Making a City Budget - Essay Example

In making a budget several considerations are factored into the decision-making process which is a prerequisite in budgeting. A budget which is a financial plan aids in ensuring that funds are not misappropriated and only identified stuff is dealt with as per the plan. It shows estimated expenditures and income or revenue sources to finance the expenses. This may be in form of the different types of loans and grants, taxes, bills, and expenses including payments of human resources, initiation of new development plans, and repayment of previously taken loans amongst others.  

The current year’s changes should be incorporated in terms of income and expenses. The revenue sources are analyzed and conservative amounts are given, no overestimates are included in a budget forecast. A combination of recurrent and fixed/investment of the year’s expenditure is added to find the general expenditure of the current year and a liberal approach is applied to indicate expenditure; in expenses, it is better to overestimate than to underestimate.

In this case, the seven-year-old city has previous budgets based on which a new budget forecast will be made. The recurring expenses are estimated and the general sources of revenue and support are also estimated. Any other additional expense added is included in the creation of a balance. The seven-year duration is ideal for proper assessment of the fiscal trend and gives unbiased analysis that is irrespective of the economic meltdowns that have been experienced in the near past. The general projected expenditure is estimated at $847,464,080 while the total expected income is $870,393,810.

The expected revenue and support are expected to come from sales taxes, fines and forfeitures, other sources, last year’s budget balance, a working balance, license permits, other taxes, property taxes, and intergovernmental revenues. These estimates are underestimated and only sure amounts that are well-known will be accessed are included. On the other hand, the main costs to be incurred by the council include: servicing the loan taken, maintaining the information and communication, paying secondary agencies, salaries, transportation, and public works, and in ensuring public safety The expenses when subtracted from the revenue a surplus of $22,929,730. According to Scott (2010), this surplus can be carried forward to the next fiscal year when budgetary constants remain the same and no unanticipated eventuality occurs.

Conclusion
The budgetary estimates forwarded have a credible criterion followed in arriving at the final figures. The current year’s expenses will indeed increase due to the increasing cost of life as does the revenue collected through taxes and levies. This understanding is important in incorporating the new changes that need to be included in the current budget forecast. The acknowledgment of the need to identify varying revenue sources benefits future budgets by making them progressive and not static. Read More