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The City Government of Omaha Nebraska Special Funds
Term Paper ID:43201
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Essay Subject:
Omaha Nebraska is an economically healthy city It's financial statements give a picture of ...... More...
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10 Pages / 2250 Words
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Paper Abstract:
Omaha, Nebraska is an economically healthy city. It's financial statements give a picture of how the city government is performing its fiduciary duties.
Paper Introduction:
The City Government of Omaha Nebraska Special Funds Municipal income statements are large and unwieldy monsters whentaken as an aggregate This is because the incorporate many differentactivities with different goals and objectives The finances for eachentity are reported as a separate fund allowing the voters to determinewhich projects are doing well and which it needs the city government toaddress Three funds of interests in the financial statements forOmaha Nebraska are the Special Assessments Fund the Convention CenterHotel Fund and the Printing Services
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Net assets ofthe Convention Center Hotel Fund ... Printing services is charging too much for its services. Bestyet, maybe their machines are lasting longer than expected, so theirinterest expense is lower than projected. There are certain cases in which the county feels it must demand thatproperty owners make improvements. Retrieved on April 4, 2 9 fromhttp://www.hotel-online.com/News/PR2 7_2nd/Apr 7_OmahaHilton.htmWojno, Marc A (2 8). 22), more thanenough to make payments on the debt associated with it. Chances are that the city already has an establishedinternal mail system, and there is no security risk to sending jobs toanother internal department. According to page 16of the financial statements, the printing services fund had revenues in2 8 of $528,3 9, , a budget worthy of even the most expensive high-volume printing equipment. It buys supplies and equipment from thecommunity, but all of its revenues come from within the government itself.Thus all of its revenue would arrive through inter-fund transfers. Though the hotel is good for thebusiness community, such an injection would do little to benefit thegeneral public."If tax dollars had been needed for new down comforters, sparkling wineglasses, thick cotton towels and fresh coats of paint, Ebdon said, it wouldhave had to come from other city needs, including park improvements andstreet resurfacing" (Kotoc 2 7). The Convention Center Hotel Fund is a classic example of anenterprise fund. Sometimes forcing a fund to pay foritself does not make sense. Thecity government does a great deal to augment both business activity andresidential life through taxpayer dollars and the fees associated withcertain activities. Another example would be a change to the sewer system on a certainstreet. Kipplinger's Personal FinanceMagazine, July. The City of Omaha, Nebraska, located in the central planes area ofthe US, is the largest city in the state. The hotel is not run by the government. This is because the incorporate many differentactivities with different goals and objectives. There are several possible reasons. The City of Omaha simply borrows against thereceivables rather than letting $7 million dollars sit idle. Municipal governments are under strong pressure from their citizensto balance their budget each year. David (2 7). Sothis is a conservative receivables balance and therefore acceptable. One is that the internal pricingis off. Municipal governments are far more likely than federal or stategovernments to put individual programs out the voters for approval.Financial statements that report the activities of various funds give thevoters a chance to make informed voting decisions about programs that mayneed to be changed. This suggests thatthe government has issued debt against the value of the specialassessments. It has a population of just over425, . New debt will be more expensive to issue.Businesses will avoid setting up shop in the city. Annual appropriations may also be used to subsidize these funds. April 21. 2 ). Perhapsthe department is running very efficiently. Let us take for example the weed controlfund. In an economically strong community like Omaha chances are there arefew such properties. This is toavoid the health risks associated with out of control nature, such asinsect transmitted disease. There is a special assessments debt service fund. The finances for eachentity are reported as a separate fund, allowing the voters to determinewhich projects are doing well and which it needs the city government toaddress. Printing Services is an enterprise fund whose only customers arewithin the city government. "The Convention Center Hotel Fund is used to account forcosts associated with the construction and operation of the ConventionCenter Hotel" (27). Whatever the reason, the profitwill either invested back into printing services or transferred back to thegeneral fund. Plus $3,588,292 was reserved for debt service (p. 9, 2 8) The city will also transfer funds from the general fund if theenterprise fund is running a loss. These payments must be made whenever theproperty is sold in order for the new owners to have clear title. With the new plan, the debt payment drops to $3.8million." The cash flow from the hotel was positive, but not sufficient to makethe debt payments. "#3, Omaha Nebraska". Retrieved on April 4, 2 9 fromhttp://www.kiplinger.com/magazine/archives/2 8/ 7/2 8-best-city-omaha.html 16). They are used for aspecial purpose and are generally expected to pay for themselves with feesfor services. They will alsoput a lien on the house if the person does not pay promptly. Theoretically it should charge no more than itcosts to provide its products and services. Voters will complainthat the politicians are not making good use of their tax dollars and mayvote for other leaders and election time. "County Weed Abatement Regulations."Retrieved on April 4, 2 9 from http://www.dcplanning.org/dcabate.htm."Fortune 5 List By State: Nebraska". Maybe they used up old stock,or found material sources that had lower prices than were budgeted. In practice some of theseproperties may be losing value. A specialassessment would thus be made to the owners for the costs of adapting theirindividual homes to the new system. Municipal governments, on the other hand, are faced with thesame borrowing restrictions as most businesses, with the one exception thattheir interest rates are kept unnaturally low by the exemption of theirinterest from state income taxes. The facility brings tourism and cultural events to thetown, stimulating the economy and making Omaha a better place to live. Enterprise funds are a type of proprietary funds. To avoid answering to the fact thatthey had not lived up to their own projections, "The Hilton agreed toforgive $3.7 million in exchange for having its management contract for thehotel extended by three years to 2 21" (Kotoc, 2 7). It is generally financed by a 1 year note that covers thecost of contractors performing the service until the actual taxes can becollected. Three funds of interests in the 2 8 financial statements forOmaha, Nebraska are the Special Assessments Fund, the Convention CenterHotel Fund, and the Printing Services Fund. Some of them also get funds from the federal and stategovernments. The federal government has the option toborrow almost endlessly because it issues the currency with which it willpay its bills. When local governments borrow more than they can reasonably expect topay their bond ratings will drop. So the liens inthe future will increase in value over time, rather than decrease. The regulations state that anyone in possession, charge or control of any lot or ground or any part of any lot, within the unincorporated villages and subdivisions of the County of Douglas, upon which shall be allowed or maintained any growth of twenty-four (24) inches, or more, of noxious (defined in paragraph 2) and/or nuisance weeds (defined in paragraph 3), shall be guilty of maintaining a nuisance.If the violation happens within the city limits, and the owner does notcorrect the problem, the city government will do it for them. As is usually the case, aprivate management company, Hilton, was retained to do the job. Since the city needs to dig up the street anyway, it is prudent tosimply change all of the connections at once. It's building was financed in a variety of ways. Why has this department made$88 million at the costs of other departments? The City Government of Omaha Nebraska Special Funds Municipal income statements are large and unwieldy monsters whentaken as an aggregate. Here theCity would use money from the general fund to subsidize publictransportation, and it would be reflected on the financial statements as aninter-fund transfer. CNNMoney. These receivables are not liquid, but their correspondingexpenses are in the past. On page 39 of the financial statements we can seethat the government actually retired the full amount of debt for last yearand reissued debt for the full amount for 2 9. In his article published last Aprilin Hotel's Online, C. Revenues and expenses are adjusted as necessary to maintain an adequate amount of working capital. Now in 2 6 it was not the case. In theory this should not be necessary because tax liens must bepaid upon transfer of the property by sale. Now the one year note is by no means the end of the story. Now since this is an internal fund, there is no needfor it to run a profit. (Statement,p. Naturally they receive loans and grants from the citygovernment. Hilton had extended short-term credit to the city tohelp set-up the hotel, and because it was too large of a loan the citycould not keep up with the interest. This interest rateis punitive and is almost certainly higher than inflation. The City's enterprise operations are reviewed on an ongoing basis. Hotel Online. The "Special Assessment Fund" is an interesting example of arestricted fund. The city also has a lower cost of capital thanthe private sector. To encourage people to use public transportation,the city must keep the cost below the cost of commuting. The management fees that the cityhas to pay to Hilton pay off in the fact that the hotel is generally full. Plus it could bring in large numbers of experienced employeesto do the job quickly and efficiently. On one hand, it probably consists mainly of back taxes onassessments on real estate. Hilton haseconomies of scale in items like advertising as well as the asset of namerecognition. However, the depreciationexpenses for building and equipment are in the ballpark of $3 milliondollars (there may be purchases included in the number on page 64 of thenotes). The code is actually set by Douglas County,in which the City of Omaha resides. Accordingto the statement of receivables on page 55, the $7,457,675 in receivables,presumably from the taxpayers. Interestingly in this case the problem was partly created by themanagement company. Another option is that the expenses are lower than expected. Second, setting up a central print shop, perhaps with a deliveryservice, allows the city to reap economies of scale. Last year the balance on this account changed dramatically, from$1, 25, to $215, . If the assessment is made because an absentee landlord never upkeepsthe back yard, it is likely that the inside of the house is falling apartas well. 2 ).In theory the fund "lost" $3,558, 94 (p. Plus the governmentmust go through a lengthily process of advertising the contract, obtainingbids, etc., for which the city must allocate human resources. Any time the government must go to the private sector it needs to payfor the profit of the business in addition to the cost. So the lossis only on paper. There are two basic reasons for setting up a fund like this. Such a house may not be sold for the assessed value, and indeedmay not be salable at all. The value of such receivables is somewhat indoubt. This was not a case in which the government was willingto inject more money into the project. David Kotoc explained that the city needed torefinance the $1 3 million in 25-year bonds that it issued to build thehotel. If the government eventually seizes the propertyor buys it in a urban revival program the receivable will have to bewritten off. Thismakes the reported figure conservative, which is appropriate for afinancial statement in the United States of America On the other hand, the receivables are not adjusted for uncollectibleamounts. Perhapsother departments use it to make certain that they use their entire budgetin order to assure that it will not lose funding for the next year. Now the convention center actually interacts with a fair number ofother funds. The company also increases the amount of the receivables each year bythe amount of interest that it charges the lienholders. First,the city can save money by doing its own services rather than outsourcingthem. amounted to $(23.8) million (p. An excellent example of this is the weedabatement zoning regulations. This processalso slows up the action, particularly if it is a large, one-time project. The present value of future punitive interest isprobably higher than an allowance for doubtful receivables would be. The business sector boasts four Fortune 5 companies: BerkshireHathaway, Union Pacific, ConAgra Foods, and Peter Keiwitt Sons(CNNMoney.com). This also saves thehomeowner's the trouble of hiring contractors themselves. After the service is performed the city willsend the owners a bill called a "special tax assessment". "under the current [original] plan the city would pay up to $6million this year. The costs of the printing services fund were 439,487, , leaving aprofit of $88,822, . Retreived on April 4, 2 9from http://money.cnn.com/magazines/fortune/fortune5 /2 8/states/NE.htmlKotok, C. The city may decide that the system may need replacing to keep itfrom failing. So it is faster and cheaper to do thingsinternally. Thus the issuance of governmental financial statementsis a critical component of a healthy democratic entity.Douglas County Environmental Services. The City has decided to account for these activities by the use of enterprise accounting to better identify the cost of the services and for better management control. This will cost the owners of the houses money because all ofthem will need to update their individual system connections. For example, say that traffic congestion is amajor issue in the city. "City of Omaha Facing Restructuring of $1 3 millionin Bonds Used to Build the 45 room Hilton Omaha; Hotel Revenues Have NotMet Projections". Located in the heart of the American Midwest, it was rankedat #3 on Kipplinger's Best Cities to Live, Work, and Play list, with it'sonly drawback being a high sales and income tax rate (Mojno 2 8). In fact the convention center hotel's operatingactivities generated $5,9 ,817 of positive cash flow (p. This also benefitspeople who cannot afford cars and need the bus to get to work.
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