MPA 511: Funding for State & Local Government

At this stage you are familiar with the budget types, budget actors, proposal preparation, personnel, and

operating budgets, capital budgets and capital improvements. These components make up the

framework and base content of a budget. In this module, you wil l become familiar with funding sources

that comprise a great portion of a state and local budget.

For example in New York State, one funding source for school districts is contributed from the New York State Lottery. While there are many sources of revenue, the key is an appropriate application.

Taxes

The major source of income for state government largely come from taxes. Menifield (2017) states taxes

fall into three categories: income, consumption, and wealth.

Most of us who are homeowners know that property taxes are a big revenue generator. But, how is

property tax assessed to provide revenue to the local government budget? Menifield provides the

calculation used by the tax assessor to determine the portion of property tax to be assessed (Menifield, 2017). Property tax by state is listed at the following website 2019 Tax-Rates.org.

Where does your state fall?

I have disputed the property tax calculation under the impression the city would recalculate in my favor.

Well, I do not have to tell you the end of that story. I did not have an appreciation for how the taxes

were calculated, I understand there is a process. In the readings, Menifield shows how the calculation method is applied.

Despite knowing there is a method to determine the taxes to be applied, I still believe there must have

been a mistake. But Menifield insists there are tests. Tests to ensure appropriate calculation of taxes:

coefficient of dispersion and price related differential. Familiarize yourself with these terms. You may see them again.

Revenue Management

Stepping back into your role as city manager, you have to manage your income. There is money coming

from various sources, and you are responsible for placement in the budget where it makes sense.

It is not enough to understand the income/revenue sources and expenses contributing to budget

development. Equally important is instituting a process of revenue management. So, what is revenue

management? As described by Menifield “revenue management is a test of performance” (p. 136).

There must be a check and balance of the revenue to ensure the efficiency and effectiveness of performance.

In the State of Michigan, an example of how economic challenges impact the budget. Read how

Michigan deals with the impact of revenue challenges on their budget. Are tax cuts the only way to

increase revenue or are there alternative cuts to be considered.

In the text, Menifield (2017)introduces three components of revenue management:

• revenue development,

• revenue analysis, and

• revenue support systems.

These are the stages of ensuring fiscal accountability in the preparation and implementation of a budget

with fidelity. What happens when a crisis happens? Read on about the government shutdown and the subsequent impact.

Talk About It

How do you manage revenue in a government shutdown? Below is a link with comments from the CEO of Delta regarding the government shutdown of January 2019.

Delta’s CEO said the airline will lose $25 mill ion this month due to the government shutdown

Given that the news has been littered with stories associated with the common man ’s experience as it

relates to the government shutdown; please consider sharing how this national crisis has in some way impacted you. Be mindful that the impact could be indirect.

Share an article of an organization or government entity impacted by the government shutdown.

Revenue and Natural Disasters

Once again, we have seen how a natural disaster adversely impacts budget planning. New Orleans does

not appear to have completely recovered from the hurricane that devastated its citizens and further

mesmerized the nation. Read the following article: Louisiana budget: What programs still don’t have funding

We know that New Orleans was adversely impacted by revenue challenges since the levee broke.

Talk About It

Discuss the challenges New Orleans is still experiencing and the impact on their budget (local, state, and national).

Revenue and Policy

Challenges to revenue because of natural disaster reveals that an action plan or recovery plan may not

have been in place to avoid fiscal losses. However, policies are intended to set controls thus preventing

inconsistencies with the data.

Exploring revenue collection standards and their application at the following websites provides for a

better understanding of what and how various factors impact revenue. As you participate in the discussion on revenue collection standards in California and Texas, be prepared to share your views.

Talk About It

Let’s compare the revenue management of a couple of states. You may elect to compare Texas and

California, or you may elect to choose your state and compare to one of the others. Discuss the

differences or similarities in how the states have elected to apply standards to revenue collection. In

your discussion reflect on the key terms from the lesson and utilize where applicable. Please provide a thorough analysis.