1. Intro Budget & Finance

2. Revenues vs. Expenditures Revenues ◦ Money coming in to the agency ◦ Income Expenditures ◦ Money going out ◦ Bills, staff, equipment, facility utilities

3. Income Sources Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts

4. Compulsory Income Secured by government organizations Collected through taxing & regulatory powers at different government levels Why do commercial agencies care?? Types of taxes…??

5. Compulsory Income Real property tax Personal property tax Sales tax Excise tax Income tax Local option tax

6. Compulsory Income Real property taxes ◦ Land & whatever is developed or growing on the land ◦ Different rates for different levels ◦ 96% of property taxes stay locally

7. Compulsory Income Real property taxes ◦ Understand assessed value, tax abatement, tax base ◦ Value defined by a realtor/appraiser/tax assessor  Fair market value  Assessed value – 30-50% lower than FMV (1/3 in IL)  A.V=Taxable worth

8. Compulsory Income Real property taxes ◦ Tax abatement

9. Compulsory Income Real property taxes ◦ Tax base  Total assessed property value of all taxable property in a community  Bloomington vs. Hudson  Exemptions – NPOs, churches, universities, museums….

10. Compulsory Income Real property taxes ◦ Tax rates formula Tax rate = Required taxes / net assessed valuation Required taxes = * Set from budget (ie. $5,000,000) * Expenditures – revenues (excluding taxes) * Where does a city get revenue?

11. Compulsory Income Real property taxes ◦ Tax rates formula Tax rate = Required taxes / net assessed valuation Net assessed valuation= Total assessed valuation of com.410,500,000 Tax exempt property (abatements) - 10,500,000 Net assessed valuation$400,000,000

12. Compulsory Income Real property taxes ◦ Tax rates formula Required taxes/net assessed valuation=tax rate $5,000,000 / $400,000,000 = 0.0125 (1.25%) Also read as $1.25 per $100 assessed value

13. Compulsory Income Real property taxes ◦ Tax rates formula Tax rate = 0.0125 AV: $100,000 home x 0.0125 = $1,250 tax bill AV: $150,000 home x 0.0125 = $1,875 tax bill

14. Compulsory Income Real property taxes Personal property taxes Sales taxes Excise tax Income tax Local option tax

15. Compulsory Income Personal Property taxes ◦ Allowed in 41 states (not IL) ◦ 1. Household tangible property ◦ 2. Business tangible property ◦ 3. Intangibles

16. Town of Normal Eg 0.75% Use tax on titled items ◦ cars, boats, motorcycles ◦ Supports General fund

17. Compulsory Income Real property taxes Personal property taxes Sales taxes Excise tax Income tax Local option tax

18. Compulsory Income Sales taxes ◦ Largest source of state tax revenue ◦ Second largest for cities ◦ Imposed on the sale of tangible goods ◦ Range 4-10%

19. Compulsory Income Sales taxes ◦ Dedicated sales tax ◦ Used to fund Bank One Ballpark & renovate Packer Stadium ◦ Rural towns vs. tourism towns

20. Tourism Town Comparisons Normal, ILHonolulu County Tax rates$7.46/$100 AV$0.33/$100 AV Taxes paid on AV $60,000$4,476$197.40 HA property tax on same home* $7490$329 Honolulu County gives $80,000 credit to FMC. Rest is taxed. Must pay a minimum of $100 in taxes $180,000-$80,000=$100,000 AV

21. Town of Normal Eg The State of Illinois collects a sales tax at a rate of 7.5%, which is distributed as follows: ◦ 5% to the State of Illinois ◦ 0.25% to McLean County ◦ 1.00% to the Town of Normal ◦ 1.25% B-N home rule tax  Used for General Fund with a small % to support the Uptown Renewal Program.

22. Compulsory Income Real property taxes Personal property taxes Sales taxes Excise tax Income tax Local option tax

23. Compulsory Income Excise taxes ◦ Imposed on specific goods, services ◦ Hotel-Motel tax  CVB’s  Sports facilities  IL Sports Facilities Hotel Tax… Why do this?

24. Illinois Sports Facilities Hotel Tax The Illinois Sports Facilities Authority imposes a tax on gross receipts from hotel operators within the City of Chicago. Receipts from permanent guests (occupants of 30 days or longer) are not taxed. Proceeds are used for the corporate purposes of the authority, including construction costs for the Comisky Baseball Park.

25. Funding 2% of hotel/motel tax goes to CVB

26. Compulsory Income Excise taxes ◦ Car Rental tax ◦ Sin taxes

27. Town of Normal Eg Tax%Supports Hotel & motel tax12%6% to the state; 2% to CVB; 4% city (Interstate Center & Uptown Normal) Food & Beverage (for immediate consumption) 2%General fund Liquor tax4%Police Utility tax (ie. cable, gas, elec) 5%General fund (one of largest revenue sources) Motor Fuel Tax??Collected by state to fund local roads

28. Compulsory Income Real property taxes Personal property taxes Sales taxes Excise tax Income tax Local option tax

29. Compulsory Income Income taxes ◦ Municipal, state & federal levels  IL = 3% flat tax with 1/11 going to municipalities ◦ IL = no state property taxes, rely on income taxes Which is more fair, property or income tax?

30. Compulsory Income Real property taxes Personal property taxes Sales taxes Excise tax Income tax Local option tax

31. Compulsory Income Local option taxes ◦ Applied at the local level ◦ Legislatively enabled at the state level ◦ Ie. Local home rule sales tax added to the state sales tax (1.25% in B-N)

32. Income Sources Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts

33. Gratuitous Income Received without expectation of return ◦ Grants, bequests, sponsorships Most often giver does not receive a direct benefit or compensation

34. Gratuitous Income Grants ◦ LWCF – development of outdoor rec resources ◦ OSLAD - Open Space Land Acquisition and Development ◦ Illinois Transportation Enhancement Program

35. Gratuitous Income Bequests ◦ Life insurance ◦ Wills  ELM fund Sponsorships & Donations ◦ $$, land, equipment, stocks, bonds ◦ See examples….

36. Gratuitous Income Nonprofit agencies ◦ Rely on gratuitous Public agencies ◦ Rely on some forms of gratuitous ◦ Grants & the need for a foundation Commercial ◦ Gives gratuitous income

37. Income Sources Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts

38. Earned Income Cash resources generated from fees & charges ◦ Impacts all sectors

39. Earned Income Entrance fees Admission fees Rental fees User fees Sales Special service fees

40. Income Sources Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts

41. Investment Income Invest unneeded revenue ◦ Stocks, mutual funds, money markets All sectors do this NRPA earned $1,287,643 in 2007 from investments = 10% of their overall budget

42. Income Sources Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts

43. Revenue generated from contractual agreements ◦ Concessions ◦ Golf pro shop All sectors use this Eg….

44. Contractual Receipts Austin PARD ◦ $200,000 in revenue annually from contracts ◦ Barton Springs Food and Beverage in Zilker Park

45. Overview by Sector Sector/ Income CompulsoryGratuitousEarnedInvestmentContractual Market Sector NoneMinimalMajor source Can be a major source NPONoneMajor source Limited, based on available cash Growing importance Public Sector EssentialGrowing importance Major source Limited, based on available cash Growing importance

46. Expenditures Operating Expenditures Capital Expenditures

47. Operating Expenditures Regularly occurring costs ◦ Personnel ◦ Supplies ◦ Equipment ◦ Utilities ◦ Services

48. Capital Expenditures Used to finance projects that are costly ◦ Land acquisition ◦ New facility ◦ Major improvements

49. Capital Improvement Plan Zoo – Continuation of Master Plan1,000,000 Park Acquisition & Development 500,000 Small playgrounds 100,000 Security Park Lighting 100,000 Subtotal Parks:1,700,000 Gym floor 100,000 Golf sprinkler system 400,000 High & Low Ropes Course @Nature Center 125,000 Total Recreation: 625,000 Total Capital:2,325,000

50. Capital $$$$ - Public Public - Bond programs ◦ Money borrowed by the government ◦ 2 types….

51. Capital $$$$ - Public Public Bond programs ◦ 2 types  General obligation bond  Revenue bond

52. Capital $$$$ - NPO/Comm Pay as you go ◦ Have money up front ◦ Nonprofits Pay as you use ◦ Pay over the life of the asset

53. Capital $$$$ - NPO/Comm Nonprofit - Capital Funding ◦ Capital campaigns ◦ Loans

54. Capital $$$$ - NPO/Comm Commercial – Capital Funding ◦ Investors, owners ◦ Corporate bonds  Mortgage bonds  Equipment trust certificates  Income bonds