An Example of Budgeting with Form 4-B

Here's budget form 4-B for the Town of Elnora, in Daviess County, Indiana, for the budget year 2000.  I chose it to illustrate how the numbers add up, and because the numbers are small and manageable (Elnora is a small town, population 721 in 2000).  

This is a readable version of 4-B, with two columns, one showing the entered amounts, the other showing the lines that are calculated from other lines on the form.  

You can see why they say that this form budgets for 18 months.  Lines 1 through 4b are the spending required for the budget year 2000 (line 1) and 1999 from July through December (lines 2 through 4b).  That's 18 months.  The total is $99,916, but a better idea of how much Elnora spends out of its general fund in a year can be had by just reading line 1, $68,825.  That's planned spending for budget year 2000.

Likewise, there's 18 months of revenue in this table.  Line 8b is estimated revenue for 2000, not including property taxes.  Lines 6, 7 and 8a are the current balances, and property taxes and other revenues expected for the rest of 1999.  The sum is $96,827.

At first glance, that looks pretty good.  Almost all of general fund spending ($99,916) is covered by existing or expected revenues ($96,827).  Line 10 appears to show that only $3,089 more is needed from property taxes.  Alas for Elnora's taxpayers, that's not right.  Elnora could limit its levy to $3,089, if it spent its general fund balance down to zero.  That would not be prudent, so Elnora wisely budgeted a $32,700 operating balance to go along with their spending.  That means $35,789 must be raised.

Except, Daviess has the CAGIT income tax, which provides revenue to reduce the levy.  The amount is only $1,907, on line 13, but every little bit helps.  That leaves $33,882 to be raised from the property tax.  Divide this by assessed value (at the top of the form, $2,716,645) and multiply by 100, and you get Elnora's general fund property tax rate, $1,2472 per $100 assessed value.

I like to look at these numbers in a different way, though.

$101,525  That's the amount Elnora wanted to spend or keep in balances in 2000.  It's the sum of lines 1 and 11.

 $36,498  That's the amount Elnora expected to have in balances on January 1, 2000. It's the sum of lines 6, 7 and 8a, minus the sum of lines 2, 3, 4a and 4b.  That is, it's balances on June 30, 1999, plus the revenue they expected to get for the rest of 1999, minus what they expect to spend for the rest of 1999.

 $31,145  That's the amount of revenue expected from non-property tax sources, miscellaneous revenue and the money from the CAGIT income tax.  Add lines 8b and 13.

 $33,882  That's the property tax levy, just like line 16.  It's also spending plus balances for 2000, minus start of year balances, minus expected revenue.

One more calculation.  Suppose we look at these numbers without the balances.  Budgeted spending for 2000 on line 1 is $68,825.  Total revenues, not counting balances, is $31,145 plus $33,882, or $65,027.    Elnora intended to spend $3,798 more than they took in during 2000, with the deficit made up by running down their balances from $36,498 to $32,700.  

These three numbers, expected spending (also known as appropriations), property tax revenue and non-property tax revenue, plus the tax rate and assessed value, are a pretty good summary of what Elnora intended to do with its general fund in 2000.  Of course, Elnora had a few other funds, too, the Local Road and Street Fund, the Motor Vehicle Highway Fund, and the Cumulative Capital Development Fund.  The first two receive state funds for road maintenance.  The last is a savings account for capital projects.  Only this latter fund has a property tax levy. 

You can see Elnora's total 2001 appropriation, levy and revenues on the budget tables available on this website.  Click below to see the Daviess County table for 2001, and check out Elnora.