Memo Writing

Memo Writing

*This works will contain two part, we need do the excel (attachment A) based on the information that mentioned above. And then write a memo, this memo should answer all of the questions that mentioned for the memo part.

As the Senior Budget and Policy Analyst for a major municipality, preparing for a very challenging budget year ahead, you have been asked to review the information provided below to make budget projections and recommend an overall budget strategy than can be reviewed with the Budget Director and his senior staff, and when finalized presented to the Mayor for consideration. Prepare a Budget Memorandum of no more than 2 pages, accompanied by a completed Attachment A exhibit.
Complete Attachment A (in an EXCEL spreadsheet) as the first portion of the assignment, by calculating certain components of the current year’s budget as well as projections for the coming fiscal year beginning July 1, 2018 based on the information provided below.
In Attachment A to start with, you are given a breakout of the current Fiscal 2017 budget. First, you are provided a breakout of the locally funded operating budget by expenditure type (salaries and wages, pensions, etc.). Following that is a breakout of the same budget by service area or agency, which you will have to calculate based on the percentages provided. Also provided is the revenue breakout by funding source for the Fiscal 2017 budget.
Complete the remaining portions of Attachment A using the following information from the base budget forecasts for Fiscal Year 2018:
Salaries and Wages are increasing an average of 5.0 % annually based on existing contractual agreements covering employees that are covered by collective bargaining units. This reflects an extremely generous labor contract settlement entered into by the prior Administration before leaving office. Managerial employee salaries are maintained at current fiscal year 2017 levels. Fringe Benefits (citywide) are increasing rapidly driven by an increase in Health Insurance (which is paid in total by the municipality) of 10.7%; Other Fringe benefits will rise by 6.0%. In addition, the following expenditure categories are forecast to change from Fiscal Year 2017 as follows: Pensions +15.8%; Debt Service +3.37%; Contracts +3.0%; Equipment/Supplies +5.0%; Insurance – 0.2%.
On the revenue side, Personal Income projections for Fiscal 2018 indicate a reduction of $1 million, with Corporate Income Taxes expected to be flat. Projections of Miscellaneous Fees for Services indicate a drop of 5.3%; Fines and Forfeitures are expected to be $150,000 lower than Fiscal 2017 due to a heavy public backlash to the municipality’s very aggressive program of enforcing parking and sanitation violations and limitations on fines enacted by the local legislature in response. As interest rates continue to fall, investment income is expected to decline by 14% next year. Sales Tax revenues are forecast to decline by $400,000 for this municipality, which already has the highest Sales Tax rate in the region and fourth highest rate in the nation.
For Service Area or Agency expenditures, Fiscal 2018 base increases are projected as follows: Police + 6.35%; Fire/EMS +6.1%; Emergency Ops. + 2.4%; Welfare Programs + 4.68%; Homeless Services + 2.6%; Aging + 2.1%; Parks +2.3%; Public Works + 2.9%; Education +9.0%; Sanitation +5.1%; Fleet Services +3.3%; Technology +5.2%; General Purchasing/Support: 3.0%.
Once you have completed Attachment A, prepare your Budget Memorandum, taking into account the following:
This is the third budget in a four-year term for a Mayor that was elected on a platform of fiscal responsibility and bi-partisan politics. The Mayor has said publicly she will maintain budget balance and will only increase taxes as a last resort in recognition of the fact that many citizens are still struggling with the aftermath of the banking crisis of several years ago. Foreclosures on residential properties continue to be brisk. Municipal unemployment, which historically has been lower than the national average, is now at 8.2%, above the national average of 7.8%. Economic forecasts indicate a modest recovery – growth in corporate profits and employment over the next 24 months, most of which however, will not have any significant impact on tax revenues in the short-term.
The municipality, with a consistent track record of crime reduction over the last decade is beginning to see a small increase year over year in violent felonies – murder and rape, and robberies and assaults. Fire incidents have declined to the lowest level in history as have fire-related deaths. Both the number of Homeless and people on Public Assistance (Welfare) has remained somewhat flat, but is a concern due to the overall economy and unemployment levels. Population in the last census 2010 indicated a 0.5% increase over 2000 although the municipality believes a significant undercount occurred due to large in-migration, many of whom are undocumented.
Specifically address property tax issues in the Budget Memorandum, including justifications for and possible rates of property tax increases. After taking into account the projected non-property tax and other revenue projections for Fiscal 2017, to what $ level would the 2018 property taxes have to be increased in order for the 2018 budget to be balanced without expense reductions? How large a % increase would this be from the 2017 level? Further assuming no change in assessed valuations of properties, if the 2017 base tax rate is $18.73 per $1,000 of assessed property, what would the property tax rate have to be increased to in 2018 to maintain budget balance?
Alternatively, if there were no tax or fee increases for Fiscal Year 2018, how would you prioritize and specifically which agencies would you propose take the largest budget reductions and why? Which agencies would you recommend a smaller or no budget reduction and why?
There is no legal requirement for a balanced budget and in the worst case the municipality could attempt to borrow in the credit markets in order to balance its budget, although this would be negatively perceived by creditors and rating agencies as an unwillingness to make the hard choices of revenue increases vs. expenditure cuts. This municipality has a modest “Rainy Day” reserve balance of $3 million, its lowest level in two decades and reflects the fact that the Fiscal 2017 budget has already relied on a $2.5 million withdrawal from the Rainy Day fund in order to maintain budget balance. In the budget process for the current fiscal year, the local legislature, was unwilling to consider any expenditure cuts or tax increases other than a special “wealthy citizen income tax” which the Mayor resisted and ultimately failed, due to concerns that such a tax could result in mass relocation to surrounding lower tax municipalities by wealthy individuals, as this municipality already has the highest tax burden in the region.
For Attachment A, do not alter the format in the original sections. If you’d like, you can show and/or explain your work by expanding to the right or at the bottom, or by inserting additional sheets.
Your Budget Memorandum should take no more than two pages (not including Attachment A). Try to get straight to the point on the items the memo should address. Remember that the key to a good budget proposal is to be clear, concise and to the point. While you should consider options in a thoughtful way, the goal here is to make specific recommendations and not say “you could do this, however you could do that.” Take the challenge and propose what you think is a thoughtful and reasonable solution to a challenging budget scenario.

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