The Operating Budget for the City of Cincinnati, Ohio - Research Paper Example

? The Operating Budget for the of Cincinnati, Ohio Affiliation with more information about affiliation, research grants, conflict of interest and how to contact The Operating Budget for the City of Cincinnati, Ohio Introduction: The budget for the city of Cincinnati, created mainly for the general public, aims to help them recognize the process of budgeting and its final product. The process of budgeting first identifies the various services in the city, and then determines the methods in which these services should be financed. Most of the decisions with respect to the way in which the city operates are made through the formulation of the budget. Possessing the knowledge of budget is a pre requirement to have an impact on the city government. The local self government of the Cincinnati city is biennial. It can be seen that municipalities in Cincinnati have the power of the local self government to enforce sanitary regulations as well as other such regulations, which would not be in conflict with the general laws. Many of the important decisions regarding various operations in the city are done when creating the budget. The biennial has various responsibilities such as supplying clean and pure water to the public. In the city, various efforts were taken by the government to reduce violence through more stringent implementation of criminal justice system aided by law enforcement as well as other community organizations. 1. Budget Overview: 1. Financial Summary, including Revenue and Expenditures In the City of Cincinnati, Ohio, the biennial local governments utilize funds to maintain different types of revenue and expenditure accounts, keeping them separated from each other depending upon the goal of the fund. The budget of the city of Cincinnati is arranged on the basis of cash with the exemption of accrued employee benefit costs and personnel services. In the basis of cash accounting, revenue is identified when it is received and a cost is identified when it is paid. The city reports various governmental funds including General Fund, Capital Projects Fund, Debt Service Fund and other such important proprietary funds include Water Works Enterprise Fund. The city assembles, sells and purifies water to facilitate businesses and most importantly the residents of Cincinnati. Revenue consists mainly of user costs. 2. Department Budgets: The department budget of the city of Cincinnati permits to evaluate the costs and expenses connected to a particular section and whether the profits are adequate to convene these expenses or not. Furthermore, it allows the management to determine its financial performance. Following are the Department Budgets summary of the City of Cincinnati Ohio in Biennial. (financial plan) 2011 2012 2013 changes to 2013 Budget to 2012 Operating budget 28,120,790 29,221,010 28196430 (10245808) Other expenses 25,425,370 27,413,020 30,121,550 (2708530) Equipment 668,150 1,080,000 801,050 (278950) Operating total 54214310 57714030 59119030 (13233288) Employee Benefits 8, 5641,320 10,437,820 10,112,460 (325360) General Fund Overhead 1,403,550 1,421,590 2,424,890 1003300 Debt Service 2,403,550 2,421,490 2,324,790 (96700) Total 89448420 14280900 14862140 581240 3. Funding: Funding refers to the commercial action of providing capital and funds both in terms of fixed capital as well as working capital. The Cincinnati section of Community Development makes possible the process of funding as well as provides other resources that help in neighborhood revitalization, quality housing and human facilities. General Fund is the accounting unit in which every governmental activity is accounted for. Its incomes comprise intergovernmental shared revenues, taxes, investment income and charges for services. “General Fund expenditures represent costs of general government, economic development, public safety, public services, public health, parks and recreation, and other services” (City of Cincinnati, 2008, p.27). Capital Projects: Capital Projects are used to account for incomes designated to build or obtain governmental fund capital assets. Such incomes are derived mainly from profits of general obligation debt, city income tax, federal and state grants. It is the city's responsibility to utilize the proceeds derived from the deal of bonds only for capital development purposes, detailed in the bond. Any accrued and premium interest received from the trade of bonds is credited into the Debt Service Fund. 4. Debt Administration: Debt Service Fund accounts for the incomes collected, payments made, appropriate principal and interest on common responsibility debt as well as capital rent payments of the funds of government. 1. Cost Analysis 1. Fixed Costs “Fixed costs are costs that are independent of output. These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include rent, buildings, machinery, etc” (Variable Costs and Fixed Costs, n.d., par.3). Fixed costs constitute a major part of the city’s budget and in current years, high degree of uncertainty in price prediction and market volatility has reasoned utility costs to be a recurring major budget issue. The city provides about $28 million a year for rent, buildings, machinery etc. 2. Step-fixed Costs: The step fixed cost gets its name from the data that the price can obtain a step up if certain events happen. The city has expanded on about $5.8 million on Step-fixed Costs. 3. Variable Costs Variable costs are costs that differ with production. Usually variable costs increase at a steady rate as compared with capital and labor. “Variable costs are costs of labor or materials that change with sales. One way for a company to save money is to reduce its variable costs. Sometimes, calculating variable costs is as simple as looking at your costs of goods sold on your income statement” (Peavler, 2013, par.4). The variable costs of Cincinnati Ohio come around $38 million. 3. Budget Challenges The city of Cincinnati is subject to face regional, local and national challenges. Even though the city faced such challenges, it was able to provide a balanced budget. In addition to the balanced budget, the city could also make several achievements. Some of the achievements include public safety initiatives, neighborhood investment initiatives, economic development initiatives, and service excellence initiatives 4. Budget Recommendations: “The Manager's Recommended General Fund Operating Budget totals $368,906,520.  It is for a one-year period from January 1 - December 31, 2013. However, because the City is transitioning to a new fiscal year, City Council is appropriating a budget for a six-month period” (Cincinnati’s Recommended Budget Invests in Growth, 2013, par.5). The city manager will review the recommendations of the Capital Committee and will develop recommendations and suggestions for capital budget. These will be submitted to the mayor for his opinion. All these will be together presented before the City Council for their approval. Reference List City of Cincinnati: All Funds Biennial Budget. (2008). Mayor, City of Cincinnati, Ohio. Retrieved from Cincinnati’s Recommended Budget Invests in Growth: Measured Spending Cuts & Parking Revenue Part of the Picture. (2013). City of Cincinnati. Retrieved from Peavler, R. (2013). Fixed and Variable Costs. About.com. Business Finance. Retrieved from Variable Costs and Fixed Costs. (n.d.). Fundamentalfinance.com. Retrieved from Read More