Municipal Budget Analysis-State of Michigan

MunicipalBudget Analysis-State of Michigan

MunicipalBudget Analysis-Detroit

Demographics

Detroit municipality has a total of about nine seven hundred andeighty-three thousand people. Whites represent the largest populationwith a percentage of seventy-eight. The African-Americans constitutefourteen percent (Schindler, 2016). Other races represent a smallpercentage of the total population. Regarding gender, the womenrepresent the highest number both among the whites and theAfrican-Americans. The median age for both sexes in Detroit isthirty-nine with the male being thirty-eight and the female beingforty. Regarding age, seventy-three percent of the total populationare eighteen years and over indicating the largest proportion ofindividuals in Detroit (Schindler, 2016). Those aged sixty-five yearsand over represent the least proportion of the total number of peoplein Detroit.

Evaluation of three-year trend of primary revenue sources andexpenditures

Detroit relies primarily on taxes for revenues. According to thestatistics, 40.3% represent revenue earned from the property taxes,36.5% depicts taxes made from sales and gross receipt, individualincome taxes amount to 16.4% while the corporate income taxesrepresents 1.9% that accrues to the municipality of Detroit (Hartmus&amp Walters, 2015). The state also receives revenue in the form ofgrants from the federal government. Further, there are capital grantsreceived by the state in addition to other miscellaneous sources ofincome (Sorenson, 2013). The primary expenditures of the municipalityvary. Education represents the major expenses of the state with ittaking a percentage of 31% of the total budget. Healthcare provisionamounts to 22% of the total expenditures (Hartmus &amp Walters,2015). Pension amounts to 10% of the expenditures. Other expensesthat have been accounted for are welfare, protection, and transport.Such are the sectors contributing to the primary expenditures of themunicipality.

Analysis of impact of issues leading to the municipality’sbudget deficiencies

The first reason for the tax deficits is about the inability to raiseenough funds from the state’s primary source of income. Notably,there are high incidences of evasion in payment of taxes. The factthat many people or institutions are evading the payment of taxesresults in deficits since the state would be unable to reach thethreshold of the finances they are hoping to achieve (Hartmus &ampWalters, 2015). The other factor leading to the deficits are thedemographic pressures. As indicated, the state has slightly a largepopulation of senior citizens negating the need to spend more onissues such as healthcare and other social functions. The effect ofsuch is a constraint on the budget that had been planned for as morefinances have to be channeled towards meeting the individual needs ofsuch people (Hartmus &amp Walters, 2015).

Proposal of financing options for the municipality

The first option is for them to come up with projects that areeligible for funding in the form of grants. Many philanthropists maybe willing to support such activities. An example of the project isthe startup of homes for the elderly, a move that will draw funds andreduce the burden of care for the state government.

Second, there is the option of selling assets to raise funds forvarious activities. It is an option that is viable especially in ascenario where the municipality has capital assets that they may notbe using. It could help increase their overall revenue.

Finally, they could borrow from the federal government as a way ofensuring that they realize the funds needed to meet the individualbudgetary requirements. The funds can then be paid back as agreed.

References

Hartmus, D. M., &ampWalters, J. (2015). Municipal Bankruptcy and Local Court Funding:What

We Can Learn fromthe City of Detroit, Michigan. Justice System Journal, 1-13.

Schindler, S.(2016). Detroit after bankruptcy: A case of degrowth machinepolitics. Urban

Studies,53(4), 818-836.

Sorenson, P. (2013).Losing Ground: A Call for Meaningful Tax Reform in Michigan. Pat.

http://www.detroitmi.gov/