Alabama Revenue and Spending Assessment

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ALABAMA REVENUE AND SPENDING ASSESSMENT 1

AlabamaRevenue and Spending Assessment

Author’sName

AlabamaRevenue and Spending Assessment

Table1

Alabamaspending and revenue breakdowns

Total direct revenue

Total spending

Deficit/debt

2013

$14.7b

&nbsp

$21.3b

$22.6b

2014

$16.0b

$22.1b

$24.2b

2015

$16.6

$22.9b

$25.6b

Deficitsfor 2014 and 2015 are estimated

Table2

Breakdownof spending

Education

Health

Security

Others

2013

36%

&nbsp

17%

8%

38%

2014

38%

17%

9%

36%

2015

39%

17%

9%

35%

Table2

Breakdownof revenue

Ad valorem

Fees

Business

Others

2013

36%

&nbsp

34%

27%

3%

2014

34%

33%

26%

7%

2015

34%

34%

25%

7%

Sources(http://www.usgovernmentrevenue.com/local_revenue_2013ALbn,http://www.usgovernmentspending.com/local_spending_2013ALbn)

Trendsof revenue sources in Alabama

TheAlabama local government had revenues of $14.7 billion in 2013, $16billion in 2014, and $16.6 billion in 2015 while deficits stood at$22.6 billion, $24.2 billion, and $25.6 billion in 2013, 2014, and2015 respectively. The local government spent $21.3 billion in 2013,$22.1 billion in 2014, and $22.9 billion in 2015. The county usedmost of its revenue in education, followed by health and security inthe three years while ad valorem, fees, and business respectivelycontributed to the county’s revenues. It is worth noting that thecountry has experienced budget deficits in the three years: $6.6billion, $6.1 billion, and $6.3 billion in 2013, 2014, and 2015respectively.

Ethicalpractices in financial policies

Thelocal government has an ethical responsibility to play in regards torevenue collected. As illustrated in the revenue and spending of thelocal government, it collects a proportion of its revenue from fees,taxes, and charges from businesses thus, it should utilize therevenue in a manner that takes into consideration the citizens’needs. Chung (2015) contends that governments should consider theneeds of the citizens when spending on the revenue they havecollected in an ethical approach. Thus, the government’sresponsibility to the entire society is to ensure the maximization ofthe public’s wealth. In this relation, the public expectedaccountability on the expenditure of the taxes and fees charged bythe local government. In the subsequent years of tax collection, therevenue collection increased but the government could not experiencesurplus, as reducing spending was not possible. The local governmenthad to borrow money and increase taxes to subsidize the budget, whichcontributed to increased charges. The deficit experienced by thegovernment also added to the debts of the local government especiallyin scenarios where the government borrowed money to cushion thebudget. Advanced techniques of tax collection impacts on the publicto enable the local government improve its revenue collection program(Berman, 2015). However, such a scenario may affect the publicnegatively especially when taxes increase significantly. As theanalysis of the revenue and spending trends of the governmentillustrates, any government should act ethically as well as considerthe needs of the public.

Assessmentof the challenges faced

Thelocal government’s reputation is necessary for regards to theinternal challenges or opportunities that may affect its revenuesources. When citizens perceive a government to be non-performing andcorrupt, they avoid paying taxes or fees, which hampers thegovernment’s revenue sources. In this scenario, however, the publicperceives the local government as transparent and cost-effective. Inthis relation, the local government tries to maintain the reputationby ensuring service delivery to the public remains valid. Moreover, alocal government may face human resources aspects (Chung, 2013). Theneed to train the staff becomes a challenge in that they need toadapt to new conditions of management. The local government issusceptible to threats of economic changes and realization of newopportunities for revenue collection. This is due to overreliance onthe collection from the local government as well as the perceptionthat it may receive money from the state or the federal government.In this relation, management of money flow becomes a challenge to thelocal government.

Reference

Berman,D. (2015).&nbspLocalgovernment and the states: Autonomy, politics and policy.Routledge.

Chung,C. S. (2013). Government Budgets as the Hunger Games: The BrutalCompetition for State and Local Government Resources Given MunicipalSecurities Debt, Pension and OBEP Obligations, and TaxpayerNeeds.&nbspRev.Banking &amp Fin. L.,&nbsp33,663.

USGovernment Revenue. (n.d.). AlabamaLocal Guesstimated2 2015 Government Revenue.Retrieved March 26, 2016, fromhttp://www.usgovernmentrevenue.com/local_revenue_2015ALbn

USGovernment Spending (n.d.). AlabamaLocal Guesstimated2 2015 Government spending.Retrieved March 26, 2016, fromhttp://www.usgovernmentspending.com/local_spending_2015ALbn