PL PACKET 05171983 (2) - Laserfiche WebLink

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i 1' 132 The Practice of Local Government Planning local-government debt limits and also to finance facilities serving more than one. Ij jurisdiction. They may.be financed .through revenue bonds retired by user charges, although some authorities have the power to tax.. Special,assessments Public works that benefit particular' properties may be fi- nanced more equitably by special assessment:that is,they are financed b'y_those )' who directly benefit. Local improvements often financed by this.method include. street paving, sanitary sewers;.and water mains. State and federal grants State and federal grants-in-aid are available to finance a large number of programs. These may include streets, water and sewer facili- ties, airports, and parks and playgrounds. The cost of funding these facilities may be borne completely by grant funds,or a local share may be'required. Fed- eral revenue sharing and Community Development Block Grants have given local governments more choice in how to spend their grant money. Much of this money has been used to finance capital improvements. Tax increment financing Tax increment financing may be used to provide front end funds in an area where large scale redevelopment is feasible: A district 1 around the proposed development is designated with a tax base equivalent to the values of all the property within the area. The tax revenues paid to taxing units are computed on the initially established tax base during the redevelop- ment period, which is usually the expected life of the project. The area is then redeveloped with finds from the sale of tax increment bonds. These bonds are sold by the municipality or a specially created taxing district for acquisition, re- location, demolition, administration, and site improvements. Because of the higher value of the newly developed property in the district, more tax revenue is collected and the tax "increment" above the initially established level goes into a fund to retire the bonds. After the development is completed and the bonds i' are retired, the tax revenues from the enhanced tax base are distributed normally. Fiscal policies Careful fiscal analysis and the adoption of specific fiscal policies must be the foundation of a local CIP. Long-range financial studies and forecasts must be made. Typically, they are conducted by the jurisdiction's finance officer, or in small communities by the local government manager's office. At the minimum such analysis should include the preparation of tables showing the amortization of all outstanding debt. Since local government can issue bonds that mature over long periods of time, this analysis will have to look ahead for more than a decade. As a practical matter, more intensive analysis and forecasting are done for the next five year period. These forecasts focus on the local general eco- nomic situation and the extent to.which it may affect long-term local govern- ment revenues. For growing communities the analysis may show the degree to r which various categories of revenue—property taxes, fees and licenses, state t aid, income taxes, and other sources-will grow in the future. For stable or declining'communities, such as mature central cities, such an analysis may t show that because the economic base of the city is declining(for example, man- ufacturing and retailing establishments are moving to the suburbs)the local tax base may also be declining. Anticipated revenues must then be compared with anticipated expenditures for.capital improvements, personnel services, and pension plans, and other J: costs must be projected to determine whether projected revenues and expendi- tures are in balance or whether surpluses or deficits are forecast. The financial analysis can provide useful information. However, it is essential that the analy-