Municipal Budgeting and Revenue Essay

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Municipal Budgeting and Revenue


Every government entity has a primary goal, which is to be as efficient and effective as possible while expending the smallest amount of resources. In addition, the resources expended cannot be more than the resources received as revenues. The budgeting process is a tool that assists government entities in being both efficient and effective. Before a budget can be adequately prepared, you must first understand the budgeting concept and secondly be knowledgeable of budget types.

Local governments use budgets for a variety of reasons, including: accountability, planning, evaluation, and information. A municipal budget is a financial map to help guide public managers and administrators of
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If a budget is well-designed and aligned to priorities and available resources, everyone should have a clear picture of the direction in which the city is planning to head, and the various activities that are to be continued and even enhanced.

The budgeting process is one, which is long and tedious. However, before budget preparation can truly begin, the administration must accurately estimate its revenue for the fiscal period. In the remainder of this research paper, the author will discuss propositions that have effected municipal government finance, sources of municipal government revenue, and conclude with current trends in municipal government finance. For the purposes of this paper, unless otherwise stated, all figures and information is from the State of California.


The proposition that has changed the way California cities have been financed for the past fifteen years is Proposition 13. Proposition 13 was passed by the voters in June of 1978 to amend California’s Constitution to incorporate a limit on local governments ability to impose property taxes. The proposition basically states that the maximum amount of tax cannot exceed one percent of the full cash value of the property. After Proposition 13 was enacted, there have been a variety of other propositions that have restricted and/or redefined municipal revenue sources in California, and the way these funds can be expended.

Fifteen of the most recently enacted
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