You work as a budget analyst in South City. Your responsibility is to prepare a capital budget
Fantastic news! We've Found the answer you've been seeking!
Question:
Recently, South City permitted the construction of a few large casinos and hotels in a blighted area of town. This is anticipated to increase economic activity in the area, providing funds for much needed capital improvements. The improvements are being funded with a special purpose local option sales tax (SPLOST) and a tax increment finance (TIF) district, both of which have been authorized for 10 years. The City hired a consultant to make projections over this period, with SPLOST revenue estimated to be $15-$20 Million annually. The improvements are expected to increase the property tax base by $450-$500 Million (the City's current property tax rate is 1%).
The Mayor needs a budget that forecasts the SPLOST and TIF revenues, finances their priorities, and determines if any funds are likely to be available for another round of improvements at the conclusion of year 5. In forecasting revenue, you must create two scenarios, one with the lower bound estimate and another using the 50th percentile of the range, with both increasing by 2% from years 2-10. The projects are being financed with 5% par bonds that have 10-year maturities, and the City can earn 3% on their investments.
Related Book For
Introduction to Governmental and Not for Profit Accounting
ISBN: 978-0132776011
7th edition
Authors: Martin Ives, Terry K. Patton, Suesan R. Patton
Posted Date: