Budget Analysis for the City of Newark and the City of Plano

Budget analysis aims at determining the capacity of the budget to
reflect the character of the governmental institution and its
development program for a foreseeable financial period. This paper has
analyzed the historical backgrounds of the Plano city and Newark city
with a focus on their development agenda. The study has identified the
capacity of reduction or increase in specific budgetary items to
determining the character of the governmental institution. The study
indicates that the Plano city has significantly higher revenue
generation and expenditure in all the budget items. This was a
reflection of the high developmental progress attained in Plano city
compared to the development progress in Newark city. In addition, the
study has identified that Plano city has a higher per capita revenue and
higher per capita expenditure than Newark city. Moreover, the study has
identified that the two cities use different formats to present their
Key words: Budget analysis, governmental institution, budgetary items,
revenue, expenditure.
Budget Analysis for the City of Newark and the City of Plano
Budget analysis involves a critical review of revenue and expenditure
items included in the budget in order to determine the intent and the
impact of the government budgetary plan. Budget analysis provides
support strengthening the civil society organizations and members of the
public in influencing the decisions if tax policy revenue collection and
allocation. The analysis involves the comparison of the budgets of the
same institution for a given period or comparison of the budgets of
different institutions within the same financial periods. The net
impact of the comparison is the determination of whether the leaderships
of the respective institutions had the capacity to transform the policy
ideas into the planned outcomes. In addition, budgetary analysis
provides a platform that can be used in making real budget plans in the
future (Palmer, 2012). This paper will provide a comprehensive budgetary
analysis for the City of Newark and the City of Plano. The analysis will
focus on revenue and expenditure variables by comparing and contrasting
them in the two cities. The aim of this analysis is to determine the
ultimate impact of each budgetary item in the target area of expense or
revenue. This will be achieved by comparing and contrasting amounts of
revenue or expenditure in the two cities and comparison of the effect of
the budget items.
The governance of Plano City and Newark City
Plano City is administered by the council-manager government referred to
as the Plano City Council. The Plano City Council is composed of eight
members who represent four districts forming the City. The governing
council is headed by the mayor who is elected to a three year term, with
a limit of three serving terms (Plano City Council, 2013). In addition
to the eighth district representative members, the governing council
appoints several residents to serve on different committees and
The Newark City Council is composed of six members who represent
different districts forming the City. The council members are elected to
serve in a four year term while the mayor is elected to serve a two year
term. The meetings of the council provide the public policies that
direct the political and economic interest of the city residents (Newark
City Council, 2013).
Histories of Plano City and Newark City
Plano City
Plano City is located in Collin and Denton County and the metropolitan
area called the Dallas-Fort worth Metroplex. In 2010, Plano City was
ranked as the 9th in the State of Texas and 70th in the United States
based on its population size. According to United States Census Bureau
(2010), Plano city population size was 269,776 in 2010. In 2005 Plano
City was named one of the best places to live in by CNN Money in the
Western United States but dropped to 11th place by the 2006. In
addition, Plano City has been ranked as one of the wealthiest cities
based on its median household income in comparison to other cities with
a population of 250,000. The United States America Census Bureau
indicated that Plano city has a significantly lower poverty rate of only
6.4% by the year 2008 in comparison to other cities with a similar
population size. In addition, Plano City is one of the safest places in
the United States according Forbes Magazine in 2010. With 70 public and
12 private schools Plano City has one of the highest scoring schools in
the United States. There are numerous companies headquartered in Plano
City including J.C Penny, Huawei, Traxxas, Alliance Data, Dell Services,
Cinemark Theatres, Ericsson, Frito-Lay, Siemens PLM Software
Rent-A-Center, Dr Pepper Snapple Group, HP Enterprise Services and Pizza
Hut. Plano City also holds two cultural and entertainment events
including the Plano Balloon Festival and Plano International Festival
annually. Plano City 2011/2012 financial report indicates total assets
of $277.5 million, total liabilities of $31.4 million, revenues of
$194.0 million and expenditures of $212.3 million.
Newark City
Newark City is located in Essex County and Gateway Region in the state
of New Jersey. It also ranks as the 2nd largest city in the New York
Metropolitan Area. Newark ranks 67 th among the most populous
municipalities in New Jersey based. According to the United States
Census Bureau Newark City had a population size of 277, 140 in the year
2010. Newark City is a hub for the country`s shipping, railing and air
related activities. Notably, Port Newark serves as the main shipping
terminal for containers in Port of New Jersey, as well as New York it
is also the largest shipping terminal on the East Coast. Newark City is
home to the Liberty International Airport one of the municipal 1st
commercial airports in the United States it is one of the busiest
cities in airports operations in the United States (City of Newark,
2010). Newark City also headquarters numerous corporations including
PSEG and Prudential Financial. Newark City one of the most racially
diverse cities is divided into five wards. Poverty is one of the
significant challenges facing Newark City notably one third of its
population is comprised of poor workers. Newark’s economic status has
led to a significant decline in its population over the last few decades
especially among the white population. In the year 1996, Newark city was
ranked as one of the most dangerous cities to live in by Time Magazine.
Although the crime rate in Newark dropped significantly by the year 2008
in the recent year this city has experienced a substantial increase in
crime in 2011 Newark city reported a 6% increase in crime attributable
to lay off in the police force due to the economic recession. Newark
city hosts several parades and festivals including the Lincoln Park
Music Festival, Cherry Blossom Festival and Portugal Day Festival.
Table 1: Demographics of Newark City and Plano City
Newark City Plano City
Population (2010) 277,140
Area 26.107 sq mi (67.617 km 2) 71.6 sq mi (185.5 km 2)
Households 80,875 (2000 Census) 94,542
Families 60,575 (2000 Census) 61,641
Population Density 11,458.3 inhabitants per square mile (4,424.1 / km
2) 3,102.4 inhabitants per square mile (1,197.8 / km 2)
Housing units 109,520 86,078
Average density 4,528.1 per square mile (1,748.3 / km 2) 1,202.8 per
square mile (464.4 / km 2)
Racial Makeup
African American
Native American
Pacific Islanders
Hispanic / Latino
Other Races
26.31 %
52.35 %
0.61 %
1.62 %
0.04 %
33.83 %
15.22 %
66.9 %
7.6 %
0.36 %
16.9 %
0.1 %
14.7 %
3.0 %
Married Couples 28.0 % 64.3 %
Single Parent (Female) 28.9 % 7.5 %
< The age of 18
18- 24 years
25- 44 years
45- 64 years
Above 65 years
25.6 %
11.9 %
31.9 %
22.1 %
8.6 %
28.7 %
7.0 %
36.5 %
22.9 %
4.9 %
Households With Children Under The Age of 18 Years 33.7 % 42.0 %
Median Income (Household) $35,659 $84,492
Median Income (Family) $41,684 $101,616
Source: United States Census Bureau (2011)
Places of Interests in Plano City and Newark city
Historic sites in Plano City include the Plano Station and Texas
Electric Railway which was built in the year 1908. Other historic sites
in Plano city include the Heritage Farmstead Museum which was built in
1891 (Kealer, 1997). Some of the most fascinating places in Newark City
include the Newark Museum which is one of the largest in New Jersey
State. Newark City is also home to the Newark Public Library which of is
the largest in New Jersey State.
Revenue and expenditure
Revenue and expenditure are the two main components of the budget whose
balance determines the effectiveness of the institution in converting
the policy plans into the desired results. The municipal councils, being
the government agencies, are charged with the responsibility of
collecting revenue in different forms from individuals and organizations
operating within their jurisdictions. The municipal councils are also
allowed to spend the revenue collected in accomplishing different policy
projects within the city. For the purpose of comprehensive analysis, in
this paper, each of revenue and expenditure items is divided into three
main categories. The general revenues and expenditure category refers to
the funds that are established to account for the resources that are
devoted to financing the general services under the governmental unit.
Sources of general revenues include taxes, miscellaneous revenue, and a
wide variety of fee charge (Sennoga, 2008). General expenditure, on the
other hand, refers to the means in which the general revenue is spent by
the governmental unit to serve the citizens including the general
administration, sanitation, and protection of life and property.
Enterprise revenue is the income derived from projects started and
operated by the government unit in a similar way as commercial
enterprises. The government unit may charge fees for the utilization of
specific programs it initiates as a source of income. The enterprise
expenditure, on the other hand, refers to the expenses incurred by the
government unit to stand and maintain a given enterprising program.
County councils are allowed to initiate and charge a fee for some
programs that enhance their service to the city residents. Redevelopment
revenue and redevelopment expenditure refer to the sources of funds for
development programs and expenditure for such funds in development
programs such as infrastructural development (Palmer, 2012). The
development programs financed by the redevelopment revenue have a
lifespan of more than one year. This section provides analysis of
different categories of revenue and expenses for Plano City and Newark
The cities of Plano and Newark generated their revenue from general
sources, redevelopment agency capital projects, and state construction
maintenance significant revenue funds.
Table 2: General revenue
$ ‘000’ % $ % PLANO
(269,776) NEWARK CITY
Property Taxes/ General property taxes
Sales taxes
Other Taxes


$ 480.92
$ 217.41
$ 44.05

$ 45.65
Special assessments –
463,325 1.5 – $ 1.69
Franchise Fees
22,361,000 8.08 –
$82.89 –
Licenses, permits and fees –
1,039,660 3.34 – $ 3.74
Fines and forfeitures –
591,433 1.9 – $ 2.13
Investment Income 3,473,000 1.25 –
$ 12.87

Program Revenues
Charges For Services/ Current service charges
Operating Grants and Contributions
Capital Grants and Contributions

$ 0.026
$ 76.97

Proceeds from sale of property –
1,198,975 3.86 – $4.44
Total 276,743,000
$1,125.82 $112.02
Source: Author construction
The total general fund revenues for the cities of Plano and Newark are
as follows: 276,743,000 (City of Plano, 2010) and 31,090,768 (City of
Newark, 2010) million dollars respectively. The per capita revenue for
Plano city and Newark city are $1,125.82 and $ 112.02 respectively.
Although the population size for Plano and Newark cities is almost about
the same, but there is a large disparity between the average revenues
between these two cities. According to Kim (2008), Plano city has
implemented numerous programs to stimulate economic growth in this city.
Plano city revenue is significantly higher in comparison to the two
cities. The highest source of revenue in Plano City in the financial
year 2010 was property taxes, which makes up (46.9%) of the city’s
general revenue fund. Comparatively the highest source of revenues in
Newark city was another tax category which comprises 40.8% of the
general fund in the city.
The per capita revenue is significantly high in Plano city compared to
the per capita revenue in Newark city for all categories of revenue
source. The tax revenue especially the property tax registered the
highest per capita revenue of & 480.92 in Plano city compared to $ 44.05
in Newark city. Similarly, Plano city recorded the highest total per
capita revenue of $ 1,125.82, which was significantly higher than the
total per capita revenue of $ 112.02 in Newark city. This was a further
evidence of effective management and diversification of revenue sources
in Plano city compared to Newark city (Elliott, 2013). The investment
income is one of the unique sources of revenue to the Plano city
treasury, which generates $ 3,473,000 to the city. This is a significant
source of revenue that consequently contributes $ 12.87 to the revenue
per capita for the Plano city. This is unique because it offers the city
council an alternative source of revenue and an opportunity to reduce
the tax burden on the resident. Other significant sources of revenue
that are available to Plano city and not available to Newark city
include the operating grants and contributions and capital grants and
contribution. Some of the conditions for grant acquisitions include
efficient management in the past, professional capacity to utilize the
grant awards, and availability of appropriate plans for grant
utilization. These are some of the features that may have offered the
Plano city an opportunity to acquire immense grants compared to Newark
city. This is evident from the reports by Theodore (2010) who indicated
some of the dedicated managers of the Plano city including the long time
serving city manager Tom Muehlenbeck. Tom is recognized for boosting the
development agenda of the city, which have transformed Plano city from a
suburb into one of the wealthiest cities in the United States (Theodore,
A comparison of the budgets of the two cities indicates that Plano city
has a diversified source of revenue compared to Newark city. In
addition, Plano city has the capacity to generate more funds for the
similar categories of revenue source compared to Newark city. There are
two potential causes of low income collection in Newark city. First, the
rampant corruption scandals reported in the city have denied both the
city and the state government substantial revenue. According to
Elliott (2013) corruption in Newark is committed at the resident and the
governance level. The author also revealed that all the mayors in the
Newark city have been associated with political corruption scandal
committed during their terms in office. The corruption among the city
residents results from the concealment of property and tax avoidance
strategies. Secondly, poor municipal management in Newark has been a
blame for law revenue collection and utilization. According to Barr
(2004) failure of municipal leadership in Newark can be traced back in
1930, which resulted from the failure of the municipality. The plan
would have helped the municipality in diversifying the sources of
revenue, thus reduce the tax burden on the city residents. This would
have been accomplished by acquisition of East Orange, Kearny, Harrison,
Vail burg, and Belleville at the early stages of the city development
(Barr, 2004). The trend of poor management has persisted to date, and
this narrows the capacity for revenue generation in Newark city compared
to the Plano city, which is characterized by effective management.
Redevelopment Agency Capital Projects Fund
The main sources of revenue for redevelopment of capital projects
include the general property taxes, local taxes, and use of money and
Table 3: Redevelopment Agency Capital Projects Fund
$ %
General property taxes – 55,049,000 9.4
Other local taxes – 527,221,000 90.4
Use of money and property – 668,000 0.11
Total – $ 582,938,000 100
Source: Author construction
The redevelopment capital projects fund receives 90.4% of its revenue
from other local taxes.
Table 4: Capital Projects Fund
$ %
Other governmental agencies – 9, 398,000 13.5
Current service charges – 48,882,000 70.4
Use of money and property – 11,140,000 16.04
Total – $ 6 9,420,000 100
Source: Author construction
The city of Plano did not receive any revenue from its capital projects
in the fiscal year 2010. For the Capital Projects, the city of Newark
received a significantly higher amount of the current service charge
which contributes 70.4% of revenues in the Capital Projects Fund.
Table 5: State Construction Maintenance Special Revenue Fund
$ %
Other governmental agencies – 1,299,779 89.0
Current service charges – 100,325 7.04
Use of money and property – 25,197 1.76
$ 1,425,301 100
Source: Author construction
The city of Plano did not receive any revenue from the state
construction maintenance significant revenue projects in the fiscal year
2010. 89% of revenue from State Construction Maintenance Special Revenue
Fund in the fiscal year 2010 was from other governmental agencies.
Although the municipal council of Newark city has substantial sources of
fund for capital projects, there is a large amount of funding, which is
sourced from other government agencies. This indicates the incapacity of
the Newark city to finance its capital projects independent of external
sources of funds. The heavy support of the Newark city by other
government agencies resulted from the change of leadership, which
resulted in a strategic plan of making the city a center for office
through infrastructural development. According to Roney (2006) the new
development strategy targets the key sectors that will drive the local
economy of the city. The continued support of the government agencies
has given Newark city some of the world class infrastructure that
facilitates the just-in-time delivery services.
Expenditures for the Cities of Plano and Newark
The budgeted items of expenditure for the two cities (Plano city and
Newark city) are comparatively different in the amount of expenditure
and the items’ category as shown in Table 6.
Table 6: Expenditures for the Cities of Plano and Newark
$ % $ % PLANO
(269,776) NEWARK CITY
General government expenses 18,439,000
Libraries 10,295,000 3.93 – – 38.16 –
Administrative services 7,800,000 2.98 – – 28.91 –
Public safety
Police 66,061,000 43,655,000
Streets and parks 6,800,000 2.16 – – 25.20

Public services and operations 5,663,000 2.16 – – 20.99 –
Community development 6,800,000 2.59 8,945,000 45.3 25.20
Recreation 4,700,000 1.79 – – 17.42 –
Interest on long-term debt 600,000 0.02 14,119,000 9.5 42.22 50.87
Public works 34,002,000 12.97 – – 126.04 –
Technology services 13,806,000 5.26 – – 51.18 –
Other 2,076,000 0.79 – – 7.69 –
Total 262,081,000 100 41, 800,000 100 971.47 150.60
Source: Author construction
The total expenditure for the cities of Plano and Newark is $
262,081,000 (City of Plano, 2010) and $ 41, 800,000 (City of Newark,
2010) respectively. There is a large disparity between the average
expenditure per person in the cities of Plano and Newark which was
$971.47 and $150.60. Notably, the city of Plano spent a significantly
higher percentage of its revenue on a police which makes up
approximately (16.65%) of the expenditure in the city. Comparatively
Newark City spent 33% of its total expenditure on police. In addition,
Plano city emphasizes on the public service and administrative expenses
compared to the Newark city. The budgets also indicates that Plano city
has a high expenditure on public works, which makes-up 12.97 % of the
total budget while Newark city does not have that category of expense.
Moreover, Plano city has a budgetary allocation of 5.26 % of the total
budget on technology services, an allocation that is not provided in
Newark city.
It is evident that the budgetary allocations reflect the rate of growth
and the status of the two cities. First, the high percentage of
budgetary allocation of police (16.35 %) in Plano city directly reflects
the tight security status of the city. According to Plano City Council,
(2013) the high budgetary allocation of police in Plano city, in the
past, have given the world class security status. This resulted in the
classification of the Plano city as one of the safest cities to live in
the United States. However, the security status of Plano city may
deteriorate following the decline in budget allocation on police. With a
population of 269,776, the City of Plano in Texas has had to contend
with 3% cut in its operational budget due to a massive budget cuts in
the fiscal year 2009/2010. According to Solis (2009) the Plano police
department will be forced to implement more than $2.2 million budget
cuts. The budget cut may lead to a decline in the response time and the
number of police officers on the streets at any one given time. The
budget cuts will also eliminate incentive programs in the Plano police
The Newark city, in contrast, has had a low budgetary allocation of
police in the past. This has resulted in its classification as one of
the most dangerous cities in the United States as a result of the high
crime rates. This is evidenced by the financial stress in 2011, which
resulted in budget cuts the City of Newark had to terminate the
employment contract of 13% of the police force (Barro, 2011). As a
result of the layoff crime rate in the city of Newark increased
significantly shootings, auto theft and murder went up by 29, 39 and 71
percent in comparison to the year 2010. To protect its population of
277,540, the City of Newark needs to increase its budget appropriations
for police service.
The high budgetary allocation on public works (12.97 %) and
administrative services reflects the high quality of services delivered
in the city. The funds allocated for the two items are used in the
acquisition of the tools necessary to enhance the quality of service
delivery. According to Theodore (2010) the high quality of service
delivery in Plano city is commensurate with the highly qualified and
dedicated city managers who have helped the city in providing quality
services at a reduced cost. The Newark city, in contrast, has recorded
an improved quality of services delivered, although there was no
identified budgetary allocation on the administration and public works
indicated in the budget. The improved quality of service delivery in
Newark city has resulted from the adoption of best practices and
reformed management system (Newark budget, 2010). The per capita
expenditure is comparatively higher in Plano city that in Newark city.
The Plano city has a per capita expenditure of $ 971.47 while Newark
city has a per capita expenditure of $ 150.60. This translates directly
to the level of poverty and low rate of development in the Newark city
compared to Plano city.
Newark City budget format
The Newark budget is presented in a line item format where minimal
information about the explicit objective of each item is presented.
Although the budget items are well classified, the budget lacks the
explanation for the item’s inclusion in the budget plan. The Newark
budget is well organized in overall because the consistent change in the
amount of funds allocated or generated from each of the budget items can
be easily traced from one period to the other. The main goal of the
Newark municipal, similar to other government agencies, is to reduce
expenses and diversify revenue. Newark city was not spared by the
financial downturn, and this resulted in a decline in revenue generated
starting with transfer tax revenue, which declined by $ 2.3 million
(Newark budget, 2010). Several expenses (including expenses on Newark
trolley and expenses on the print edition of the City newsletter) were
eliminated in the budget in order to reduce the overall expense. The
city council diversified the channels of revenue generation by
introducing a storm water utility, addition of the apartment complex
business for dumpster collection, and increase in sewer rates by 25 %
(Newark budget, 2010).
The simplicity of the budget presentation may explain the causes of slow
growth rate of Newark city compared to other cities in the United States
including Plano City. The budget allows only a superficial analysis, and
this may create an opportunity for corrupt council members failing to
disclose the actual revenue generated and the budget expenditure on
different budget items.
Plano City budget format
The Plano City budget is a performance budget because it reflects the
amount of resources dedicated and out of services for each unit. The
budget is well organized with each of the items and sub-items arranged
in chronological orders. The Plano city budget was prepared during a
period financial difficulty following the world financial crisis. The
city mayor acknowledges that the value of property in the city had
decreased by 4.27 % (Muehlenbeck, 2010). To this end, the city budget
puts emphasis on reduction of expenses and increase revenue in order to
accomplish the policy plans. Some of the expense reduction plans include
the elimination of 115 employment positions from the general fund
allocation. This was intended to reduce the city expenses by reducing
the amount of funds dedicated to the remuneration of city staff. The
budget, on the other hand, targets to increase revenue generation
through the several means such as a reduction of exemptions on sales
(Muehlenbeck, 2010). This would help the city recover part of $ 23.2
million of lost revenue on sales tax freeze in the previous year.
The budget was comprehensive and provided the explanation of all the
budgetary items including the reasons the course of action taken
regarding all the items. This was done starting from the general fund
items, which is the main source of revenue for Plano city. The low
property rate of 6.4 % in Plano city indicates the causes of high growth
rate of the city and increase in the city’s population.
Budget analysis is an effective means of determining the focus of a
governmental institution regarding the revenue collection and
expenditure. Different governmental institutions use varying formats of
preparing their budgets. These budgets indicate the target that the
institution would like to attain within a given period. In addition,
finance budgets reflect the character of the city that can be determined
by identifying the key budget items. Although, most of the budgets aim
at reducing annual expenditure and diversifying revenue, some budget
items are much more sensitive to reduce their spending. For an instant,
a reduction in the police budget in the two cities, Plano city and
Newark city, may result in insecurity in the cities. A rise in
criminality may affect the economic progress of the city, thus reducing
the desirability of the city among the residents and the amount of
revenue collected. This implies that the governmental institutions
should avoid reducing expenditure on items that may deteriorate the
future of the city.
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