PAD 713: PUBLIC BUDGETING & FINANCE

Exam 1 [Total 20 points]

Exam Rules
 1 inch margins.
 Calibri or Times New Roman font style, no larger than 12 point font.
 Double-space your text
 Minimize the use of quoted materials. Put concepts in your own words and then
provide citations to those ideas. For instance,
The property tax is often the prime driver of local governmental revenues (Bland,
2013, p. 54).
 Provide a reference list for all of your citations. Use APA style.
 For this examination, I will analyze the analytical quality of your answer. Make sure to
integrate your answers with specific citations to the course readings. Make your
answers objective and logical. Do not give opinion based, subjective answers. Since this
is a take-home exam, I must ask you not to discuss the exam with fellow students. To
that end, all exams will be examined for plagiarism using the online plagiarism software.

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Question 1 (5 points)
Provide an analytical response, based in Public Budgeting and Finance, for the questions listed
below. You need to address these questions with thoughtful analysis that integrates lecture
notes, book concepts, and your own ideas in order to do well. Your answer for the question
should be 2-3 pages.

Go to the following budgeting website for the city of Austin, Texas:

Explore that website. After you have a good grasp of how Austin, Texas approaches public
budgeting, please answer the following questions. Make sure to integrate all of your answers
into one essay based answer of 3-4 pages that directly links back to readings and concepts
discussed in class.
i. What budgetary format does Austin's budget follow?
ii. What budget process does Austin seem to follow?
iii. Why does their adopted budget have so much text?
iv. How does Austin pay for capital items? Does this seem like an effective
way to pay for capital items?
v. Can you clearly follow expenditures and revenues for 2019-2020? If so,
tell me where the city obtains most of its revenue and where it
spends most of its revenue.
vi. Overall, is the presentation and format of Austin's budget effective? If
not, how would you change it.
vii. Rate this budgeting website of Austin, Texas on a 1-5 scale (with 1
equaling the lowest possible score and 10 equaling the highest
possible score). Explain your justification behind your ranking.

Question 2 (4 points)
Explain the major theoretical theme (or idea) that seems to be driving the evolution of public
budgeting & finance. When applied to the world of public budgeting, what are the significant
advantages and disadvantages of this theme (or idea)? Does this theme make public budgeting
& finance better, or worse?

Make sure to integrate your answers to all of these questions into one essay based answer of 2-
3 pages.

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Question 3 (3 points)
Look at the following information and answer the question that follows.

Table 1: Sales Tax Revenues (1974-2017)

1974 $10000
1975 $11000
1976 $12000
1977 $15000
1978 $16000
1979 $17000
1980 $18000
1981 $19000
1982 $20000
1983 $22000
1984 $24000
1985 $12000
1986 $15000
1987 $16000
1988 $17000
1989 $18000
1990 $19000
1991 $20000
1992 $22000
1993 $24000
1994 $12000
1995 $15000
1996 $16000
1997 $17000
1998 $18000
1999 $19000
2000 $20000
2001 $22000
2002 $24000
2003 $12000
2004 $15000
2005 $16000
2006 $17000
2007 $18000
2008 $19000
2009 $20000
2010 $22000
2011 $24000

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2012 $5000
2013 $6250
2014 $6250
2015 $6666
2016 $7109
2017 $7111
2018 ???

Figure 1: The Same Sales Tax Revenues (1974-2017) in Chart Form

Question
Given the data before you, what is the best way to estimate the revene for 2018? Design a
revenue estimation for 2018. Note that for this question you should both explain your revenue
estimation strategy in written text, explan why that estimation strategy is effective, and also
estimate revenue for 2018 in excel. You need to show all of your calculations for that revenue
estimation. Your narrative answer to this question should be 1 page long.

Note: there is one correct answer for this question. Pay careful attention to choosing your
revenue estimation strategy…

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Question 4 (3 points)
Explain how Micro-Dynamic and Macro-Dynamic Scoring strategies are effectively used in
revenue estimation. Your answer should be 1 page in length.

Question 5 (5 points)
The city of Lepanto Springs has experienced severe economic stress over the last five years.
With that severe economic stress, businesses and residents have fled the city and helped to
accelerate revenue losses that have contributed to constant budget deficits. For this year, the
budget deficit is approximately $48,000 (from a total annual budget of $1.2 million). To help
solve this problem, the city of Lepanto Springs elects a new Mayor, Jessica Smith. Upon taking
office, Mayor Smith has her team develop at least three proposals to help generate new
revenue in the city. After a series of meetings and a month of analysis, her team produces the
following three proposals.

Proposal A
Implementing a 5% ‘Sin Tax’ on fast food purchases within the city limits of Lepanto.
Using economic development data from the city, the Team knows there are 15 fast food
establishments within the city limits. Each year, those establishments produce
approximately $1 million dollars in sales. Thus, the team estimates that a 5% tax on that
$1 million dollars in sales will produce $50,000 in annual tax revenue (5% multiplied by
$1 million).

Proposal B
Implementing a $5 user fees on all citizen communication interactions between citizens
and the bureaucrats working for the city. This would include email responses from city
staff to citizens, answering calls from citizens, and meeting citizens face-to-face at the
city hall. The team estimates that each year, the city engages in approximately 15,000
citizen communication interactions each year. Thus, the team estimates that a $5 fee
on each citizen communication interaction will generate $75,000 in annual fee revenue
($5 fee multiplied by 15,000 citizen communication interactions).

Proposal C
Implementing corporate sponsorship on the city hall building. After meeting with
business owners in the area, only one corporate sponsorship opportunity presented
itself. The business, Mandall’s, is willing to pay the city of Lepanto $1 million dollars a
year for a sign that would advertise their business. The sign that they would want to use
is included on the next page. Mandall’s will not negotiate on the use of another sign.
This sign would have to be put on the city hall building as part of this proposal.

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Photo 1: Corporate Sponsorship Sign from Proposal C

Analyze each proposal and determine which option is the best option for the city. Make sure to
Include issues and concepts discussed in class in your analysis. Your answers should be 2-3
pages in length.