Oklahoma City agency
This is the agency in the state of Oklahoma in the USA. As far as population is concerned, the city ranks 30th in the US. This population calls for accurate planning in order to meet the various needs. In order to meet this need, this agency prepares annual budgets for the planned expenditures.
Oklahoma City Budget, Programs & Capital Projects
The budget for this city is $1,027,852,482. The General Fund Budget was USD 400.8 million. The major program that has been proposed under the current financial year is an increase of 40 new police positions. This increase will sum up to 1116 positions of the uniformed police. With respect to the capital projects, the city has allocated 1 million dollars for improvement of the bus service. These funds will be allocated to infrastructural developments such as bus bays and traffic lights.
Salary forecast
A five year salary forecast for Oklahoma City indicates a positive trend. The agent will be remunerating its workforce at increasing rates owing to the high inflation.
The salaries are forecasted as follows
Revenue estimate
The revenues for Oklahoma City come from various quarters. There is the sales tax and the use tax. The use tax is levied on all imports that are meant to be used by the residents. Other taxes that are revenues to the city include tobacco excise tax, commercial vehicle tax and motor fuel tax. The taxes are to grow at 2.2% per annum. The licenses, permits and fees are to grow at a rate of 4.3%. There is another category of other fees which are to grow at a rate of 1.8%.
The estimates for revenues are as follows.
Capital budget for Oklahoma City
The capital budget for Oklahoma City is as follows
Sources of funds for the above expenditures
The agency compensates the employees as follows
Payroll forecast
An increase of the salaries by 2 percent, 4 percent and 5 percent would lead to the following salaries.
Chart depicting the salary increases
Effects of increase on benefits for the agency
The benefits of increase in salaries would be several. To begin with, the agency would be in a position to retain its employees. In addition, the general public would appreciate the big budget by the agency. However, the agency would incur high costs which will automatically derail its implementation of the capital projects. This may hinder long term growth of the city out of allocation of funds to recurrent expenditure.
Trend analysis
The trend of expenditures for the past five years has been as shown in the below diagram.
The chart for the data in the table above is as shown here.
Clearly, the total expenditure has been increasing consistently over the past five years.
Expenditure forecast
There are several expenditures that are the highest for this agency. On an overall basis, the operating expenditures are higher than the capital expenditures. For the operating expenditures, administration is the highest, followed by operational and fire prevention services and finally support services.
The chart for this data is as indicated below.
According to my view, this expenditure should be approved. This is because the expenditure is increasing in line with the population and growth targets for Oklahoma City. My justification is that it is crucial that this city improves its quality of service provision to the residents. A major policy through which this can be achieved is by increasing the expenditure. However, the expenditures that should be increased must be limited to only the necessary ones. By so doing, Oklahoma City will add value to the residents and the city as a whole.
Options for predicting the cost
In the case that has been presented, Oklahoma City has to choose between an Urgolight system and a conventional system. In the LCC analysis, the decision will be arrived at by using the purchase and installing costs. In addition, there will also be an inculcation of maintenance costs. For this calculation, LCC will be computed as follows.
LCC = PV of purchase and installation costs + PV of energy & maintenance costs
PV = present value
LCC for option one
PV of purchase and installation costs = $ 500,000. Since it is at present, the present value of this cost is the same as the given cost. Furthermore, this cost is incurred only at the beginning of the project. Energy & maintenance costs for each year is = $ 20,000 + $ 2,000 = $ 22,000. Present value of an annuity = Annuity [1 – (1 + discount rate) ^ -n]/ discount rate. The value for n= number of years.
PV of energy & maintenance costs = $ 22,000 [1 – (1 + 0.04) ^ - 20]/ 0.04 = $ 298,987
LCC for option one = $ 500,000 + $ 298,987 = $ 798,987.
LCC for option two
PV of purchase and installation costs = $ 100,000. Energy & maintenance costs for each year is = $ 50,000 + $ 10,000 = $ 60,000. PV of Energy & maintenance costs = $ 60,000 [1 – (1 + 0.04) ^ -20] / 0.04 = $ 815,420.
LCC = $ 100,000 + $ 815,420 = $ 915,420. From the calculations, the LCC for option two is greater than that of option one. This implies that Oklahoma City should adopt the Urgolight system since it involves lesser cost than the conventional system.
References
Andrew, P. (2013). Expenditures for Oklahoma City. The Oklahoma City Journal , 33.
Davies, M. (2012). Council Reservation for the Budget. Budget & Finance , 23.
Solomon, C. (2013). Proposals for Programs & Projects. Oklahoma City Budget for 2013 , 19.
The City of Oklahoma. (2013). Oklahoma Five Year Forecast . The City of Oklahoma City , 76.
The URLs for this work are from the following sources
http://www.hm-treasury.gov.uk/psr_mpm_index.htm.
http://www.treasurydirect.gov/NP/BPDLogin?application=np.
http://www.okc.gov/finance/FY%202012-2013%20Adopted%20Budget.pdf
http://www.okc.gov/finance_tab/
