revenue sources
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Revenue Sources. Chapter 8. Income Sources. Compulsory Income Gratuitous Income Earned Income Investment Income Contractual Receipts. Compulsory Income. Secured by government organizations Collected through taxing & regulatory powers at different government levels - PowerPoint PPT PresentationTRANSCRIPT
Revenue SourcesRevenue Sources
Chapter 8
Income SourcesIncome SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts
Compulsory IncomeCompulsory Income
Secured by government organizations
Collected through taxing & regulatory
powers at different government levels
Why do commercial agencies care??
Types of taxes…??
Compulsory IncomeCompulsory IncomeReal property taxPersonal property taxSales taxExcise taxIncome taxLocal option tax
Question…Question…
How is an individual’s property taxes determined?
Compulsory IncomeCompulsory IncomeReal property taxes
◦Land & whatever is developed or growing on the land
◦Different rates for different levels Personal home, business, undeveloped
land, farm
◦96% of property taxes stay locally
Compulsory IncomeCompulsory IncomeReal property taxes
◦Understand assessed value, tax abatement, tax base
◦Value defined by a realtor/appraiser/tax assessor Fair market value Assessed value – 30-50% lower than FMV
(1/3 in IL) A.V=Taxable worth
Fair market value = $180,000 listingAssessed Value = $60,000 ($180,000 / 3)
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax abatement
Exemption from paying taxes Specific time period New business incentive
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax base Total assessed property value of all
taxable property in a community
Bloomington vs. Hudson
Exemptions – NPOs, churches, universities, museums….
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax rates formula
Tax rate = Required taxes / net assessed valuation
Required taxes = * Set from budget (ie. $5,000,000)
* Expenditures – revenues (excluding taxes)
* Where does a city get revenue?
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax rates formula
Tax rate = Required taxes / net assessed valuation
Net assessed valuation=
Total assessed valuation of com.410,500,000
Tax exempt property (abatements) - 10,500,000
Net assessed valuation $400,000,000
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax rates formula
Required taxes/net assessed valuation=tax rate
$5,000,000 / $400,000,000 = 0.0125 (1.25%)
Also read as $1.25 per $100 assessed value
Compulsory IncomeCompulsory IncomeReal property taxes
◦Tax rates formula
Tax rate = 0.0125AV: $100,000 home x 0.0125 = $1,250 tax bill
AV: $150,000 home x 0.0125 = $1,875 tax bill
Town of Normal EgTown of Normal Eg
Taxing Body Tax Rate % of Total 60,000 AV; 180,000 FMV
Town of Normal 0.00749 10.0% $449 Normal Library 0.003391 4.5% $203 McLean County 0.00901 12.1% $541 Township 0.001486 2.0% $89 Road & Bridge 0.000809 1.1% $49 Water Reclamation District 0.001587 2.1%
$95 Airport Authority 0.001078 1.4% $65 Unit 5 School District 0.045325 60.7% $2,720 Community College 0.004442 6.0% $267
Total .074618 100.0% $4,477
FYI…FYI…Monday – meet in ITDC 103BRead one of the linked articles
Compulsory IncomeCompulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax
Compulsory IncomeCompulsory IncomePersonal Property taxes
◦Allowed in 41 states (not IL)
◦1. Household tangible property Autos, $, livestock, furniture
◦2. Business tangible property Inventory, business fixtures, furniture,
equip
◦3. Intangibles Stocks & bonds
Town of Normal EgTown of Normal Eg0.75% Use tax on titled items
◦cars, boats, motorcycles ◦Supports General fund
Compulsory IncomeCompulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax
Compulsory IncomeCompulsory IncomeSales taxes
◦Largest source of state tax revenue◦Second largest for cities◦Imposed on the sale of tangible
goods At-home food & drugs exempt DE, MT, NH, OR – no sales tax
◦Range 4-10% 1-2% stays with local government
Compulsory IncomeCompulsory IncomeSales taxes
◦Dedicated sales tax MO State Parks (1/10 of ea. Cent) Have no entrance fees
◦Used to fund Bank One Ballpark & renovate Packer Stadium
◦Rural towns vs. tourism towns Boulder, CO & Wal-Mart Normal vs. Honolulu…
Tourism Town Tourism Town ComparisonsComparisons
Normal, IL Honolulu County
Tax rates $7.46/$100 AV $0.33/$100 AV
Taxes paid on AV $60,000
$4,476 $197.40
HA property tax on same home*
$7490 $329
•Honolulu County gives $80,000 credit to FMV. Rest is taxed. •Must pay a minimum of $100 in taxes
•$180,000-$80,000=$100,000 AV
Town of Normal EgTown of Normal EgThe State of Illinois collects a sales tax
at a rate of 7.5%, which is distributed as follows:
◦5% to the State of Illinois ◦0.25% to McLean County ◦1.00% to the Town of Normal◦1.25% B-N home rule tax Used for General Fund with a small
% to support the Uptown Renewal Program.
Compulsory IncomeCompulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax
Compulsory IncomeCompulsory IncomeExcise taxes
◦Imposed on specific goods, services◦Hotel-Motel tax
CVB’s Sports facilities
2% toward Spurs’ SBC Arena Georgia Dome (3.7%) Comiskey Park (2%)
IL Sports Facilities Hotel Tax…
Why do this?
Illinois Sports Facilities Illinois Sports Facilities Hotel TaxHotel Tax
The Illinois Sports Facilities Authority imposes a tax on gross receipts from hotel operators within the City of Chicago. Receipts from permanent guests (occupants of 30 days or longer) are not taxed. Proceeds are used for the corporate purposes of the authority, including construction costs for the Comisky Baseball Park.
Compulsory IncomeCompulsory IncomeExcise taxes
◦Car Rental tax American Airline Center in Dallas Atlanta Hawks Philips Arena
◦Sin taxes Alcohol, cigarettes Cleveland’s Jacob’s field, Gund Arena &
Browns Stadium
Town of Normal EgTown of Normal Eg
Tax % Supports
Hotel & motel tax 12% 6% to the state; 2% to CVB; 4% city (Interstate Center & Uptown Normal)
Food & Beverage (for immediate consumption)
2% General fund
Liquor tax 4% Police
Utility tax (ie. cable, gas, elec)
5% General fund (one of largest revenue sources)
Motor Fuel Tax ?? Collected by state to fund local roads
Compulsory IncomeCompulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax
Compulsory IncomeCompulsory IncomeIncome taxes
◦Municipal, state & federal levels IL = 3% flat tax with 1/11 going to
municipalities Suggested 4.5% - 50% increase
$50,000 - $1500 to $2250 ($750 or $62 per month)
◦IL = no state property taxes, rely on income taxes
Which is more fair, property or income tax?
Compulsory IncomeCompulsory IncomeReal property taxesPersonal property taxesSales taxesExcise taxIncome taxLocal option tax
Compulsory IncomeCompulsory IncomeLocal option taxes
◦Applied at the local level◦Legislatively enabled at the state
level◦Ie. Local home rule sales tax added
to the state sales tax (1.25% in B-N)
Income SourcesIncome SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts
Gratuitous IncomeGratuitous IncomeReceived without expectation of
return◦Grants, bequests, sponsorships
Most often giver does not receive a direct benefit or compensation
Gratuitous IncomeGratuitous Income
Grants
◦LWCF – development of outdoor rec
resources
◦OSLAD - Open Space Land
Acquisition and Development
◦Illinois Transportation Enhancement
Program
Gratuitous IncomeGratuitous IncomeBequests
◦Life insurance
◦Wills
ELM fund
Sponsorships & Donations
◦$$, land, equipment, stocks, bonds
◦See examples….
Gratuitous IncomeGratuitous IncomeNonprofit agencies
◦Rely on gratuitous
Public agencies◦Rely on some forms of gratuitous◦Grants & the need for a foundation
Commercial◦Gives gratuitous income
Income SourcesIncome SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts
Earned IncomeEarned IncomeCash resources generated from
fees & charges◦Impacts all sectors
Earned IncomeEarned IncomeEntrance fees
◦ Well-defined but not necessarily enclosed
areas
◦ Botanical gardens, zoos
Admission fees
◦ To enter a building, structure, designated
area
◦ Show, performance
Earned IncomeEarned Income
Rental fees
◦Pavilions, equipment
Earned IncomeEarned Income
User fees
◦Activity fees
◦Showmobile user
fees…
User Fees Eg.User Fees Eg.Michigan DNR generated: $24.9 million in camping
revenues$12.2million in gate receipts. Accounts for almost 96% of their
total revenue of $38.6 million(NASPD, 2008)
Earned IncomeEarned Income
Sales
◦Goods & services through pro shops,
concessions, etc.
◦Eg
Kentucky State Parks restaurants - $14.4
m/year
Tennessee – $8.5 m/year
Earned IncomeEarned Income
License & permit fees
◦Boat permits, snowmobile license,
Earned IncomeEarned IncomeSpecial service fees
◦Handling fees
◦Lottery funds
Attingham Park – Heritage Lottery Fund Colorado Lottery
Earned IncomeEarned IncomeSpecial service fees
◦Luxury suite ($100,000 per)
◦Personal seat licenses (@$1000 per)
Pay for right to buy season tickets
Forfeit when you no longer buy
season tickets
Transfer by gift, bequest or sale to
third party
Income – IL State ParksIncome – IL State ParksSource Revenue
Entrance Fees -
Camping fees 5,863,987
Cabins 83,419
Lodges 175,831
Concessions 154,485
Pools/beaches 11,459
Golf 75,000
State budget (0.092%) 57,121,100
Other sources:-Motor fuel tax-Snowmobile, ATV, boats, hunting license registration-Taxes on tobacco, sporting goods-Sales tax on tourism
Income SourcesIncome SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts
Investment IncomeInvestment Income
Invest unneeded revenue
◦Stocks, mutual funds, money
markets
All sectors do this
NRPA earned $1,287,643 from
investments = 10% of their
overall budget ….
Income SourcesIncome SourcesCompulsory IncomeGratuitous IncomeEarned IncomeInvestment IncomeContractual Receipts
Contractual ReceiptsContractual ReceiptsRevenue generated from
contractual agreements◦Concessions◦Golf pro shop
All sectors use this
Eg….
Contractual ReceiptsContractual ReceiptsAustin PARD
◦$200,000 in revenue annually from contracts
◦Barton Springs Food and Beverage in Zilker Park Commission Paid– $90,000 annually
($7,500 per month) + 8% of gross annual sales up to
$265,000 and 8.5% of gross annual sales exceeding
$265,000
Overview by SectorOverview by SectorSector/ Income Compulso
ryGratuitous Earned Investme
ntContractual
Market Sector
None Minimal Major source
Major source
Can be a major source
NPO None Major source
Major source
Limited, based on available cash
Growing importance
Public Sector
Essential
Growing importance
Major source
Limited, based on available cash
Growing importance