Introduction
Formulating a budget is s process that considers many things; the budget mainly focuses on the end goal. For example, a budget can aim at expanding the business within a given time frame. Designing a budget for a business expansion will be different from a budget meant to cut costs. This paper is meant to explore the process of formulating a budget in Houston. The budget analysis also involves identifying areas that need improvement in the budget. The analysis revolves around the operating budget process and capital improvement process plan. The budgeting procedures, in this case, are centred in the city of Houston. Hence the changes are proposed per the laws of Houston. Therefore, the budget analysis is meant to propose specific changes intended to improve the budget.
Operating Budget Process Plan
An operating budget is the total amount of revenue and expenses expected to be incurred within 12 months (Fiscal Year Operating Budgets, n.d.) In this case, the operating budget is centred in the city of Houston. The current process of formulating an operating budget process plan was designed in 1988 (Fiscal Year Operating Budgets, n.d.) The city of Houston implemented its operating budget process plan in the fiscal year 1989 after establishing the basic policies (Fiscal Year Operating Budgets, n.d.) One of the most important policies was that the department. The government of Houston has continued to make many improvements in the process of formulating the operating budget plan. One of the main changes that have been implemented since then is the integrated budgeting approach.
The integrated budgeting approach includes interlinking the budgets and financial plans for the general, enterprise, and special revenue funds and the capital improvement plan. The finance department must also give a monthly financial breakdown of the city’s current financial status. The finance department works hand-in-hand with the office of the city controller. The monthly financial report ensures that Houston works according to the stipulated guidelines and the proposed budget plan. The proposed operating budget plan system is protected by section 102.009 of Texas (local government code chapter 102 Municipal budget, n.d.) The act requires that the city council only spend funds after the proposed budget has been fully approved. The city council must also spend the finances within the budget; any expense outside the budget is considered illegal.
It is normal for an emergency to occur, and the city council may be forced to spend outside the budget. The city council of the city of Houston can change the original budget to accommodate an emergency in the spending from the original budget. If the city council has been forced to make an amendment, the city council has to ensure that the decision is met with much thought and scrutiny. The city council must present a file copy of the proposed amendments to the city secretary for the copy to be attached to the original copy. The city council is allowed to continue with the proposed amendments after the office of the city secretary has approved the amendments and has attached the proposed amendment to the original budget.
There are several steps involved in formulating an operation process plan budget. The process begins with formulating the operational forecast and developing the guidelines. The budget must undergo a lot of scrutiny for it to be approved. The department of finance and submission reviews the budget, and if the department is satisfied, the mayor reviews the budget. In case the budget is revoked by the mayor, the budget is taken back to the department of finance reviews, which in turn reviews it and forwards it to the different city departments for further review. After the mayor has approved the proposed budget, the city organizes workshops for the city council members to familiarize themselves with the budget. The proposed budget is only adopted after the city council has adopted the proposed budget. The current system of formulating the operating budget has been successful for a long time; however, some areas need improvement.
Capital Improvement process plan
The city of Houston has many projects in every department; this paper will focus on the department of Parks. The county government has to develop a six-year plan for the proposed projects in each department. The capital improvement process acts as the master plan for the government when it is working on projects. The capital improvement process of Houston county is divided into two main parts; the capital budget and the capital program. The capital budget is a plan for spending the next year on capital items. A capital program is a plan of expenditure, typically exceeding the capital budget by 5 to 10 years. The capital improvement process is adopted after a successful public review. The general public has to be satisfied with the capital improvement process plan for it to be adopted by the county government.
The capital improvement process undergoes certain steps before it is adopted and implemented accordingly. The first step is to develop the budget according to the proposed projects. The budget is then approved by the citizens, which in this case will be the residents of Houston. If the citizens are comfortable with the proposed budget, it is approved. If the citizens disagree with the proposed budget, it is not approved. After the budget has been approved, it is communicated. The communication ensures that every stakeholder understands their role in the approved budget. The projects that are within the budget are expected to be completed within the stipulated time frame.
Houston’s city has several projects currently being developed from the approved capital improvement process plan. The city of Houston is currently working on five main projects in the parks, recreation, and trails department. Each project requires some funds for it to run effectively. The first project is to open a bare paw lake activity park which will include many recreational activities and interpretative signage for a more captivating experience. This park has been allocated a total sum of $ 723,000. The city of Houston has already secured a total of $ 75,000 from the local government and $ 19,500 from other sources.
The next project in the capital improvement process of the city of Houston is the Houston-Willow Creek Sled Trailhead Phase II. This project is expected to cost an estimated $250 000. The project includes improving the signage of the current park and installing 911 emergency phones in several parts of the park. The department of parks, recreation, and trails believe that this project aims at the visitors’ safety. The government is yet to secure the full amount to commence the full operation of this project.
The next project in the capital improvement process of the city of Houston is the upgrade of restrooms in the parks and recreational centres. The government of Houston city seeks to ensure that the public washrooms comply with the Americans with disabilities act that was passed in 1990. The new washrooms are expected to be clean and more enclosed. This project requires a total of $200,000 for it to be accomplished; however, the government has yet to secure a fraction of the total.
The government of the city of Houston intends to develop a non-motorized boat launch at the end of robin hood. The project aims to expand the little Su river access at the end of the north Robin Hood drive to ease access for non-motorized boats. This project is meant to save time for people accessing the dock with non-motorized boats. The project is meant to save an estimated one hour. The project is expected to consume an estimated $15,000. The local government of Houston is yet to secure any amount for this project to commence.
The last project that is within the capital improvement process is a new dog park in Little Su Campground. The project will consist of a fenced dog park for visitors who visit the park with their dogs. The dog park will help ensure that the park has a designated area for dogs. The main idea of this project is to create an environment where visitors can be comfortable releasing their dogs to play in the park. This project aims to create a conducive environment for visitors to relax without worrying about the dog getting lost since the park will be well-fenced. This project is expected to be achieved through a lot of volunteering and donations. The project is expected to cost an estimated $5,000; currently, the project has not received any funding.
Recommendations
The Covid-19 pandemic proved that the Operating budget plan of the City of Houston needs to be more flexible. The city has set aside an option for emergency adjustments; however, the emergency window is not long-termed. The emergency option in the operating budget needs to be reviewed to ensure that it can accommodate long-term change. The process of making the amendment is very lengthy. The city of Houston only allows the amendment to be done after the council has approved the amendment. The idea of involving the council to make the amendment would not accommodate an emergency. The amendment process is very lengthy and may consume a lot of time; hence, it may not be very effective. Therefore, the idea of emergency funds should be reviewed to ensure that it is time and cost-effective.
The mayor is the last person who reviews the proposed budget after the finance department has reviewed the proposed operational budget plan. Financial education is not among the major qualifications when the mayor is elected. Naturally, the mayor should be the person who authorizes the budget; however, the mayor should have a team of financial advisors to act as a guide in the process of approving the proposed budget. In case the budget is found to have any issues in the future, the mayor is the one who takes full responsibility of the backlash. Therefore, the mayor should approve the budget but with guidance from a team of qualified accountants and financial advisors.
In the final stage of the budget, the city council is given an opportunity to review the budget; in case the city council members do not find it fit for the budget to be implemented, the finance department has to revise the budget. This step may create a loophole for the finance department to make budget changes without the mayor’s approval. The mayor should be involved in case the city council needs the budget to be revised. If the fiancé department makes illegal changes, then the mayor is answerable for any case that may arise from the changes. Human beings are different, and sometimes people can have evil motives. Excluding the mayor in such crucial steps may result in malpractice since the mayor is not involved. If the city council wants the budget to be revised, the finance department should make the changes under the mayor’s supervision. Hence, the mayor can approve the revised version of the budget.
The government of the city of Houston does not involve its citizens in the operational budget processing plan. The citizens of Houston should be involved in the budget processing plan since they are directly affected by the budget. The money being budgeted is collected from the citizens through tax. Since the citizens are directly involved in the collection of tax then, they should be aware of how the taxpayer’s money is being utilized. Leaders have always been accused of using the tax payer’s money wrongly. To avoid such accusations, the city of Houston should develop a program involving the citizens in the operating budget plan. The county government of Houston has always involved its residents in the capital improvement process through public meetings; the same method can be implemented in the operating budget process plan Transparency will prevent malpractices during and after the budget has been implemented.
The capital improvement process of Houston needs to be reviewed to ensure that funds are allocated in the right priority. Some of the most important projects seem underfunded compared to others. An example is the restroom project which has been allocated a total of $200,000, while the Houston-Willow Creek Sled Trailhead Phase II has been allocated $250,000. Public restrooms are very important when it comes to parks and recreational areas. The current restrooms are not even American disability act compliant hence new ones will have to be set up. It is also worth noting that this project will be carried out in every park situated in Houston by the local government. Since this project will benefit many people and even include disabled people, it should be well funded.
The city of Houston also seems to have not secured most of the funds for the proposed projects. This results in two questions; either the budget did not consider the funding source, or the different stakeholders are not in mutual agreement. The delayed funding is not good, especially when developing huge projects. Delayed funding will result in time wastage since the projects must wait for the funds to begin. The capital improvement process should be matched with the funding for the projects. The personnel involved in the development of the capital improvement process should put into consideration the source of the funds.
The projects require funds from different stakeholders such as; the federal government, state, MSB, and other donations. The stakeholders involved in the funding should be involved in the Capital improvement process to ensure they can fund the proposed projects. When the people funding the projects have been involved in the budget formulation, they are more likely to easily honour their contributions. The capital improvement process is more inclined toward the side of the people who will benefit from the projects and does not address the source of the funding. It is important to note that delayed funding will delay the whole project resulting in time wastage. The projects may even become expensive due to the dynamic nature of the foreign exchange market. Therefore, the city of Hoston should address the issue of the delayed funding for the projects.
References
2020 Ordinances. (n.d.). Www.houstonak.com. Retrieved November 13, 2022, from https://www.houstonak.com/index.asp?SEC=3388E849-AACB-4E05-A27E-AA82BE76AE93&DE=92D54ABE-FFCF-4AC8-97C9-AD42A850D681
Fiscal Year Operating Budgets n.d.) ww.houstontx.gov. Retrieved November 7, 2022, from https://www.houstontx.gov/budget/21budprop/index.html
LOCAL GOVERNMENT CODE CHAPTER 102 MUNICIPAL BUDGET n.d.) tatutes.capitol.texas.gov. Retrieved November 7, 2022, from https://statutes.capitol.texas.gov/Docs/LG/htm/LG.102.htm
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