C. Expenditure and Revenue Trends This section will analyze major sources of ex

C. Expenditure and Revenue Trends
This section will analyze major sources of expenditures and revenues, as well as trends over time. For trends, use the most current budget year available as well as one prior year (most budgets will include data for at least one or two prior years; it will probably be most interesting to use the oldest year and the most recent year for comparison). For the “older” comparison year, you can use either actual or budgeted revenues and expenditures.
Use tables or graphs to help display key information. You should have at least one table for expenditures and one table for revenues, using the same format as the first homework assignment. Some jurisdictions may have a large number of departments and/or revenue sources, so it may be helpful to aggregate some data in your tables (for example, in an expenditure table, you could list the largest departments, then combine the other departments into an “other” category). You may want to show the breakdown of expenditures in different ways, such as the following example:
Following are the major questions you should answer regarding expenditures:
What is the total expenditure budget?
It is often helpful to relate this to something else to give the reader some perspective – e.g., how much is this per capita (total budget divided by population)?
Where does the money go?
Which are the largest departments/activities?
Which are the largest funds? (this will require breaking down the total budget by fund).
What are the major sources of growth or decline over this period?
If the budget has increased by $10 million over the past two years, you should be able to explain where most of the increased expenditures have occurred (your tables will tell you which areas have experienced the most change; the message at the beginning of the budget, or detailed discussion within the budget document, may help explain the reasons for the change).
These are the general questions regarding the revenue structure and trends:
Where does the money come from?
What are the primary sources of revenue? (e.g., property tax, sales tax, etc.)
See the note above about aggregating revenue sources in the table if necessary
How much have total revenues changed over this period?
Which revenue sources have experienced the most change over this period? To the extent possible, attempt to explain why the changes occurred.
For major tax sources, try to provide detail on the tax rates, and any pertinent changes in the tax base or rate over the period studied.
D. Conclusion and Recommendation
This section should draw conclusions about the overall fiscal health and future outlook for this government, based on your analysis. Do they appear to be in good shape? Is there structural balance between revenues and expenditures? If they are experiencing fiscal stress, how have they responded to it (e.g., service level reductions, increased tax rates and/or user fees, etc.)? What are the major issues facing this organization in the near future? What effects has the recession had, and/or what difficulties might it present soon? What are the key things the new budget director needs to know?