Question

Police Department Budget. The police chief of the Town of Meridian submitted the following budget request for the police department for the forthcoming budget year 2017–18.

Item	Actual FY 2016	Budget FY 2017	Forecast FY 2017	Budget FY 2018
Personnel	$1,051,938	$1,098,245	$1,112,601	$1,203,157
Supplies	44,442	61,971	60,643	65,070
Maintenance	47,163	45,310	46,139	48,075
Miscellaneous	34,213	36,272	32,198	38,086
Capital outlay	65,788	69,433	67,371	117,905
Totals	$1,243,544	$1,311,231	$1,318,952	$1,472,293

Upon questioning by the newly appointed town manager, a recent masters graduate with a degree in public administration from a nearby university, the police chief explained that he had determined the amounts in the budget request by multiplying the prior year's budget amount by 1.05 (to allow for the expected inflation rate of 5 percent). In addition, the personnel category includes a request for a new uniformed officer at an estimated $50,000 for salary, payroll expenses, and fringe benefits. Capital outlay includes a request for a new patrol vehicle at an estimated cost of $45,000. The amount of $500 was added to the maintenance category for estimated maintenance on the new vehicle. The police chief is strongly resisting instructions from the town manager that he justify the need not only for the new uniformed position and additional vehicle but also for the existing level of resources in each category. The town manager has stated she will not request any increase in the police department's budget unless adequate justification is provided.

Required

Evaluate the strengths and weaknesses of the police chief's argument that his budget request is reasonable.

Are the town manager's instructions reasonable? Explain.

Would the town council likely support the town manager or the police chief in this dispute, assuming the police chief might take his case directly to the town council?

What other improvements could be made to the town's budgeting procedures?

Answer 1

a.This is a classic example of incremental budgeting.From the perspective of the new town manager who apparently is interested in applying zero based budegting concepts the police chiefs argument that last year budget should be the base without further justification is weak ad not likely to be accepted.

b.Yes generally the town manager is to be applauded for attempting to implement a rational budegting approach.Politics however may be more important than economics in this particular case.One would need to know if the town council hired the new town manager to improve the performance of town government including the budget process..

c.As discussed above the town manager would be naive to undertake budgetary reform without the backing of a majority of town council.If the ploice chef has held his or her office for a long period and is well respected in the community the town council may direct the town manager to back off.In this case the new town manager not only will have lost some creditability with the council but will be less effective in dealing with the police chief and the other town officials as well.

d.As suggested the town presentky uses incremental line item budgeting,probably organised along departmental lines.Although the new town managers effort to impose zero based budgeting discipline into the budgeting process is laudable development of a program budget would further enhance the performance of the town government.A well designed program budget would utilize citizen partcipation of the town government.