Norfolk Budget Review, Essay Example

Budget Message

City Manager Marcus D. Jones states in his budget message that the city of Norfolk will continue further steps in analyzing and integrating new initiatives to improve their operating efficiencies. He directly points the finger at the costs of debt service, health insurance, and retirement in suggesting that they are expected to increase. Because Jones is expecting the costs of these accounts to increase, he specifies that it is now a priority to identify methods of minimizing them. The finger is also pointed at employee salaries in the budget message. Jones goes on to address the idea of solutions for any identified problems in salary compression. Pay range is analyzed by position and benefit programs which all appear to be a blame for budget pressure.

At the start of the budget message, there is immediate praise to current administration. Jones first praises the City of Norfolk themselves, describing them as a “well managed government”, twice. The National Civic League is then praised when Jones acknowledges that the City of Norfolk has gained their approval in regarding them as an “All American City”. Then, three of Norfolk’s programs were praised for being awarded for addressing challenges in the community and continuing innovations to resolve such challenges. These three programs praised were Veterans Initiatives, Flood Mitigation, and Neighbors Building Neighborhoods. Jones also points out that these programs were initiated based on the City of Norfolk’s “priority settings process” which is a statements intended to praise the city itself once more.

The budget message specifies six City Council priorities. These were a part of the City’s priority setting process. These priorities consisted of Accessibility, Mobility, & Connectivity, Economic Vitality & Work force development, Environmental Sustainability, Lifelong learning, Safe, Healthy, & Inclusive Communities, and a Well Managed Government. However it is noted that there is a higher area of priority on two of them which are on Lifelong Learning and Economic Vitality & Workforce Development.

It is noted that there are various trade-offs structured in the budget development process. The very first indicator of who is facing whom is the first trade-off listed which provides a two percent salary increase for city employees starting January 2014. This two percent increase in salary is coming out of the tax payers’ pockets. Then immediately the second listed trade-off hits tax payers with an increase in real estate tax rates of two cents. This tax payer cost is for the interest of the School Construction, Technology, and Infrastructure Program (CTI). The development of two new fire stations is listed, as well as city administered health care plans, decentralization of storehouse operations, communications and public information with information technology, improving customer service, emergency ambulance fees, and police record service fees. Ultimately, tax payers are going to fund all of these trade-offs. However if it benefits the citizens of Norfolk, then there are really no losers here. The only losers would be the taxpayers that fail to support such tradeoffs.

The primary audience is noted on the first page of the budget message, which of course is the Honorable Mayor and the City Council of Norfolk, Virginia. Many accounting practices regarding the City of Norfolk government are addressed through calculations of taxes, revenues, and expenditures among other things. This would suggest that parts of the audience are the government accountants, tax attorneys, and even possibly the internal revenue service.

This budget message does not seem to be directly aimed at promoting any public relations. However, there are points made that are likely to be picked up by the media. The media is likely to pick up anything that has to do with an increase in taxes and how those increases are intended to be used by the city. This is because tax payers generally would like to know is their tax dollars are being used in an appropriate manner.

Improvements in neighborhood infrastructure may also be picked up by the media as the citizens of Norfolk will want to know about the city’s plans for real estate. Concerns for education, specifically in this budget message, school capital may also be picked up by the media to tell parents about what is going on in the city’s public schools. Funding is being used for the priorities of paying debts for school construction, funding technology to enhance the learning experience in the class room, and to provide additional funding to improve infrastructure. Expanding to education on the professional level, there are also budgets for internships for high school and college students for careers in public safety. The budget message addresses funding for its Public Safety Internship Program. The media may want to relay this to the community as it not only provides careers opportunities for students, but also helps to stimulate the public safety force. Old Dominion University is also acknowledged for partnering with the Office of Emergency Preparedness and Response (EOC) and this is another possible media attraction that makes for a good story.

Budget Overview Section

The General Fund Budget Overview presents the general funds for revenues and expenditures as well as how they are being allocated. Norfolk’s approved amount of general fund revenues for fiscal year 2014 totaled $817,500,799. This was nearly an 18 million dollar increase from the approved general fund revenue of $799,790,809 from fiscal year 2013. These general fund revenues are divided into 25.1% for real estate taxes, 22.6% for state and federal funds for education, 9.3% for consumer taxes including sales, hotel meals, admissions, cigarette taxes, 9.7% for other state funds, 4% for state funds for health and human services, 6.1% for other property taxes, and 23.2% for other city funds including local taxes, fees, fines, rent, interests.

The general fund expenditures for fiscal year 2014 were divided into 38.2% for education, 9.3% for debt payments, 6.2% for health and human services, 13% for public safety, and 33.3% for other departments and services.

Estimated revenues by health care funding sources show for a pivotal change for approved funding in fiscal year 2014 from 2013 as well as 2012. Actual health care funds were zero amounts in 2012. Then the approved revenue for health care funding in 2013 was also zero amounts. However, fiscal year 2014 approved for $57,931,973 in health care revenues. This substantial difference contributed to the 7.7% increase in the total of all funds for estimated revenues between 2013 and 2014. Conversely, federal aid was significantly reduced by $378,304 or 3.7% from the approved amount from fiscal year 2013. It was noted that the drop in federal aid was mostly due to the end of the federal Education Jobs Fund program.

Fiscal year 2014 approved expenditures experienced almost a 20 million dollar increase. The sub-total of expenditures, not including the new health care funds that were approved, was $1,023,141,109. This was a 1.9% jump from fiscal year 2013’s $1,004,048,515. From fiscal year 2012’s amount for Public Assistance, which was $17,120,493, the approved amount for 2013 was significantly reduced to $14,264,219. It is noted that this reduction from 2012 was mostly due to the Commonwealth of the state of Virginia changing the reimbursement model for specific child care programs. Despite these changes effecting Public Assistance, fiscal year 2014 experienced a $49,919 increase, given this 0.3% increase was not significant enough to compensate the declines from 2012.

In separating the estimated expenditures by fund type, General Funds, Special Revenue Funds, and Enterprise Funds all showed increases in their approved amounts from 2013. The only account that did not experience a gain was the Internal Service Funds, which suffered a loss of $2,200 from fiscal year 2013.

In estimated general fund expenditures by area for fiscal year 2014, the Executive service area suffered a dramatic $2,029,500 or 31.6% decrease from the approved amount in 2013. Conversely, the General Management account experienced a $3,018,907 or 8% increase in fiscal year 2014 from the approved amount in 2013. This decline in the Executive account reflects the transfer of communications and public information to the General Management account. This is what shows the correlating decrease from the Executive account to the increase in the General Management account.

City tax rates and fees reported some minor fluctuations in fiscal year 2014. Regarding property taxes, the general real estate taxes jumped by four cents from 2013’s $1.11 per $100 of assessed value to $1.15 per $100 of assessed value. Real estate taxes for the downtown improvement district also jumped by four cents from 2013’s $1.27 per $100 of assessed value to $1.31 per $100 of assessed value approved in fiscal year 2014. There were no fluctuations in personal property taxes between fiscal years 2013 and 2014 as all rates remained the same. Regarding other local taxes, there was zero activity as all rates remained the same from fiscal year 2013 through 2014. Refuse disposal taxes also all maintained congruent rates. Water and waste water fees showed minor fluctuations as water fees increased by fifteen cents from fiscal year 2013’s $4.15 per 100 cubic feet to 2014’s $4.30 per 100 cubic feet. Waste water also increased, but by fourteen cents from fiscal year 2013’s $3.39 per 100 cubic feet to 2014’s $3.53 per 100 cubic feet. Storm water fees showed minor fluctuations as residential fees jumped from $9.96 to $10.24 per month between 2013 and 2014; while commercial fees jumped eighteen cents from $7.18 to $7.36 per 2,000 square feet between 2013 and 2014. All utility taxes, both commercial and residential, remained the same from 2013 to 2014.

The ending fund balance at June 30 for fiscal year 2014 was $53,660,088, which was short from both 2013’s approved balance of $73,235,718 and 2012’s actual ending balance of $92,507,191. The summary of changes in net assets for the city remained the same at $355,903,784 approved for both 2013 and 2014.

Detailed Budget Section

The General Management budget consists of four departments. The communications and technology department presented the priority of economic vitality and work force development with the objectives of expanding, attracting, and retaining businesses within Norfolk. The new measure of technology related events in Norfolk increased from 25 events approved in fiscal year 2013 to 30 events approved in 2014. Another objective was to connect businesses and workers. This new measure of the number of community leaders recognized and encouraged by the Civic Opportunity and Outstanding Leadership (COOL) awards increased from 15 to 20 between 2013 and 2014.The finance department a new measure of the number of instructional communications sent to vendors doing business with the city had a dramatic increase from 10 to 10 between 2013 and 2014. A notable change in the General Services department was the increase in percentage of customers who rate service as meeting or exceeding expectations. This percentage increased from 92% to 94% from 2013 to 2014. The human resources department presented an increase regarding the priority of eliminating barriers in the work force. The measure of new hires who were veterans increased from 15% to 18% from 2013 to 2014.

The Community Development budget consists of two departments. The planning and Community Development department introduced a new measure in 2014 which improved the time-to-decision for job applicants in the workforce. 2014 gained 2 new processes for this measure that were never used in previous years. The Development department contributed to opening job opportunities as the total number of small, women, veteran, and minority owned businesses increased from 502 to 528 between 2013 and 2014.

The Parks and Recreation budget consists of five departments. The Libraries department stimulated purchases of library materials as 35,000 materials were purchased from libraries in Norfolk, an increase of 5,000 from 2013. The Cultural Facilities, Arts, and Entertainment department showed an increase of participants in the MacAurthur Memorial Education and Culture program from 40,000 in 2013 to 45,000 in 2014. The Zoological Park department increased labor benefits by increasing the number of zoo staff receiving advanced training from 4 in 2013 to 5 in 2015. The National Maritime Center did not present objectives concerning labor. However, their total expenditures summary shows a decrease from $5,542,410 in 2013 to $5,535,500 in 2014. The recreation, Parks, and Open Space department contributed to eliminating barriers in employment by increasing the number of students recruited by enhancing effectiveness in recruiting materials for the Norfolk Emerging Leaders Municipal Intern Program. This number jumped from 1 in 2013 to 4 in 2014.

The Public Health and Assistance budget consists of two departments. A notable chance in the Public Health department was the increase of certifications for managers at Norfolk food establishments. This number increased from 362 in 2013 to 380 in 2014. The Human Services did not present increases regarding labor, but priority outcomes resulted in an increase of the number of children who improve and require less critical care from 10 in 2013 to 20 in 2014.

The Public Safety budget consists of two departments. The Police department increased the percentage of rank leadership officers who complete training from 0% in 2013 to 14% in 2014. The Fire Rescue department contributed to eliminating barriers in the workforce by maintaining a 100% completion rate for participants in their internship program in 2014, a significant increase from 0% in 2013.

The Public Works department had objectives focused on city construction as well as the environment. Total expenditures increased from $42,000,527 in 2013 to $42,983,976 in 2014.

Application Questions

Economic factors such as changes in interest rates or inflation definitely affect Norfolk’s city budget. This is because the budget is dependent on the purchase power of the economy. If the economy does not have enough purchase power, they will not stimulate the economy through sales revenue, and taxes won’t be collected by either the consumer or the businesses.

Demographic factors such as population growth, age, and household income also affect Norfolk’s budget plan. This is because an increase in population means a wider distribution of taxable income for the city budget. Also, age can affect the budget because more people in the children’s age bracket can stimulate the need for more schools, materials, and teachers to employ. People in the upper age brackets will be looking for employment and the city needs to be able to budget projects the increase job growth.

Intergovernmental issues such as changes in federal or state aid or laws affect Norfolk’s city budget, especially those regarding healthcare. Certain criteria for citizens to receive healthcare for certain diseases in the state can affect the rate of taxes to be collected for relevant state health care programs. Also, citizens fail to meet the requirements of federal aid, they will turn to state aid and this also correlates to tax fluctuations.

The Norfolk city budget illustrates transparency in their focus on the city budget alone. Although there are various budgets concerning revenues, expenditure, and tax rates, the simplicity of all of these accounts being relevant to a single entity—the City of Norfolk—illustrates transparency in their financial statements. The Norfolk city budget also illustrates the city’s accountability by maintaining their responsibility to ensure a healthy job market, properly spent tax dollars, and addressing room for improvements.