BUDGETING AND FINANCE

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The Basics of Public Budgeting and Financial Management

· Chapter 8: Effectively Communicating the Data, pgs. 224-245

M8D1: Effective Data Communication

(SEE ATTACHED .PDF)

Within the notes, you’ll find guiding questions, articles, and videos to help spark the conversations. To start the course off, let’s talk about the differences between public and private budgets. Let’s also explore the implications of federal budget differences on the general public. To earn maximum points, be sure to review the discussion guide and the discussion criteria links below.

PEER ONE:

Baltimore’s presentation relies more on numerical representations of change through displaying spreadsheets. Baltimore’s presentation was much shorter than Denver’s. However, this was achieved through a denser description of information that could make it harder for a layperson to interpret. Baltimore utilized more general categories of describing areas of impact and the amount that would be cut with no specific services mentioned. Baltimore’s presentation was also much more catered to budget analysts who already had in-depth knowledge of past budgets and specific expenditures. This can provide a significant benefit internally, especially when the speed of dissemination of the information is essential.

Meanwhile, Denver’s presentation provided a better frame of reference as it utilized multiple ways of achieving relatability through using methods such as using baseline averages from other years and areas. First, Denver uses U.S. change as a baseline, while Baltimore only uses yearly change as reference. Denver’s presentation is also easier to read for the average individual, which would help policymakers and citizens understand Denver’s plan clearly. Denver clearly demonstrates its budget strategy to mitigate the loss of revenue with items such as pie charts so that the individual can have a complete view of the budget. Denver’s also had more specificity about where the changes in the budget would be realized. For instance, they said that their community works program would be cut, which would be realized through items such as a 50% cut in community garden planting and public area trash pickup (Budget & Management Office [BMO], 2020).

            Baltimore collected the majority of their revenue for the general fund from property and income taxes (Office of the County Auditor [COA], 2020). For F.Y. 2020, they anticipated an increase in this revenue despite COVID-19 over previous years (COA, 2020). However, they anticipate F.Y. 2021 to be less than F.Y. 2019 (COA, 2020). The use of these funds is broken down into many services, but the majority is toward education at 39.2% (COA, 2020). The other substantial expenditures go to general government function and public safety, both at 18.3% of the budget (COA, 2020). However, when it comes to decreasing the expenditure, they only planned to reduce services for the aging, planning services, school funding, and capital expenditures for PAYGO (COA, 2020). Moreover, many of the expenditures that the city undertakes are basic maintenance of infrastructures such as bridges, sewage maintenance, and other essential items (COA, 2020). These items make any cuts to spending very difficult as they represent daily needs.

            Meanwhile, Denver’s revenue sources include sales tax, lodgers tax, and general fund revenue (BMO, 2020). However, as COVID-19 impacted a large portion of their income, they saw a dramatic decrease in revenue for this year. They provided a very comprehensive plan on reducing spending, such as leaving job vacancies unfilled, reducing travel and training expenses, reducing services provided to avoid overtime, and closure of non-essential services and buildings (BMO, 2020). Moreover, Denver discussed how COVID-19 inadvertently forced the city to save money, which will be useful to reduce other potential cuts (BMO, 2020).

            The level of specificity that Denver employs to demonstrate their sources of revenue and expenditures is noteworthy. For instance, one of the areas of revenue through retail sales that the U.S. overall suffered was in the electronics and appliances sales with a decrease of 64.8%; meanwhile, Denver saw an actual increase of 4.2% (BMO, 2020). Additionally, Denver is very explicit in where they will reduce spending, especially when considering the Parks and Recreation services, where they will cut two million dollars (BMO, 2020). Denver’s breakdown of all services that will be reduced in this department will help citizens understand where savings can be realized. Another interesting item that Denver funds are the Winter Park Trust Fund (BMO, 2020). This is a unique line item for the area. Due to COVID-19, they will reduce spending by only repairing and restoring existing facilities (BMO, 2020). Overall, Denver has many services they can more easily cut to minimize expenditures, as many of them are non-essential but nice for the community to have.           

References

Budget & Management Office (2020). The 2020 mid-year reductions. Retrieved from https://www.denvergov.org/content/dam/denvergov/Portals/344/documents/Budget/2020/06172020_FINGOV_2020BudgetUpdate.pdf

Office of the County Auditor (2020, April 30). Overview of the proposed FY 2021 operating and capital budgets. Retrieved from http://resources.baltimorecountymd.gov/Documents/Auditor/Budget_Analysis/FY2021%20Budget%20Analysis/overview.pdf

PEER TWO:

At first glance, the Baltimore presentation looks a bit blue collar even though half the slides were some sort of chart.  The Denver presentation comes complete with enough colors and graphics, even Walt Disney would’ve been proud of this one.  Baltimore’s briefing seems to be a take home, read up on the facts and figures, and bring this slideshow with you to tomorrow’s meeting as we will sit down and go over numbers and see where we are at and where we are going.  As for Denver’s presentation, if someone is briefing this thing I would be lost in the sauce halfway through.  Denver’s briefing begs for a briefer who is an expert on the numbers, and can walk the audience through the Bob Fosse (you may have to look him up) presentation of, “The Greatest Powerpoint Presentation Ever Created”.  As for me, I’d enjoy sitting through Denver’s briefing as I would expect a lovely lemon tart or perhaps a wide assortment of breakfast pastries to accompany my Double Ristretto Venti Half-Soy Nonfat Decaf Organic Vanilla Brownie Iced Chocolate Double-Shot Frappuccino with Foam Whipped Cream Upside Down Double Blended Mocha.  As for Baltimore’s presentation, it’s a grab and go McDonalds breakfast burrito and a cup of joe no creamer or sugar available because the accounting department forgot it was their turn to pick it up, and you know, because we have things to do so let’s get on with it.  On a side note, I can crush about four of those breakfast burritos and keep it moving, just saying.

Denver’s presentation addresses the unemployment rate, the various paths to economic recovery, and highlights the struggles in revenue, citing a 10.5% decrease in general funds this year.  Another glorious, spectacular, picturesque display of information presents a decrease in the Lodger’s Tax as well as Sales Tax, with a projected shortfall only getting worse from March to May, increasing from the original claim of an additional $46 million, totaling the projected loss of 2020 to reach $226 million in revenue. Two more breathtaking spectacles of absolute amazement allows the audience to fully comprehend the impact parking fines, parking meters, and rec memembership will have on the economy, reinforced by the second emphasis on lack of sales tax, and lodger’s tax.  The remaining slides presents options of furlough, spending cuts, and adjustments to the original budget, and then takes the audience in to possible strategies and timelines for the 2021 budget.  The 2021 budget will focus spending on helping the community get through this economic crisis, assisting businesses through grants, offsetting emergency costs and ensuring public buildings are safe (corona), and creating a contingency plan for a possible second wave of this pandemic.

Set on a white background with black lettering, complete with font, size and spacing changing with every slide, the Baltimore budget proposal leads off with facts and figures straight out of the gate.  By the second, third and fourth slide, the audience should be through their first breakfast burrito and have a firm understanding of how the city is generating revenue.  Slides 5 through 8 allows the audience to see how the funds will be allocated and which internal agency budgets will be affected.  The FY 2021 Budget General Funds Expenditures Significant Changes: FY 2020-2021 slide looks like a hot mess, leaving the audience to have to squint and figure out what the right side of the chart is explaining.  Although this slide uses four colors and only three different forms of font and sizes, it demands the briefer to be knowledgeable and capable of relaying this information to the audience, or else it’s another trip to the black coffee and burrito table for me (but I would probably lie and say I had to use the bathroom, no sense being rude).  It appears there will be a revenue shortfall by $17.4 million in 2021 (General Funds Surplus-Budget Plan slide later on in the briefing), but the first briefing slide indicates a 3.5% increase to the budget, I think.  Baltimore’s focus for 2021 seems to be on the sewer and water enterprise, making up 55% of proposed capital projects, while the community projects will only receive 4%.  While the city of Denver presented a lovely superfluity of possibilities for 2021, Baltimore’s “What’s Next” slide highlighted the upcoming Agency Hearings in late April, accompanied by the Budget Adoption meeting on May 21st.    The Denver briefing seemed more in depth, easier on the eyes, and full of life.  I would think the Denver briefing would keep an audience engaged a bit more on the budget information, while the Baltimore briefing seems as though I would be in the meeting room for roughly 15-20 minutes, with the boss stating, “You got the info, now get to work” at the end. 

Denver Department of Finance. (2020). Denver’s Budget. Retrieved from https://www.denvergov.org/content/denvergov/en/denver-department-of-finance/financial-reports/city-budget.html

Office of the County Auditer, Baltimore County Maryland. (2020). Overview of the Proposed FY 2021 Operating and Capital Budgets. Retrieved from http://resources.baltimorecountymd.gov/Documents/Auditor/Budget_Analysis/FY2021%20Budget%20Analysis/overview.pdf

PEER THREE:

Effective Data Communication

Data can be communicated effectively using data visualizations. Data visualization is the process of taking raw data and transforming it into charts and graphs that explain the numbers. Based on this definition, charts and graphs help to give meaning and purpose to raw data. The most popular data visualizations formats are bar (column) charts, line graphs, tables, and pie charts.

A pie chart is used to displays proportional data.  A bar chart shows numerical and discrete comparisons across categories. The horizontal axis shows specific categories of data being compared. The vertical axis, alternatively, shows the discrete value scale.  A line graph is used to show trends in a data set. In this paper, Baltimore County and Denver Mayor’s budget presentations will be analyzed.  It is divided into three sections. Part 1 highlights the expected sources of revenue for each County. Part 2 elaborates on income and expenditures that caught my attention.  My thoughts about the budget presentations are presented in part 3.

Part 1

Denver Mayor’s Budget

The City of Denver has a $1.49 billion budget for 2020. The revenue sources used to fulfill that budget are diverse and complex as the services provided. Sales and taxes make up about 50% of Denver’s overall budget. The remaining 50% of the City’s budget is funded by a wide variety of other revenue sources, including marijuana sales tax, property tax, occupational privilege tax, and agency revenues (Slide 18). 

The sources of revenue the city depends on are just as important as the decisions made on how to spend the money. Given this fact, the City of Denver has specialized sources of revenue that are used to pay for specific functions that directly benefit an individual or group of people. These sources are DHS mills and transfer, Environmental Services Enterprise Fund (ESEF), and CIP offset of transfers (Slide 19).

DHS mills and transfers funds the creation of HOST and ESEF, the Office of Climate and Sustainability. But some revenue sources are used to pay for anything the city does. These general revenues pay for Denver’s core services, such as fire, police, and street maintenance, which benefit everyone. Overall, Denver’s budget presentation focused on the City’s biggest expenditures, which are parks and recreation, public works, and public safety.

Baltimore County Budget

Baltimore County’s total operating budget for the 2021 fiscal year is $3.5 billion budget. The operating budget includes the capital budget ($94.6 million), general funds budget ($2.2 billion), gifts and grants budget ($235.8 million), non-county budget ($1074.6 million), and enterprise budget ($347.4 million). The operating budget pie chart in section 2, page 1, shows the general funds budget constitutes 56.8% of the County’s total budget. So, almost half of the County’s revenue is allocated to the general fund. There are two major categories of revenue sources in Baltimore County’s:  taxes and non-taxes revenues. Tax revenues include sales and services tax, property taxes, and Income taxes.  In the proposed 2021 general fund budget, property taxes were the largest single source of revenue.  It accounts for 47.7% of all Baltimore County general fund revenues. Income tax and sales tax account for 37.7% and 6.4% of the total revenues, respectively. Sources of non-tax revenues include fees and other charges (2.4%), state aid (2.3%), general fund surplus (1.3%), fines and penalties (0.3%), licenses and permits (0.2%), federal aid (0.2%), and investment income (0.1%). Overall, approximately 91% of the Baltimore county budget is funded by taxes, and non-taxes fund the remaining 9%.

Additionally, Baltimore County has a $94.6 million capital budget. The capital projects can fall in any of the following categories: 1) buildings, 2) schools, 3) waterway improvements, 4) recreation, 5) community improvements, 6) storm drains, 7) bridges, 8) refuse disposals, 9) roads, and 10) community college. The expected sources of revenue that Baltimore County relies on funding capital projects are debt premium, program open space, and reallocation, general funds (PAYGO), reallocated G.O. bonds, stormwater fees, federal aid, and state aid. The pie chart in section 3, page 2, shows the debt premium is the largest source of capital revenues. It accounts for 39.4% of the total revenues.

Baltimore County’s budget allocations have economic impacts. Given that taxes account for 92.2% of Baltimore’s budget, it means citizens bear a higher tax burden compared to other counties. A higher tax burden lowers productivity because it discourages investments, savings, innovation, and work.

Part 2

In any budget presentation, one has to check how revenue and expenditure estimates are presented. Baltimore County’s budget presentation was different from that of Denver. In Baltimore County, tables and pie charts were used to present the overall picture of the 2020 budget. Property taxes and education, college, and libraries expenditures caught my attention because it accounts for almost half of the County’s revenue and expenditures, respectively.  As for the capital budget, the debt premium caught my attention because it is the largest source of revenue.  In Denver’s proposed budget, a pie chart was used to show general fund expenditures allocation. Public safety caught my attention because it occupied a large portion of the pie chart. It means public safety is the Mayor’s leading priority. Economic development and net other reserves and contingencies are the Mayor’s least priority areas because it occupies a small portion of the pie chart.  Also, one has to check if a budget has a written narrative. Both budget presentations lacked a written narrative.

Part 3

Denver’s proposed budget is not that detailed compared to Baltimore County’s budget. Denver’s Mayor did not specify the sources of revenue or give the breakdown for all expenditures and incomes were presented. Baltimore County’s budget was very comprehensive. First, all the five components of the Baltimore’s operating budget were outlined: capital budget, general funds budget, gifts and grants budget, non-county budget, and enterprise budget. The general funds budget is the largest, as it accounts for 58.6% of the total budget. Secondly, the sources of revenue for both the general fund and capital budget were specified. Third and lastly, budget data was also communicated effectively using tables and pie charts.  Therefore, a PowerPoint presentation is not effective in communicating budget data (Denver’s Mayor used a PowerPoint to present the City’s budget data). I highly recommend that Counties should use reports to present their budget data just like Baltimore County. I think tables and pie charts are the most effective ways of presenting budget data. Pie charts colorful and easy to understand compared to bar charts and line graphs. Both Denver and Baltimore counties used pie charts. Also, each pie chart should have a corresponding data table. Tables help to break down multiple data categories.

In conclusion, Denver’s proposed a $1.49 billion budget for 2020, and Baltimore has adopted a $3.5 billion budget for 2021. Both budgets reflect on citizen’s needs. In Baltimore County, almost half of the general funds are used to fund education (Education expenditure account for 47.2% of the total expenditures. In Denver, public safety is the Mayor’s key area of concern. It accounts for 40% of total expenditure. Both public safety and education reflect the citizen’s needs.

References

Baltimore County Government. (2020, May 29). Analysis of executive budget – Baltimore County. https://www.baltimorecountymd.gov/Agencies/auditor/budgetanalysis.html (Links to an external site.)

Denvergov.org. (n.d.). The Mayor’s 2020 Budget. https://www.denvergov.org/content/denvergov/en/denver-department-of-finance/financial-reports/city-budget.html (Links to an external site.)

Menifield, C. E. (2017). The Basics of Public Budgeting and Financial Management. [eCampus]. Retrieved from https://ecampus.vitalsource.com/#/books/9780761869764/