits

Pay as you use◦Pay over the life of the asset

Capital $$$$ - NPO/CommNonprofit - Capital Funding

◦Capital campaigns

◦Loans

Capital $$$$ - NPO/CommCommercial – Capital Funding

◦Investors, owners

◦Corporate bonds

Mortgage bonds

Equipment trust certificates

Income bonds

intro budget & finance. revenues vs. expenditures revenues ◦ money coming in to the agency ◦...

Documents

ha property tax

tax bill slide

use tax

av taxes

tax exempt property

property value

tax base value

tax bill av