The Capital Budget

The Capital Budget

Overview of Selected Local Government

The city of Memphis is located in the US state of Tennessee. The city has strategic and economic importance to the US country. Capital budgeting processes adopted by the City Council have been analyzed and examined via trend analysis of the past five years' performance. All the estimates and forecasts have been made under certain assumptions pertaining to the quality of information and data extracted from the official website of the City of Memphis (2013).

Payroll Forecast

Analysis of the budget summary for FY 2013 provided little information on compensation for employees; hence, all the enlisted expenditures were assumed to be payroll expense incurred by the local agency. At the given varied levels of pay increase, forecasted changes in the agency expense are illustrated by table 1. In the city of Memphis, average employee salary for employees is $48,554, which is exclusive of numerous benefits and compensation offered by the city.

Payroll Expenditures

Actual 2013

Forecasted 2014 @ 2%

Forecasted 2014 @ 4%

Forecasted 2014 @ 5%

City attorney

9,681,056 9,874,677 10,068,298 10,165,109

City council

1,495,186 1,525,090 1,554,993 1,569,945

City court clerk

3,357,353 3,424,500 3,491,647 3,525,221

City court judges

600,737 612,752 624,766 630,774

City engineering

7,549,122 7,700,104 7,851,087 7,926,578

Community enhancement

- - - -

Executive

5,017,227 5,117,572 5,217,916 5,268,088

Finance

4,755,458 4,850,567 4,945,676 4,993,231

Fire services

131,277,816 133,903,372 136,528,929 137,841,707

General services

20,111,051 20,513,272 20,915,493 21,116,604

Grants & agencies

103,046,681 105,107,615 107,168,548 108,199,015

HCD

4,590,943 4,682,762 4,774,581 4,820,490

Human resources

7,179,978 7,323,578 7,467,177 7,538,977

Park services

34,555,088 35,246,190 35,937,292 36,282,842

Police services

232,609,495 237,261,685 241,913,875 244,239,970

Public services & neighborhoods

- - - -

Public works

23,206,382 23,670,510 24,134,637 24,366,701

Information Systems

14,665,670 14,958,983 15,252,297 15,398,954

Total Payroll Expenditures

603,699,243 615,773,228 627,847,213 633,884,205

Table 1: Payroll Forecast for FY 2014 (City of Memphis, 2013, p. 373)

Analysis shows that increase in employment compensation benefits will result in overburdened cost for the agency. Consequently, it can affect capital budgeting procedures. On the other hand, increase in pay and compensation will benefit the agency by increasing motivation, commitment and job satisfaction among employees. Analysis identifies prudent strategies of city mayor and council in an attempt to balance the forecasted increase in payroll expenditures. Similar to 2009, the city can balance cost and associated benefits by eliminating allocated funds to vacant posts in a manner that well serves individual goals of each stakeholder.

Figure 1: Payroll Forecast

Trend Analysis

Over the past five years, agency has shown mixed performance trend. A comparative study of agency revenues and expenditures shows proportional increase in the revenue relative to expenditure. However, FY 2013 posted a no-profit and no-loss situation because agency revenues and expenditures were equivalent.

Performance Trend

2010

2011

2012

2013

2014

Total Revenue

577,300,012 634,815,930 643,112,709 603,699,243 582,653,857

Total Expenditure

561,419,764 630,559,624 615,529,875 603,699,243 613,523,563

Table 2: Performance Trend Analysis

Based on previous performance, the agency has forecasted greater proportion of increase in total expenditure than revenue due to proposed plans for city development and expansion.

Figure 2: Trend Analysis

Vertical trend analysis of agency expenditures for the last five years shows mixed trend of total ...