Calma Rainy Day Budget Analysis

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The city of Calma is increasing its budget for the past ten years; it is a reflection that the City maintains its revenue even though it experienced a decline in population by 17 percent over the last 15 years. The city maintains expenditures yearly by revenue collection and is considered to be a "strong mayor" municipality. Income tax is one of the revenues of Municipality; it increased in 2014. The property tax rate has remained the same since 2013. If the mayor’s goals are applied towards the year 2016 budget then the City of Calma is definitely going to do well and increase. She states that a few of her goals include developing a vibrant downtown area for the city, encouraging job promotion and creation in order for economic growth, engaging…show more content…
Balanced-budget meaning that cities almost always plan to have a zero balance at the end of the year while rainy day budget has a surplus on a budget that can be used to other general fund expenditures at the end of the budget year. The city of Calma was using rainy day budget before 2014. Its surplus budget used in the employee benefits fund. The goal of the rainy day budget has been to replenish annually to reach 5 percent of general fund expenditures. It has a positive consequence because the City will make expenditures based on their collection. The City will need to be effectively monitoring its budget. The negative consequence of this budget strategy that the City have no surplus or reserve to carry…show more content…
Throughout examining past budgets, it was noticed that states usually tend to shift their expenditures towards the future in order to meet their current period budgets, and this usually occurs with states that have strict balanced budget requirements. The positive aspect towards balancing this city’s budget was to make sure that the budget is spent equally and efficiently on areas that need more focus within the city, since the city does not want any tax increases it should be able to spend money on maintaining basic city services for the neighborhoods as well addressing issues such as pension benefits, employment, employee health benefits and so on. As for the negative aspect to balancing the City of Calma’s budget is that it may not be easy to deal with a budget if the city is going through an economic crisis, there might be a recurring form of deficit spending which causes a negative effect on the value of the dollar. Also, percentages of the budget are usually used in order to finance activities that produce a particularly negative effect on the economic activities. For example, many agencies have relatively small budgets but they enforce great costs on the economy’s private

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