Unit #7 Project This assignment is the second of a three-step process. Step 3 will be completed in Unit VIII. Using the selected government budget from Part I in the previous unit, evaluate the past

Unit #7 Project This assignment is the second of a three-step process. Step 3 will be completed in Unit VIII. Using the selected government budget from Part I in the previous unit, evaluate the past
Detroit Municipality Financing Name Institutional Affiliation Detroit Municipality Financing Detroit, Michigan, has a population of approximately 700,000 people. The town is about 139 square miles. The city is the largest municipality in the state of Michigan and the 18th largest city in the United States (Census, 2022). Detroit is home to many major corporations, including General Motors, Ford, and Chrysler. The city is also home to the Detroit Institute of Arts, the Detroit Zoo, and Belle Isle Park. The City of Detroit’s budget has been in flux recently as the municipality has been grappling with several financial challenges. In July 2013, the City of Detroit filed for bankruptcy protection, becoming the largest municipality in the United States. As part of the bankruptcy proceedings, several of the city’s assets, including its art collection, were sold off, as well as some of its pension obligations were restructured. The City of Detroit’s budget problems has been exacerbated by several factors, including the city’s declining population, the loss of manufacturing jobs, and high crime levels. The budget deficit for the fiscal year 2013 was $327 million, and the city’s long-term debt was estimated to be $18 billion. To address the budget deficit, the city has implemented several austerity measures, including cuts to city services, layoffs of city employees, and the sale of city assets. The City of Detroit’s revenue sources includes income taxes, property taxes, sales taxes, and charges. In recent years, the city’s revenue from income taxes has declined as the city’s population has declined (Massaron & Stoudemire, 2020). The loss of manufacturing jobs has also hurt the city’s revenue from property taxes and sales taxes. To make up for the shortfall in revenue, the city has been relying increasingly on charges, such as water and sewer fees and fees for city services. The City of Detroit’s expenditures includes costs for city services, such as police and fire protection, and costs for city employees, such as salaries and benefits. The city has also been required to make payments on its long-term debt. To address the budget deficit, the city has cut spending on city services and city employees. The city has also implemented several austerity measures, such as deferring payments on its long-term debt. These financial difficulties could be averted utilizing exploring other financing options to increase their revenue streams. The city of Detroit could try to negotiate with its creditors to devise a plan that would allow it to restructure its debt and avoid bankruptcy. This could involve the city agreeing to pay back a portion of its debt over time, with the creditors agreeing to forgive the rest. Detroit could raise new revenue by increasing taxes or fees or selling off city assets (MTB, 2022). This could help to raise the money needed to pay back its debts and avoid bankruptcy. The city of Detroit could declare bankruptcy and try to negotiate with its creditors to devise a plan for repaying its debts. This could involve the city agreeing to pay back a portion of its debt over time, with the creditors agreeing to forgive the rest. References Census. (2022). Detroit city, Michigan. Retrieved from https://www.census.gov/quickfacts/detroitcitymichigan Massaron, D. P., & Stoudemire, T. (2020, March 6). Mayor’s Proposed Budget. Retrieved from htDetroitmi.gov: https://detroitmi.gov/document/fy-2021-mayor-budget-presentation-council MTB. (2022). Municipal Financing Options. Retrieved from https://www3.mtb.com/commercial/government-banking/municipal-financing-options
Unit #7 Project This assignment is the second of a three-step process. Step 3 will be completed in Unit VIII. Using the selected government budget from Part I in the previous unit, evaluate the past
Local Government Budget Brandon Green Public Finance & Budgeting Columbia Southern University Professor Shelley Taylor Local Government Budget Trends of Revenue Sources and Balances The City of Detroit has filed no bankruptcy petition. Over the past three years, the City’s revenue streams and balances have changed. For the General Fund, City revenues come from property tax, income tax, and other sources of revenue. The City’s General Fund is primarily funded by sales and use taxes on real estate and personal income. The City’s income from property taxes has decreased over the past few years while its income from income taxes has stayed stable. To compensate for the decrease in property tax revenue, the City has turned to state revenue sharing (Aydin, 2010). Also, the City’s General Fund has seen its balance fluctuate throughout the last three years. In the fiscal year 2019, the City had a surplus; however, in the fiscal year 2020, the City had a deficit. The fiscal Year 2021 is expected to be a good year for the City. The City’s budget has been affected by changes in the City’s revenue and expenditure patterns. The City has been forced to cut back on spending to meet its financial obligations. To make up for the decrease in property tax revenue, the City has also turned to state revenue sharing. Ethical Practices of Financial Policy on Taxes, Fees, and Charges Taxes, fees, and charges in the City of Detroit are handled ethically. A progressive income tax, fair and equitable tax rates, and tax revenue used for public services are just some of the City’s ethical standards regarding taxation. Ethical practices for the City’s fees include charging appropriate and required fees and using fees to pay for the service’s cost (Walker, 2022). The budget of the City is affected by the City’s ethical tax, fee, and charge policies. Income taxes in New York City are progressive, meaning those who can afford them pay more. This generates cash for the City, allowing it to continue providing public services at a reasonable cost. As a result of the City’s fees, the City can maintain a balanced budget. The Impact of Budgetary Deficiencies on the Organization A lack of funds can have a significant influence on an organization. A lack of adequate funding might harm the reputation and trustworthiness of an institution. These factors impact service delivery, financial commitments, and operations. The organization’s budget can be significantly affected by budgetary shortcomings. As a result, the organization’s ability to offer services, meet financial obligations, and keep things running may be compromised. The organization’s reputation and credibility can also negatively impact budgetary shortfalls (Mohd Ali, 2021). A lack of funds may hinder the organization’s ability to provide services. Because of a lack of funding, the organization may have to reduce its services. The organization’s capacity to meet financial obligations might also be affected by budgetary shortfalls. Default on debt obligations may be necessary if the organization does not generate adequate money. If the company’s credit rating suffers, as a result, it will be harder for the organization to secure loans in the future. A lack of adequate funding might harm the reputation and trustworthiness of an institution. An organization’s reputation could be tarnished, making it more challenging to secure funding and recruit top-tier talent. An organization’s reputation might be tarnished if it cannot pay its financial responsibilities. Internal/External Opportunities and Challenges of Revenue Rources Regarding revenue streams, there are both internal and external opportunities and obstacles. Increasing taxes on individuals who can afford to pay more, raising fees or charges for services, or generating cash through public-private partnerships are all examples of internal potential. Budgetary opportunities and challenges arise from within and without the government. These include securing funding from private groups and individuals and bringing in money from visitors to the area: Internal problems include balancing the budget and lowering services to save money while also reducing spending. These include a downturn in the economy, which can affect the amount of money the government obtains via taxes, fees, and charges (Jonnalagedda, 2011). Taxes need to be collected, and public services must be provided. The government must also monitor the economy’s impact on revenue sources. References Aydin, B. (2010). Cyclicality of Revenue and Structural Balances in South Africa. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1750704 Jonnalagedda, S. (2011). Revenue Generation in the Information Era: Opportunities and Challenges. IIMB Management Review, 23(1), 4. https://doi.org/10.1016/j.iimb.2011.01.008 Mohd Ali, B. (2021). Organization Budgetary Control System. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3794866 Walker, E. (2022). Legal Financial Obligations (LFOs) as Taxes, Regulatory Fees, or User Charges? An Analysis of Washington’s Criminal Legal System LFO Revenue. Federal Sentencing Reporter, 34(2-3), 175-185. https://doi.org/10.1525/fsr.2022.34.2-3.175