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Municipal Budget Research Paper

Municipal Budget Analysis The objective of this work in writing is to assess the budget of the Municipality of Chicago, Illinois in terms of how well budget documents and auxiliary information address each of these functions. The assessment will be substantiated with examples and information from documents studied. This work will examine a variety of sources including the most recent approved budget of Chicago, Illinois.

The City of Chicago 2011 budget includes provisions of no property tax increases and no new tax, fee, or fine increases to balance the budget. This is to effect that there will be no additional budget to residents already impacted by the recession. Secondly, included is the preservation of $576 million in asset lease funds to protect Chicago's future, which is inclusive of maintaining the entire $500 million Skyway long-term reserve. Third stated is the maintenance of the commitment to provide critical services to Chicago residents, which includes hiring two new police classes in 2011. Finally, it is reported that there are provisions for ongoing better management of government through the reduction of expenditures through eliminating 277 positions, restructuring departments and maintaining the hiring freeze and salary reductions that have been stated in the 2011 City of Chicago budget.

I. Population of Chicago -- Historical and Present

The population of the City of Chicago decreased from the 1970 number of 3,366,957 to the 2009 number of 2,851,268. (2006 American Community Survey)

II. Future Projections for Growth

It was reported by the "Inside' publication that the City of Chicago "took a major step forward in planning for the future of its downtown with the release of the Chicago Central Area Plan, a guide for continued economic success, physical growth and environmental sustainability for the coming decades, earlier this month." (Inside, 2002) It is related that the Central Area Plan is the first downtown plan that the City of Chicago has produced since 1958. (Inside, 2002) The Central Area Plan is reported to be the result of more than two years of talks and reflections on the part of a "broad group of Chicagoans" which includes a 24-member Steering committee of elected officials, government, business and civic leaders worked to assess the challenges ahead and to create a responsive and visionary plan." (Inside, 2002)

Stated as three guiding themes for Chicago's Central Area served as the 'rules of the plan'. The Central Area is comprised by "vibrant and diverse mixed-use urban districts, Transportation and Access -- to ensure the Central Area remains accessible and connected and Waterfronts and Open Spaces to reinforce the Central Area's focus on its waterfronts and open spaces." (Inside, 2002) The following key recommendations have bee made by the Central Area Plan:

(1) Expand the Loop's high-density office core into the West Loop around the Chicago River, transit stations and to the Kennedy Expressway between the Fulton and Jackson loft districts.

(2) Re-organize higher density development outside the Loop so that it is focused on major corridors, where transit can be provided and the centers of new urban neighborhoods formed.

(3) Create a new West Loop Transportation Center below Clinton Street, including an exclusive busway, a CTA subway, commuter and inter-city rail.

(4) Complete the development of the Chicago River Corridor throughout the Central Area with a continuous riverwalk and a system of riverside parks. (Inside, 2002)

Enactment of this plan over the next two decades will serve to strengthen "downtown Chicago's economic engine…" expand its parks and open spaces, and extend and improve its rapid transit and roadway systems. (Inside, 2002 paraphrased)

III. Expenditures -- Five Largest Operating Expenditure Categories by Subject/Service Area and the Respective Amounts

The five largest operating expenditures for the 2011 City of Chicago budget are those stated as follows with the corresponding amount of expenditure for each category:

Appropriations

2001 Recommendations

2009 Expenditures

0000 Personnel Services

508,750

461,744

0100 Contractual Services

15,000

33,175

0300 Commodities and Materials

12,000

11,977

0400 Equipment

9,500

9,496

0700 Contingencies

15,000

14,494

Appropriation Total

$560,250

$531,386

Source: City of Chicago Budget Summary 2011

The following two charts contain the revenue and expenditures...

Major Sources of Revenue
The major sources of revenue for the City of Chicago are stated to be inclusive of the following stated sources:

(1) local tax;

(2) proceeds and transfers in (3) Intergovernmental revenue;

(4) Local non-tax revenue

(5) Property-tax supported funds; and (6) Non-property tax supported funds. (City of Chicago Budget Summary 2011)

The following chart shows the expenditures for 2011 City of Chicago Local Funds.

Figure 2

Expenditures -- 2011 Local Funds

Source: 2011 City of Chicago Budget

The following chart shows the 2011 City of Chicago Corporate Fund Expenditures.

Figure 3

Expenditures 2011 Corporate Fund

Source: 2011 City of Chicago Budget

The following table lists the tax and non-tax revenue for the City of Chicago 2009, 2010 and Proposed 2011.

Figure 4

Tax and Non-Tax Revenue 2009, 2010, and Proposed 2011

Source: 2011 City of Chicago Budget

V. Enterprise Activities -- Major Enterprise/Proprietary Funds (Self-funded services: water, solid waste, trash collection) and the total revenues and expenditures involved in enterprise activities

Primary enterprise activities include the following categories with total revenues and expenditures as shown in the table labeled Figure 5.

Figure 5

Enterprise and Fund Appropriation Summary (in millions)

Source: 2011 City of Chicago Budget

Municipal Debt

The city of Chicago is reported to continue to make "significant expenditure and personnel reductions and implement additional creative practices to operate more efficiently and effectively in difficult financial times." (2011 City of Chicago Budget) The bond ratings for the city were reported to remain high as of August 2010 with Fitch assigning a rating of 'AA', Moody's Investors Service has assigned a rating of 'Aa3' and Standard & Poor's rating assigned is stated to be 'AA-'. (2011 City of Chicago Budget)

The City of Chicago's net direct long-term obligation debt - $6,952 billion or $2,400.67 on a per capital basis. (2.17% of the total estimated cash value of property located within the city. The city intends to use $374.8 million of the property tax levy for the purpose of paying general obligation debt service with an addition $36.6 million being required for the City College eBond Redemption and Interest Fund. (2011 City of Chicago Budget)

Part Two: Budget Reduction Exercise

Select one department/program of the city funded primarily through the General Fund and develop a 10% operating budget reduction proposal for that department/program.

1. Provide a breif overview of the department/program

2. Using a table, present the current budget then develop a budget planning scenario in which you make a 10% reduction in the operating budget for the coming fiscal year.

3. What specific strategy or method of prioritizing the necessary budget cuts did you use? Present and defend your reasoning; it would be useful to refer to the course readings/theory to support your process.

4. Discuss any projected loss in services and identify the primary and secondary impacts to the citizens of the budget reduction.

Part Three:

Using the same department/program for the budget reduction exercise, write a budget proposal for an increase in the budget. This need not be a 10% increase -- " it can be any amount, but should address a specific problem or issue as explained below. Remember that only persuasive budget requests get funded, so be clear, concise and help policy makers understand what they will be getting for the additional funds.):

1. Describe the problem or issue that the increase of budget will address (new service to be offered, increase customer service, etc. -- " you may be creative, but try to be relatively realistic). Be sure to develop a problem or issue to address here, do not simply reverse the budget cuts you implemented in Part 2.

2. Describe how the proposed budget increase will specifically address the problem or issue.

3. What alternatives to address the same problem or issue were reviewed before selecting this specific budget increase? (Considering alternatives is vital to a strong argument as it will help you understand the advantages and disadvantages of your own proposal -- " do not shirk this step.)

4. Using the budget format of your program,…

Sources used in this document:
References

City of Chicago 2011 Budget. City of Chicago Organization Online Retrieved from: http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetKeyFacts.pdf

2006 American Community Survey. U.S. Census Bureau. Retrieved from: http://en.wikipedia.org/wiki/American_Community_Survey

Chicago Central Area Plan Foresees the Future (2002) Inside. 17-23 July 2002. Retrieved from: http://www.insideonline.com/site/epage/6087_162.htm

2006 American Community Survey. U.S. Census Bureau. Retrieved from: http://en.wikipedia.org/wiki/American_Community_Survey
Chicago Central Area Plan Foresees the Future (2002) Inside. 17-23 July 2002. Retrieved from: http://www.insideonline.com/site/epage/6087_162.htm
City of Chicago 2011 Budget Summary. Retrieved from: http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetKeyFacts.pdf
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