Allocation of Public Finances and Budgeting for Tacoma City

This report is based on a research carried out by the public officer of Tacoma City. The purpose of the research paper is to assess the financial needs of Tacoma city and allocate the funds in the respective public activities. Tacoma city is located in Washington State. The city consists of 213, 000 residents. Tacoma city seeks to expand their public activities to meet the needs of the residents ("About Tacoma - City of Tacoma", 2018) . The financial resources of a city need to be managed effectively to meet the needs of the residents. The public officer has been appointed by the mayor to allocate the financial resources to fulfill the city’s needs. The paper analyzes the needs of the city which include capital requirements, financial incentives, subsidies to non-profit institutions and operational needs to identify the possible challenges and create a scaled-down budget. The necessity of meeting the needs of the citizens makes this paper vital to present the report to the mayor along with the city council to make sure that the financial plan is effective. The public officer will assess the past financial statements and create an expenditure plan which will include the facilities that the city will improve and add to their expenses. 

The Problem 

The mayor has requested the public officer to establish the methods of allocating the budget to meet the needs of the residents in Tacoma city. The city needs a budget of their capital needs, operational demands, financial incentives and subsidies for the non-profit institutions to facilitate private issues. The city council has allocated ten million for their budget which is inadequate to meet their needs. All the activities should be carried for to facilitate new concerns in Tacoma city. The city council has to fulfill the federal measures to get an additional ten million from the government. 

A Review of the Disciplinary Processes involved in Research and Analysis 

Budget 

A budget is a financial plan of an organization or a body. The budget defines the plans of the managers and illustrates the methods the leaders will use to meet their goals (Finkler et al., 2013). The public officer will assess the expenditure and revenue budgets of Tacoma city to make appropriate decisions. 

Special Purpose Budget 

A firm can be willing to carry out a task, but the activities are not included in the annual budget (Drury, 2008) . The implementation of a project in a company cannot be affected as a result of missing the annual budget (Drury, 2008) . A company can prepare the special purpose budget for a particular activity, project or program that they might implement. The firm can make a decision whether they will undertake the project with regard to the special purpose budget (Drury, 2008) . In our case, the special purpose budget is the expenditure budget. The aim of the budget is to meet the needs of the city and allocate the finances appropriately. 

Master Budget 

Many companies or bodies create regular budgets to include their financial needs. The master budget implements and outlines the budget aspects for a preceding year. The master budget outlines particular details that assist the organization to complete their daily activities and the forthcoming tasks. The master budget consists of capital expenditure, the volume of services, prices, expenses and cash flows (Finkler et al., 2013). The budget includes most activities of a body or an organization. 

Operational Budget 

An operating budget consists of expected margins and costs. The for-profit institutions receive money where they earn profits after delivering goods and services to the consumers. The not-for-profit institutions earn profits after delivering goods or services, but they receive financial support in the form of grants and contributions (Finkler et al., 2013). The government can earn revenue from selling goods, but the federal law provides that they must collect the taxes to finance the public activities. The expenses are the financial resources that institutions use to carry out their activities (Finkler et al., 2013). 

Forecasts based on Historical Data 

The historical data facilitates the forecasting process. The knowledge of the past performance of a company or government body assists in predicting the future activities. The forecasts related to historical information include the time series as well as the casual models. The informal methods are the simple forecasting approaches. For instance, it can be presumed that a preceding year is similar to the present year. The simple forecasts give reliable results, but the complicated forecasts give specific outcomes (Finkler et al., 2013). The public officer will create the expenditure plan based on the previous financial statements and budgets. 

Financial Budget 

The financial budget consists of cash and capital plan. The cash budget outlines the plan for the receipts and expenditures of an organization. The capital budget describes the plans for acquiring long-term assets such as buildings and properties (Finkler et al., 2013). 

Fund Accounting and Financial Controls 

The accounting controls are protocols and techniques for facilitating transactions, safeguarding assets to make sure the records are accurate. The accounting and internal measures have to develop as the organization expands to make sure that the high margins are recorded accurately (Finkler et al., 2013). For instance, many firms encounter losses due to mismanagement or inappropriate internal accounting measures. It is essential to create systems to establish the efficiency of the accounting and internal measures. 

It is important to identify the policies that establish and maintain acceptable financial measures for not-for-profit organizations. The county committee is responsible for implementing the financial control policies. The aim of the regulations is to develop financial measures and practices (Finkler et al., 2013). The county committee should choose a committee that will be responsible for the creation of the budget, handling the finances and solving auditing issues. The regulations of financial measures should facilitate full disclosure of any city committee member who enters into a financial agreement on behalf of the residents of Tacoma. The city committee can authorize people responsible for opening and closing bank investment accounts. The committee will select a person who can carry out business with financial organizations. The city council committee establishes the process of choosing an investment manager and his or her responsibilities. The city council committee is responsible for scheduling a meeting with the investment manager to hold a discussion on the progress of the new projects. 

Control and Management of the Public Expenditures 

The important elements of the management of public funds include planning and formulating a budget (McKinney, 2015) . The public spending management structure of Tacoma city consists of four kinds of fiscal and monetary regulations. The city council committee controls the collective expenses to make sure that the citizens afford the cost of living in the city. Secondly, the county council committee appoints people to allocate the funds in line with expenditure policy to meet the needs of the residents (Coe, 2011) . The county council committee makes sure that the public facilities are delivered efficiently. Finally, the public officer has the responsibility of eliminating the unnecessary financial expenses in the city’s budget. 

The public officer has to manage the payments, the purchasing trends and stocks. The public officer will create modules for procurement to enhance fiscal discipline on large scale business operations such as tendering and managing the city’s projects. The public officer will create a technical note to incorporate the commitment measures in the public expenditures. The commitment measures will assist the city to meet their goal of the management of public funds which include controlling expenses, budgeting with regard to the financial policies and managing the public finances effectively. 

Managing the Control Systems 

The city council of Tacoma uses the management control structure to meet their goals. The management control structure consists of regulations that enhance the efficiency of financial activities in the city. The management control structure establishes the deviations from strategic goals. The system gives the city council committee the correct ideas on solving their financial issues (McKinney, 2015) . The management control structure defines the goals of the city. The city council implements the action plan effectively after the goals are defined through the management control structure. The city council committee gives a report to the mayor on the achievements of the goals. The mayor will encourage the public officer and the city council for them to discover their potential of achieving the goals. The management control structure will enhance the accounting responsibility of the public officer. 

Government Financial Reporting Requirements 

The financial reports vary when a new project is introduced. The electronic financial reporting method is efficient, but it has to use the data transfer mode. The public officer can use the EBRL ( Extensible Business Reporting Language) financial reporting method to report the financial information. The EBRL program will enhance the effectiveness and transparency of the financial reports so that outcomes can improve the monitoring of the government activities (Weikart, Chen, & Sermier, 2013) . The JFMI (Joint Financial Management Improvement) program established the condition of the financial structure in 2001. The program made recommendations that the federal institutions should uphold transparency on the financial information (Weikart, Chen, & Sermier, 2013) . The public officer will exercise transparency and honesty when making the financial reports. The public officer will assess the city’s previous financial statements and budgets to provide an analysis of its performance. 

Using Budgets as a Disciplinary Process 

The city council needs a budget to allocate the financial resources appropriately in the various activities. The public officer is responsible for creating the budge after receiving an appointment from the mayor. The public officer needs to establish a proper communication network before creating the budget. It is important for every individual to be aware of their contribution towards the formulation of the budget. Firstly, the public officer needs to determine the goals of the city (Weikart, Chen, & Sermier, 2013) . The public officer can consult the mayor on the goals or access the city’s website. Secondly, the public officer needs to establish the net income of Tacoma city in the previous period. The past financial data will assist the public officer to forecast on the future trends. The public officer will formulate the budget on the basis of the income and expenses of the city. 

Budget Laws 

The public officer will take into account the budget guidelines as provided in the constitution. The constitution outlines a guideline for preparing budgets. The annual estimates of the revenue and expenses are outlined in the constitution. The budget law describes the guidelines with respect to the public finance management. The regulations provide the steps for making, approving, implementing and auditing the budget (Weikart, Chen, & Sermier, 2013) . The public officer will follow the budget guidelines to create an effective budget. 

The financial statements and Budgets to make Administrative Decisions 

The analysis of the previous financial statements and budgets will assist the public officer to estimate and allocate the funds in an appropriate manner. The current financial statements and budgets have immediate deadlines that cannot be corrected to establish the actual approximations. The estimation of the revenues and expenditure is a good source of the city’s financial plan. The estimation methods rely on operation plans, financial reporting trends and established laws (McKinney, 2015) . The public officer has to assess the city’s financial statements and budgets to make the projects on the revenues as well as the expenditure. 

The financial statements indicate that the city has adequate cash and cash equivalents. The Tacoma city council is in a position to finance their activities because the statements illustrate there is adequate cash. It is an illustration that the city spends less on their capital, operating activities, subsidies and incentives. The balance sheet illustrates that the company has capital assets and operating activities ( Financial Reports , 2017) . It is a clear illustration that the city spends finances on the capital and operating activities. The city does not spend their finances on subsidizing housing and giving incentives. The balance sheet indicates that Tacoma city has accrued wages ( Financial Reports , 2017) . The personnel expenses need to be increased to finance the salaries of the employees. The net receivables for the government activities are lower than those of the business activities. The city council of Tacoma needs to increase the debt services to increase their net receivables. The city council should enhance their operating transfer and debt service transfers to motivate citizens to get loans. 

The expenditure budget indicates that the Tacoma city council does not allocate financial resources for the subsidies and incentives ( Financial Reports , 2017) . The city needs to take into account the subsidies and incentives. 

Source: ( Financial Reports , 2017) 

The balance sheet indicates that the business activities in the city are efficient as compared to the government activities. The Tacoma city council has not been providing financial incentives to the citizens and subsidies to companies to enhance their efficiency ( Financial Reports , 2017) . The incentives can increase the city council’s revenue and encourage investors to make investments in the town. The city council will have to improve their housing facilities to accommodate the expected investors. The city needs to increase their investments in the capital outlay. 

Source: ( Financial Reports , 2017) 

The city allocates most finances on capital development which is approximately 40% of the total budget. The city allocated 26% of the budget on operation and maintenance activities. The city council allocates 20% of the budget on human resources ( Financial Reports , 2017) . The city council committee does not allocate financial resources for subsidies and incentives that would facilitate the development of new issues in Tacoma. The proposed expenditure plan should contain financial incentives for the residents and subsidies for non-profit organizations or other firms. 

Budget Plan 

The cost of living has been increasing in Tacoma city, and the residents cannot afford health services and other basic necessities. The residents of Tacoma city needs to take part in business activities to meet their financial needs. The public officer needs to add subsidies, incentives and health services in the city’s budget. The funds should be allocated appropriately to establish a balance between the resources. The city needs to establish their financial activities by giving incentives to the residents to attract investors. 

The available financial resources are not enough to meet the city’s financial needs. The city has to meet the federal standards to get more funds from the federal government to meet their needs. The expenditure of Tacoma city can amount to $ 20 million. The city will seek financial assistance from the national and local government to meet the monetary needs of the budget. The current revenue and expenditure plan for Tacoma City is illustrated below. 

Source: ( Financial Reports , 2017) 

The revenue and expenditure summary illustrates that the city encounters a deficit in their financial resources ( Financial Reports , 2017) . The budgets indicate that the city spends more than their income. The city should allocate their funds appropriately. The city needs subsidies and incentives to increase their financial performance and opportunities. The incentives will attract investors in the Tacoma city. The provision of subsidies will encourage the residents to open their own companies. The revenue budget indicates that the city does not receive income from investors or foreign organizations. The city should take advantage of this opportunity to increase their funds. 

Source of Funds 

The city council needs to collect more than $ 10 million to finance their budgeted activities. Tacoma city will receive ten million from the federal government in case they meet the state standards. The city council can borrow funds amounting to $ 2 million from the national government. The city council of Tacoma can seek support from the local government to expand their resource to facilitate the emergence of new opportunities. The council can borrow $ 1 from the local government. The city council can borrow a loan from the World Bank or International Monetary Fund to finance their activities. 

The city council collects revenue from taxes, fines, licenses, permits, bonds and charges on services. The funds can be used to finance the budget to meet the needs of the city. The city councils can receive funds from large non-governmental institutions or international companies. Tacoma city can receive finances from donors in forms of grants or contributions. The city council has planned to carry out campaigns to raise the funds of their budget. Finally, Tacoma city can receive finances from the foreign agencies. Some companies engage in corporate social responsibility and can contribute ten million in kind. 

Risks 

The budget plan and funds that the city councils can acquire are subject to multiple risks. The risks can be a result of the local politics and the indefinite financial regulations. The risks can reduce the projected amount to $ 10 million. There have been political challenges in the country that can hinder the city council from acquiring funds from the World Bank of International Monetary Fund. The international body might not give the city council of Tacoma the full amount. Secondly, the city council might not receive $ 10 million from the federal government in case they do not meet the state measures. 

The county council might not collect all taxes from the citizens which results in a reduction in the revenue. Some of the citizens evade taxes, and this can reduce their income. The ban on donation campaigns can hinder the city council from collecting funds. The foreign agencies can have an attitude towards the country and decline their request on supporting their financial activities. The budget should be revised to avoid any financial deficits when implementing the expenditure plan. 

Details	Actual expectation	Revised	Resultant Loss
Federal government	10	0	10
Local government	10	10	0
Donation campaign	3	0	3
Foreign aid	1.2	0	0.7
Loan from the IMF or World Bank	0.8	0	0.8
Total	25	10	14.5

Expenditure Plan 

The finances of the original expenditure plan amount to $ 25 million. The actual expenditure plan was designed to meet the needs of the city to facilitate new developments. The master budget was created to meet the strategic goals of Tacoma city and establish future developments. The actual expenditure plan is illustrated below in relation to the various aspects of expenditure and their impacts. 

Original Expenditure plan		Cost	Note
		($ In Millions)
Capital outlay		7	1
Operations and maintenance (healthcare equipment)		5	2
Personnel-salaries, rewards and allowances		4	3
Incentives		2.5	4
Subsidies		2	5
Debt service		2.7	6
Operating transfers		1.3	7
Debt service transfer out		0.5	8
Total		25

Capital Outlay (Note-1) 

The Tacoma city council provides housing to the residents. The population of the city is increasing, and there is a need for adequate housing ("About Tacoma - City of Tacoma", 2018) . The city council seeks to improve and expand their housing to meet the needs of the growing population. The public officer expects that the city council will use $ 7 million to develop and construct houses to meet the needs of the residents. 

Operations and Maintenance (Note-2) 

The Tacoma city council provides training to their employees and renovates the facilities in the town. The residents need efficient facilities to carry out their daily activities which include businesses and work schedules ("About Tacoma - City of Tacoma", 2018) . The public officials and city council employees need the training to improve their performance. The public officer expects that the city council will use $ 5 million to train their employees and improve the facilities in the town. 

Personnel-Salaries, Rewards and Allowances (Note-3) 

The city council needs to pay their permanent and temporary employees on time. The employees need rewards to improve their performance. The city council seeks to reward their employees to increase their efficiency ("About Tacoma - City of Tacoma", 2018) . It is the responsibility of the city council to provide allowances for their employees. The public officer has estimated that the city council will use $ 4 million to pay the employees their salaries, give rewards and increase their allowances. The city council will use some of the funds to pay the accrued wages. 

Financial Incentives (Note-4) 

The Tacoma city council has not been providing financial incentives to their residents. The city needs investors who will contribute to the development of financial activities ("About Tacoma - City of Tacoma", 2018) . The balance sheet of Tacoma city indicates that the financial activities are efficient. The public officer presumes that the city needs $ 2.5 million to finance their incentives. 

Subsidies to Companies or Non-governmental Institutions (Note-5) 

The city council of Tacoma has not been providing subsidies to the companies or non-governmental organizations ("About Tacoma - City of Tacoma", 2018) . The city council needs to provide subsidies to the non-governmental organizations and companies to increase the number of companies. The public officer has allocated $ 2 million to meet the subsidies to the companies. 

Debt Services (Note-6) 

The city has been funding the debt services in the town, but the funds were limited. The city seeks to expand their debt services to fund the financial activities that are carried out by the residents. The citizens of Tacoma city are entrepreneurs, and they need finances for start-up capital or to increase their stock ("About Tacoma - City of Tacoma", 2018) . The city council will provide the loans or grants to the citizens which they can repay later. The public officer has allocated $ 2.7 million to finance the debt services. 

Operating Transfer (Note-7) 

The city council of Tacoma uses the operating transfer to facilitate the exchange of finances within and outside the town ("About Tacoma - City of Tacoma", 2018) . The financial transactions have been increasing, and there is a need to improve the operating transfers to enhance their efficiency. The presumed funds for the operating transfers amount to $ 1.3 million. 

Debt Service Transfer out (Note-8) 

The Tacoma city council finances the debt services transfer out to facilitate the processes of providing loans to the residents. Many residents in the city borrow loans to finance their business activities ("About Tacoma - City of Tacoma", 2018) . The city council has to improve their debt facilities transfer out to improve the processing of loans. 

Scale-down Expenditure Plan 

The risks of gathering funds need to be taken into account before making the final budget. The scaling-down budget is created after identifying the consequences of the budget risks. The negotiations on collecting the finances can fail, and the city council will have to use the available funds. The finances of the scale-down budget amount to $ 10 million. The revised budget is illustrated below. 

Revised Expenditure plan		Cost	Note
		($ In Millions)
Capital outlay		3	1
Operations and maintenance (healthcare equipment)		1.5	2
Personnel-salaries, rewards and allowances		1.9	3
Incentives		1.5	4
Subsidies		0.3	5
Debt service		0.8	6
Operating transfers		0.7	7
Debt service transfer out		0.3	8
Total		10

Budgeted Outcome of Expenditure Plan at $ 25 Million and 10 Million 

The reduction of the finances in the expansion budget will have four major consequences. Firstly, the reduction of the capital outlay can decrease the cost to $ 15 per citizen. The city council will not construct new houses due to a reduction in the funds. The potential of Tacoma city council on providing housing will decrease as a result of the reduction of the capital outlay funds. Secondly, the city council of Tacoma will not service their equipment due to a reduction in the funds. The employees will not receive training because the funds have to be reduced due to the budget risks. The accrued wages can increase due to a decrease in the personnel expenses. The city will have few investors due to a reduction in the financial incentives. The companies and the non-governmental organizations cannot increase as a result of the reduction in the subsidies. Some residents would not receive the debt services due to the reduction in the finances in the debt facilities. The operating transfers would not be efficient, and it can discourage the residents from borrowing funds from the city council. The scale-down budget can have positive consequences in the city. The city council will manage their finances in an appropriate manner. The investors can significantly increase in Tacoma city. The city council can renovate some houses to improve their housing facilities. The Tacoma city council can service some of their machine to enhance the efficiency of their service including healthcare. 

Operational Budgets for $ 25 Million and $ 10 Million 

(Assumption: the operating and budget transfers are under the debt services. The operating and debt transfers will be calculated under the debt services) 

Details	Residents (R)	Rev/ R	Revenue  (R)	Total Revenue (TR)	TR/ R	V. cost / R	Fixed Cost	Net expense	Saving/ (Deficit)
Capital Outlay	120000	13	1560000	1,200,000	10	10	300,000	1,440,000	(240,000)
Operations and maintenance (healthcare equipment)	20000	65	1300000	300,000	15	65	250,000	1,550,000	(1,250,000)
Personnel	140000	18	2520000	1,960,000	14	12	310,000	1,990,000	(30,000)
Incentives	62000	18	1116000	1,054,000	17	15	180,000	1,079,000	(25,000)
Subsidies	120000	5	600000	480,000	4	4	85,000	541,000	(61,000)
Debt service	34200	72	2462400	1,949,400	57	60	350,000	2,402,000	(452,600)
Total			9,558,400	6,943,400			1,475,000	9,002,000	(2,058,600)

Details	Residents (R)	Rev/ R	Revenue  (R)	Net Revenue (NR)	NR/ R	V. cost / R	Fixed Cost	Net expense	Saving/ (Deficit)
Capital Outlay	60000	13	78000	600,000	10	10	300,000	720000	(120000)
Operations and Maintenance (healthcare equipment)	10000	65	65000	150,000	15	60	250,000	775,000	(625,000)
Personnel	70000	18	126000	980,000	13	12	310,000	995,000	(15,000)
Incentives	31000	18	558000	527,000	15	15	180,000	539,500	(12,500)
Subsidies	60000	5	300000	240,000	2	4	85,000	270,500	(30,500)
Debt service	17100	72	1231200	974,700	57	60	350,000	1,201,000	(225,300)
Total			4,779,200	3,471,700			737,500	4,501,000	(1,029,300)

Conclusion 

Restatement of the Thesis 

The public officer outlines the expenditure plan that meets the preferences of the city. The report explains the activities that should be added in the expenditure plan. The city needs the additional services, and the public officer has been requested to determine the activities and allocate the financial resources appropriately. 

Concluding Paragraph 

The disciplinary methods of budgeting and managing the public finances have been used to prepare important information that supports the report. The variances have been applied to establish the differences of activities in the $ 25 million and $ 10 million budget. The two have been formulated due to the risks associated with borrowing funds. The standard costing methods have been used to record the fixed and variable costs in the budget. The operational budget was used to develop the overall outcome after adding the expenses in the budget. The Tacoma city council can add subsidies and incentives to the expenses in the actual budget. The provision of economic incentives to the citizens will increase the investors in the city. The subsidies are likely to increase the companies and non-governmental institutions in the town. The city could improve in the housing and debt services. The machine and equipment of the town can be effective as a result of improving their operations as well as maintenance. The development of the new expenditure plan will contribute to the overall development of the town. 

References 

About Tacoma - City of Tacoma. (2018). Retrieved from http://www.cityoftacoma.org/about_tacoma 

Coe, C. K. (2011). Nonprofit financial management: A practical guide . Hoboken, N.J: Wiley. 

Drury, C. (2008). Management and cost accounting . London: Thomson Learning. 

Financial Reports . (2017). [Ebook] (pp. 5-20). Retrieved from http://cms.cityoftacoma.org/Finance/Financial_Reports/CAFR/2017/basic-financial-statements.pdf 

Finkler, S., Purtell, R. M., Calabrese, T. D., & Smith, D. L. (2013). Financial Management for Public, Health and Not-for-Profit Organizations. Upper Saddle River, New Jersey: Pearson. 

McKinney, J. B. (2015). Effective financial management in public and nonprofit agencies . 

Weikart, L. A., Chen, G. G., & Sermier, E. (2013). Budgeting and financial management for nonprofit organizations: Using money to drive mission success . Los Angeles: SAGE.