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The Budgeting System of Las Vegas

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Table of Contents

  • Background
  • The Government
  • The Budget
  • Tax Revenues
  • Recommendations

Background

Viva Las Vegas, as many say! The City of Las Vegas became the most popular city in Nevada as it was first known as “Clark County.” The city is located in the Mojave Desert known which is known to be the driest desert within North America. Through migration of the land and because of the search for gold in the 20th century, Las Vegas became settled in the early 1900s’ and became officially incorporated in the year of 1911. As the population rate has increased since the 1960s’ it nearly doubled within the years of 1999-2000s. 85.2% within population increase Las Vegas was on the rise and became the most popular state within America. As of 2019, the population has grown to 644,644.

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The history of the city goes back to when the town was first discovered in the year of 1829 which the city was a valley where the first non Native Americans traveled. The meaning of Las Vegas in spanish is “the meadows” classified for westward travelers and nature’s spring water. Las Vegas is within the metropolitan area which is known for primary cities beyond official city limits. For example, the Las Vegas Strip is not located in Las Vegas but right outside its borders and is within the unincorporated areas. Downtown Las Vegas’s Freemont Street is very popular in the city better known as “old vegas”. The street was named after John C Fremont who persuaded travelers to come back in the late 1840s’ through his inspired writings. The city became incorporated in the year of 1911.

Where Vegas is known for its gambling roots due to the settlers from the Gold Rush, in the year 1931 the state of Nevada legalized casino gambling and also reduced residency requirements for divorced couples. Growth and increase in population led to the city become more advanced in the mid 1900s’ before technology as well as social media became knowledgeable the city thrived with being in travelers.

Much of the city’s economy is attributed to the diversity of its town. As the city evolved the Moulin Rouge had its debut into the city being the first racially integrated casino-hotel in Las Vegas being named after the Paris nightclub. May 24, 1955 the Moulin Rouge became the spot where the black population thrived, Vester Health saw the need for an integrated hotel within the state as well as on the strip. With the help of white investors and workers who worked in real estate for the state of California also assisted with making this dream come true. This hotel also helped the “Civil Rights Movement” for Las Vegas as well as brought attention to the owner of the hotel who at the time was the first African American woman to have her Nevada Gaming License. By 1992 the hotel had become a historic place and a symbol of black civil rights in Las Vegas.

Mayor and City Council positions are elected by the registered voters of the city. Each position has a limit of 3 terms which has been running since 2011 by Carolyn Goodman. Mrs. Goodman became elected July 6, 2011 right after her husband Oscar Goodman who ran for the exact same amount of terms as his wife. Nevada Department of Taxation approved the city fiscal budget of all taxes and revenues totaling out to $108,645,000 which contains two funds of revenue. The estimated expenditures which contains 24 governmental funds totaled out to $1,073,670,075 as well as 12 proprietary funds of $406,585,257. Approved by the governing board of Las Vegas City Council on May 29, 2018. The fiscal budget was based off the year of 2018 and they council was pleased at the results they were seeing. The unemployment rate in the year of 2018 was at a 5.05 the revenues of that year had predicted it to be 2.8% higher than the year before.

The Government

In the city of Las Vegas, there is a mayor and city council. This consists of municipal court with judges, a city auditor, and a city attorney. There is also a city manager who has an executive assistant. Under the city manager is the Office of Communications and the Office of Legislative Affairs. The Office of Communications handles all public relations/marketing, social media, as well as the print media, mailroom, and graphic arts. The Office of Legislative Affairs handles all governmental affairs: federal, state, and council staff. The City Manager has a Chief Operations and Development Officer, Chief Community Services Officer, and Chief Financial Officer, and a Chief Public Safety Services Officer.

Under the Chief Operations and Development Officer are the following: building and safety (building plans, inspections, project engineering, and materials testing); planning (business licensing, code enforcement, sustainability, and current and long-range planning); public works (city engineering, transportation engineering, and environmental); economic and urban development (redevelopment, business development, parking services, asset management); operations and maintenance (parks and grounds maintenance, parks and open spaces, streets and sanitation, and fleet and fuel services); and parks and recreation (active adult and community centers, aquatics, park and facility reservations, park special events).

The Chief Community Services Officer oversees the following: the Office of Strategic Services (neighborhood development, performance management, and training and development); Community Services (federal entitlement grants, affordable housing, human services/homelessness, and neighborhood revitalization); Cultural Affairs (Neon and Mob Museum, Las Vegas Arts Commission, Las Vegas Arts and Culture, Rainbow Theater Company, and Special events); and the Youth Development and Social Innovation (early childhood education, before and after school programs, multicultural community relations, and workforce development).

The Chief Financial Officer oversees the following: the City Clerk (public board and meeting administration, elections, and enterprise records); Finance (purchasing and contracts, accounting, and budget and reporting); Human Resources (recruitment/records, benefits, safety and risk management, employee/labor relations, and classification/compensation); and Information Technologies (enterprise delivery, infrastructure and security, development, and innovation).

The Chief Public Safety Services Officer oversees: Fire and Rescue (fire and rescue services, medical services, and fire prevention and life safety services); Municipal Court (Municipal court staff, alternative sentencing and education, misdemeanor and traffic courts, and compliance/accountability); Pubic Safety (corrections, animal control, marshals); and Emergency Management (FEMA/Dept. of Homeland Security, community emergency response, and Southern Nevada Counter Terrorism).

The Budget

The final general fund budget was proposed expenditure and was expected to be fully recovered by the projected revenues. The structural deficit budget averaged out about $10million a year for the city of las Vegas. In order for a final budget to be balanced you have to shift more resources into the areas that need it the most. The city council’s main priority is to provide a two percent decrement within the department. The fiscal year budget for 2019 totaled of $3.9 million not including Public Safety or Fire and Rescue Departments. Included in the year in order to achieve the projects savings they city council would have to carefully be managed by Human Resources. The main factor that plays a major role within the budget revenue would be the performance of consolidated and property tax collection.

The two revenues together comprise 73% of the city’s general budget and based upon the city’s 27% of the population growth the tax dollar may grow or it may shrink due while expecting the new construction and growth of collections will be capped for all residential properties and 4.2% for the fiscal year of 2019. The voters of the State of Nevada recently voted to legalize marijuana for recreational purposes in addition to gaining a licensing fee to sell which is known as dispensary in the jurisdiction. This small gesture of revenue brought the city share at $0.8million for fiscal year which the licensing fees are averaging out to $2.4 million a year.

The expected growth from this year revenues are to grow by 4.2% in the year of 2020. The revenues from all over the city is increasing growth within the numbers of new programs which are up to 26 public safety marshals and patrols to protect the public space and wellness checks to care for the most vulnerable citizens beginning with homeless population within the city. The city council has a preparing budget setting which helps them serve as a guide for the departments that deliver services to the residents and businesses. The city has a diverse employment from public outreach efforts than include long range planning and surveying the household residence regarding their living experiences in the city of Las Vegas. Fun fact the city of Las Vegas does not have control over the Clark County school districts. Their is a strategic plan that goes into service the city which are 1. Iconic Las Vegas, 2.Workforce Development, 3. Smart Vegas and 4. At Risk Population. The components are to better serve the community creating a space for residents, businesses and visitors.

The city thrives to prepare their workforce for the future, become the city’s choice to develop smart applicants. Las Vegas has became the iconic destination city, to be the growth and development of the urban core. Master Plan A, as the expenditures and revenues played a major role, the master plan estimates to add 5,500 housing in the urban area over the next 25 years along with the Fremont 9 project. The Fremont 9 project that will provide 300 residential units of 26,000 square feet of retail space. The city budgets reflects what is important to the citizens and to the council of Las Vegas. The city’s budget includes the program expansion and services levels of public safety, reduce homelessness in the city, invest in technology solutions and adding more resources.

Internal Services funds which are operating expenses of the city total out $269.5 million which includes the intergovernmental shared expenses. Intergovernmental shared expenses include fire communications, graphic art operations and employment benefits.

Much of 2019 Las Vegas gambling Devine dropped and the increase of the Las Vegas Strip revenue has increased for the 6th month in a row as well as an increase in tourism. As of September gaming winning are up to 6.2% which revenue dropped generating $45.3 million. Many of the operating expenditures of the city’s budget went to marketing of city functions, advertisements, signage, branding, and more. Advertising also played a major role within the budget of the city as well. The Special Events budget was influential to developing events that would come from the city council, city planners, and more. These funds also supports the Arts & Culture committee that supports the development of Arts within the city. In addition to the arts also it supports youth development organizations, cultural arts engagement spaces, and cultural holiday events.

These events could revolve around holidays, city initiatives, and more. The operating expenditures event includes a line items for community. This went to aid and support assisting with community initiatives throughout the city, homlessnesss reduction and support efforts. Other community initiatives include senior living services, Neighborhood Services, Grants, and Foreclosure assistance to residents.

With all that has been going on economically within Las Vegas, it has improved their financial stability even more as well. As of the year 2019, Las Vegas has been on an upward wave for their credit approval ratings. Moody’s Investors Services have raised the credit ratings from Baa1 to A2. These ratings are outstanding notations of the growth that has been attributed to the growing economic and social atmosphere of Las Vegas. Moody’s Investor Services are one of the world’s most respected and utilized sources for credit ratings, research, and risk analysis.

The Baa1 rating describes as obligations are subject to moderate credit risks, as they are considered medium grade. The new rating of A2 would mean that obligations are rated A and are considered upper-medium grade and are subject to low credit risk. These new ratings come following a 10 notch decline in the ratings from 2011 to 2014. As the rating began to raise again after 2015, there is an all new level of accomplishment as of 2019. Moody’s expects the city to maintain this status for a few years, however a continued level of increase is expected to continue beyond that.

The rating is the result of the city’s efforts to refinance wastewater bonds. The city council voted to refinance these bonds that ultimately saved officials an estimate of $460,000 a year for the next 17 years. Where the ratings do not make much of an impact in regards to the financial growth of the city it does show the city that the government can be trusted when it comes to the well begin of their finances.

Tax Revenues

Tax revenue is the income from income and benefit taxes, social security contributions, goods and services taxes, payroll taxes, property ownership and transfer taxes, and other taxes. In Las Vegas, Sales and Use taxes make up 67.7% of the total department tax revenues and tax distributions. These are taxes on purchases made outside one’s home state for taxable items that will be used, stored or consumed in one’s home state and on which no tax was levied in the purchase state. The modified business tax accounts for 8.5%. The modified business tax includes total gross wages minus employee health insurance paid by the employer. Total gross wages for a calendar quarter are the total amount of all gross wages and recorded tips paid.

The insurance premium tax makes up 5.6%. The health insurance levy is a gross premium charge paid by insurers due to state-based risks. Following closely behind at 5.4% is other taxes. These are miscellaneous taxes such as self-employment taxes, Social Security and Medicare taxes on tip income, additional taxes on IRAs and other qualified retirement plans, and household employment taxes. Commerce tax makes up 2.9%. This is an annual tax passed by the Nevada Legislature during the 2015 Legislative Session. It is imposed on business with a Nevada gross revenue exceeding $4,000,000 in the taxable year. Cigarette and tobacco taxes make up 2.7%. These are imposed on all tobacco products by various levels of government to fund healthcare programs.

The net proceeds of minerals tax is determined annually by the Department of Taxation. It is based on the actual production of minerals from all operating mines, oil and gas wells, and geothermal operations in Nevada for the prior calendar year. These taxes makes up 2.3%. Following closely behind at 2.1% is the Real Property Transfer tax. These are taxes that can be levied on the privilege of selling real property within the jurisdiction by states, counties or municipalities.

The last few components of the tax revenues makes up 2.8%. The Centrally Assessed Property tax makes up 1.6% and the Marijuana tax makes up 1.2%. The Centrally Assessed Property tax is taxes related to national and intercounty operating property, such as taxes paid by airlines, highways, telecommunications, energy, gas, pipeline, private carlines, and water companies. Marijuana sales are legal and taxed. Similar to a retail tax, the state taxes the consumer buying marijuana. Some tax the transaction, similar to alcohol taxes, between growers and distributors or retailers. Nevada’s income is transferred to educational programs and its rainy day funds.

Tax revenues were extremely reliant on sales and use taxes, modified business taxes, and insurance premium taxes. This is due to the fact that the city serves as a destination party city and not so much as a city to settle down in. With the numerous businesses on the strips and plethora of hotels present for travelers the city saw fit to make majority of its tax revenue income based upon properties. Along with those include the local options tax, net proceeds of mineral tax, other tobacco tax, local school support tax, city/county relief tax. Net and proceeds generated the highest increase of change by 189%, followed by marijuana at 100%. The city’s tax revenue increased totaling $6,275,000 in one fiscal year. Also, in comparison to all other tax revenue incomes sales and use taxes totaled 67.7% of the tax revenue income, while modified business taxes totaled 8.5% and insurance premium taxes at 5.9%.

Recommendations

The City of Las Vegas utilizes a Line Item Budget. The purpose of a line item is financial accountability. It proposes the question of whether or not the money is being spent according to the intention. It also prevents the misappropriation of funds. A line item budget works well when time is short, there is considerable complexity, multiple stakeholders, and high potential for conflict. It is not good for dealing with questions of efficiency, effectiveness, future and/or neglected concerns.

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