Houston is a city located in Texas. It is the fourth largest city in the United States of America but the largest in the State of Texas. The legal levels in budgetary controls lie within the departments of the city. The city, however, maintains the internal budgetary control for revenue and expenditure. For instance, no expenditure in the city can be made without appropriation. This is the comprehensive variance report for the 2013-2014 financial year. The report is meant to show the scope and sequence of the budget in terms of both revenue and expenditure. Budget control is managed mainly via a computerized and automatic system.
Variance Report
The most significant economic indicators in the City of Houston are property and sale tax revenue. These two make up about seventy-seven percent of the General Fund revenues in the city. The upwards trends experienced in the employment and housing markets have been of great benefit to the economy of Houston.
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The increase in the revenue from these sectors is remarkable considering that most cities in America experienced mere single digit increments in sales and property taxes. The Schedule of budgeted and actual revenue and expenditures for the City of Houston, Texas 2013-2014, (Green, 2014) is summarized in the table below. All figure are in thousands of US dollars ($).
|
Budgetary Amounts |
Actual Budget Basis |
Variance with Final Budget |
||
| Original | Final | |||
| Revenues | ||||
|
Taxes and assessments Licenses and permits Charges for services Intergovernmental grants Fines and forfeits Interests Other sources |
1,788,458 32,819 114,772 21,063 38,447 3,000 30,270 |
1,788,458 32,819 114,420 21,063 38,447 3,000 30,270 |
1,826,260 35,757 117,873 20,897 35,176 2,972 13,333 |
37,802 2,938 3,453 (166) (3,271) (28) (16,937) |
| Total revenues |
2,036,887 |
2,036,535 |
2,082,023 |
45,488 |
| Expenditure | ||||
|
Legislative and executive Office of business opportunities Municipal courts Elections Financial administration Legal City Secretary Planning and development Human resource Public safety Public works Department of Neighborhoods Health Housing Parks and Recreation Library Retiree benefits Other current expenditures |
13,685 2,574 25,236 2,000 67,254 15,233 862 7,995 3,494 1,169,961 147,073 11,327 55,832 1,348 64,872 38,345 15,112 114,109 |
13,841 2,638 25,080 2,000 72,058 15,468 862 7,744 3,559 1,185,595 150,331 11,433 53,417 1,348 65,465 38,359 12,612 106,395 |
13,281 2,550 24,486 2,268 67,518 14,931 755 7,506 3,300 1,182,564 149,175 11,154 52,985 1,285 64,810 37,906 10,920 102,494 |
560 88 594 (268) 4,540 537 107 238 259 3,031 1,156 279 432 63 655 453 1,692 3,901 |
| Total expenditure |
2,071,195 |
2,092,136 |
2,065,415 |
26,721 |
Note. City of Houston, Texas: Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014. Retrieved from http://www.houstontx.gov/
Overall, the total revenue went above the budget by $62 million. Significance variances were experienced in property tax revenues ($30.8 m over the budget), mixed beverage revenue taxes ($4 m over the budget) and industrial assessment ($1.5 m over the budget).The total expenditure was also below the final expenditure budget for the General Fund by $20 million. Some of the significant variances were in; general government expenditure ($ 6.7 million below budget) and retiree benefits ($1.7 million below budget).
Problematic Areas
The main problematic areas in the agency are the funding of public school’s system and the transportation. The system satisfies minimum constitutional requirements but is not efficient for the equitable distribution of finances to ‘rich’ and ‘poor’ schools. The allocations shortchange some schools at the expense of others. Insufficient funding is availed for public education in the city despite growth in academic standards expected. The reason for these disparities is the dependence of Houston on property taxes with richer neighborhoods having higher tax revenues than poorer ones.
Funding for transport which is under public works is also limited. This has resulted in the derailed transport systems in the City. From massive traffic jams to the nearly defunct intercity rail system, the City of Houston is in need of a stir up in the financial department to improve transport facilities. Transportation is one of the greatest contributors to any city’s economic growth (Bartle, Hildreth, and Marlowe, 2012). There is, therefore, need for steps by the local government to take steps at addressing the issues.
Recommendations
A refinement of the City’s legislation is needed to control the financing of public schools. The city officials should strive to create improvements in this field so as to provide quality education for the children and thus delivering value for the taxpayers’ money. There should also be an increased allocation of funds to public schools to sustain the quality standards of education that would be beneficial to the students.
There is a need for creation of a transportation improvement program within the financial system. The program would receive financing from the city to carry out improvement in public transport including highways, transit, and roadways, pedestrian and bicycle lanes, rehabilitation of existing transportation facilities, and improvement of the subway system. The budgetary allocation committee should then also increase the funding to the transport department to meet the plans of the created improvement program.
Conclusion
In conclusion, the City Houston is experiencing significant growth in most of its sectors. There is, however, need for improvement for some areas that are causing problems to its financial administration. New programs need to be introduced and implemented as recommended in the paper to ensure the economic success of the city. There is need for better financial management and budgetary planning to ensure sound development in the region. There is need to streamline the funding of public services like schools since they form part of the problematic areas.
References
Bartle, J. R., Hildreth, B. W., and Marlowe, J. (Eds.). (2012). Management policies in local government finance, 6th edition. United States: International City/County Management Association (ICMA).
Green, C.R. (2014). City of Houston, Texas: Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2014 [Table]. The City of Houston Official Site for Houston, Texas . Retrieved from http://www.houstontx.gov/controller/cafr/cafr2014.pdf
