The Fairfax City is colloquially known as Fairfax is an independent city in Virginia, in the United States of America. According to the statistical report, the population of the city has been around 24,483 in the year 2014. The Fairfax City is an enclave in the Fairfax County. It is a separate political entity that includes the city of Fairfax and its surrounding areas. The Fairfax City is located in the Northern part of Virginia and is a part of the Arlington, Washington and Alexandria Metropolitan Area. The Fairfax City is located 16 miles away from the Washington, D.C. The Orange line of the Washington Metro serves the Fairfax County through the Vienna Station. In the year 2009, Fairfax city was ranked as the third most suitable place to live out of twenty-five places in America. The city is known for its high median income, strong public school system and increasing sole proprietors. The name of the city was derived from Thomas Fairfax, who was awarded a land of five million acres by King Charles. The town has several histories that made it an important part of American History.
Being a famous city of Virginia, a separate budget is prepared for the county. The paper has been developed to review the budgetary process of the City of Fairfax and present an overview of the operating and capital budget. Along with that, the paper also presents the sources of revenues for the county and shortcomings of the budgetary system to recommend various suggestions to improve the budgeting process (Coe).
The budget of the city is the outline of the policy and financial decisions of the government that are implemented during every fiscal year. The budget is the most important document that is used to control the financial expenditure and exposure to the city of an increasing economic inflation. It is used to determine the future of a city by implementing a strong control over the changing direction to determine a better future. It presents the groundwork to lay out the community’s activities in the future.
The budget of the City of Fairfax presents various elements that are required for control the financial aspects of the county. The budget document of the Fairfax City includes:
Revenue and Expenditure Summaries
A financial plan
Goals and objectives
A long range development guide
An annual operating program
Performance measures to ensure evaluation and accountability performance
An administration tool to ensure monetary control
The budgetary process includes the following steps:
Preparation of the funds: In this step the funds are allocated to several heads to be spent during the fiscal years. The major funds of the city include General Fund, Capital Fund, Storm water fund, Cable Grant Fund, Utility Fund, Old town service district fund, Transit Fund and Transportation tax fund.
Review of the budget: After the allocation of the fund, the budget is reviewed, and necessary changes are made according to the review report.
Budget implementation: The budget is implemented by publishing it and allocating the funds to several departments.
Monitor and control the financial aspects: The budgeting process continues with monitoring and controlling of the financial expenditures to keep the actual expenditures within the budget.
The city has a set of plans for the improvement of the capital budget for a period of next five years. The capital budget has been set for the City through the Capital Improvement Program. The Capital Improvement program takes into account the needs, the desire and the importance of the improvements in the budget; the program also understands the relation that exists between the improvement and the development of the city due to the improvement in the capital budget. The capital budget is the current and the future economic efficiency and capacity of the city.
The following will provide an outline of the capital budget for the city for the present year as well as for the next five years:
The Capital Budget for Future Five Years
Source: ("City Of Fairfax, VA : Budget")
The following pie chart distribution will offer us with the insight of the revenue generation for the city. The revenue generated from the different sectors is used for setting the budget and for expenditures on the part of the city. The following pie chart will help us to understand the expenditures of the city in the various sectors. These expenditures are done from the capital budget that is set at the beginning of every Fiscal Year.
Figure: FY 2017 General Fund Expenditure
Source: ("City Of Fairfax, VA : Budget")
FY 2017 General Fund Revenue Changes
Source: ("City Of Fairfax, VA : Budget")
It has been observed from the above table that there has been an increase in the expenditure of the city. The same expenditure amount has been zero by the revenue that has been generated by the city through various sectors. There has been an increase in the spending and expenditures of the state by 2.4% over the previous year ("City Manager’S Budget Message FY 2017 Budget"). The General funds set for the fiscal year was less than the total expenditure of the city. The total expenditure amounted to $170,075,702, whereas the budget for the year was set to be $166,845,869.
Considering the budget documents, the revenue sources and blueprint of the funding must be briefed in order to implement the particular policy and decisions. City of Fairfax, Virginia has developed the efficient market and the valuable proposition that has been comprehensively utilized by many businesses. The real property industry of the city has provided enough revenue to the government so that proper budgeting system can be evaluated for municipal services. According to the real estate assessment, real estate tax revenue has created a substantial fund from the residential tax base, commercial tax base and other property tax resources to develop Fairfax County’s budget. Apart from real estate tax revenue, personal property tax, local sales tax, business and professional tax, meals tax, tobacco tax, and transient lodging tax must be counted as prime revenue resources to City of Fairfax government.
The personal property tax rate of the country has been registered as $4.13 per $100 of the overall assessed value of the property ("City Of Fairfax, VA : Budget"). In addition to that, higher values of luxury vehicles, larger personal property have provided maximum revenue to set the budget spending according to the requirement. In the case of local sales tax revenue, $10.1 million has been registered as fund money creating a growth of 1% year over year basis. Furthermore, companies operating in the city have to pay professional and business taxes that create additional monetary resources for the overall budget. Currently, meals tax and tobacco tax have provided sufficient value to the revenue figure. As tobacco tax had been increased since 2010 to 75 cents per package of cigarette, it produces significant revenue to the overall system. Finally, accessible hotels, restaurants, lodging places require paying additional but marginal lodging tax so that some of the revenue can be generated by these businesses as well (Haas and Giambruno).
Understanding the effectiveness of performance budgeting, key challenges of implementing budget into the right order must be discussed. In the case of budget development, first of all, proper investigation of spending has to be undertaken. Considering the financial accountability and assessment of expenditure review, cash management can be a massive challenge for the management (Thain and Wright). Furthermore, budget realism can be regarded as one of the greatest challenges in the implementation process. Affirmatively, the release of funds according to the planned order by the spending department can be an issue in budget implementation development. In addition to that, types of expenditure management, modification of the budget, accounting integration and design of budget expenditure can be identified as additional problems. Meanwhile, in accounting integration, accurate knowledge of deliverables and cost of the execution system must be delivered that is one of the primary responsibility as well as risk in budget implementation. Utilizing reliable budget reports and spending assumptions, powerful implementation technique must be evaluated to deliver accurate results.
After reviewing the budget and shortcoming of the budgetary process, the following suggestions are recommended:
Proper monitoring of the funds: It is important for the government to monitor and control the expenditure of the funds. A variance has been identified between the budget and actual expenses. Hence, a proper monitoring and controlling plan can help to reduce variance in the budget.
Maintain a single treasury account: A single treasury account must be maintained that helps in the accountability of the budgetary process. The single treasury account will increase the accuracy of the accounting process and reduce the chances of fraudulence.
Appropriate budget modification: There is a need for adequate budget modification. The government of the city needs to modify the budget according to the needs in the upcoming financial year. It reduces the chances of the variance in the budgeting process.
Work Cited
"City Manager’S Budget Message FY 2017 Budget". Fairfaxva.gov. N.p., 2016. Web. Mar. 2016.
"City Of Fairfax, VA : Budget". Fairfaxva.gov. N.p., 2016. Web. Mar. 2016.
Coe, C. K. "Usefully Engaging Local Budget Analysts During Budget Execution". State and Local Government Review 35.1 (2003): 48-56. Web.
Haas, Peter J., and John Giambruno. "Fiscal Management In Government-Funded Nonprofit Organizations: An Exploratory Study". Nonprofit Management Leadership 4.3 (2004): 317-329. Web.
Hoffman, K. U. "Legislative Fiscal Analysts: Influence In State Budget Development". State and Local Government Review 38.1 (2006): 41-51. Web.
Thain, Colin, and Maurice Wright. "Conceding Flexibility In Fiscal Management: The Case Of Public Spending End-Year Flexibility". Fiscal Studies 11.4 (2010): 63-82. Web.
