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START
BUDGET YEAR
2002
BUDGET YEAR
2003
BUDGET YEAR
2004
BUDGET YEAR
2005
"PAYING
FOR IT" -- POSSIBLE SOLUTIONS
YEAR-TO-YEAR BUDGET OBSERVATIONS
"PADDING THE
BUDGET"
MORE
INFORMATION
QUESTIONS
& ANSWERS
FORUM
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City Finances Seminar, continued
Previous Page
"Padding the Budget"
For at least the past three years, the
City of Clarkston engaged in a terribly deceptive budget practice. The Council
would apparently determine how much money it needed/wanted to spend. In every
year, projected revenues fell well short of funding the budget. State law
requires that the City’s budget be balanced every year.
Rather than cutting expenditures or identifying opportunities to increase
non-tax revenue (raise fees, fines, etc.) or even, as a last resort, publicly
adopting a higher tax rate (tax increase), the City deceived its
constituents—and put the burden of the deficit squarely on the property owners’
backs.
To balance the budget, the City knowingly misstated projected revenue. Several
revenue categories were consistently overstated despite their historical
underperformance; you’ll find illustrative categories below. The catch-all
“Other Miscellaneous Revenue” was the worst example of this unfortunate
budgeting practice.
| Category |
2002
Budget/Actual |
2003
Budget/Actual |
2004
Budget/Actual |
| Tree Inspection Fee |
0 / 0 |
5,000 / 0 |
5,000 / 0 |
| Woman’s Club Res. |
20,000 / 4,575 |
20,000 / 2,400 |
10,000 / 1,550 |
| Damage Reimbursement |
32,000 / 8,199 |
30,000 / 7,558 |
30,000 / 26,537 |
| False Alarms |
5,000 / 2,365 |
5,000 / 1,245 |
5,000 / 930 |
| Other Misc. Revenue |
86,718 / 17,129 |
317,516 / 20,698 |
80,273 / 14,822 |
When the revenues fail to meet (unreasonable)
expectations, the deficit must be funded by tax dollars (usually from the
reserve). The opportunity to fund with non-tax revenue is lost; all that remains
is to write the check out of the reserve account.
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