PA650

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  1. Present value—20-25%
    Special attention must be given to the timing of the flows, recognizing that a return available only at some point in the future has less value than an equal return available now.

    Discounting: a process of converting a stream of returns or costs incurred at different points in time to a single present value. The present value accounts for both the absolute size and the timing of impacts of a proposed action. It applies the concept of time value of money.

    Discounting has nothing to do with inflation or uncertainty

    Discounting is simply that the $100 available now can yield a flow of valuable services (or interest) throughout the year.

    Compounding: $X available now (the principal) becomes $X plus $X times the rate of interest (the principal plus interest earned on that principal) at the end of one year.

    Many policy and management questions involve multiple-year decision in which the returns are permitted to compound over several years.

    In other words, the principal plus accumulated interest is reinvested and allowed to accumulate.

    Discounting: adjusts sums to be received in the future to their present-value equivalent, the amount that will accumulate to that future sum if invested at prevailing interest rates.

    It amounts to going in the other direction from compounding

    Projects yielding dramatically different returns over time can and must be compared using this technique

    For capital budget purposes, cost-benefit analysis is similar to decision-making processes used by private firms: the analysis estimates whether the gain to society (benefit) from the project is greater than the social sacrifice (cost) required to produce the project.
  2. Tax policy—20-25%
    A tax is a charge for public services and facilities. There need not be a direct relationship between the services and facilities used by an individual taxpayer and the tax paid.

    • The sales tax is imposed on the total retail price of any tangible personal
    • A use tax is imposed on the purchaser for transactions in which the sales tax is not collected.
    • The property tax is an ad valorem (value-based) tax imposed on real property and tangible personal property.
    • California Constitution Article XIIIA (Prop. 13) limits the property tax to a maximum 1 percent of assessed value, not including voter-approved rates to fund debt. The assessed value of property is capped at 1975–76 base year plus inflation — or 2 percent per year.- Business license taxes are most commonly based on gross receipts or levied at a flat rate but are sometimes based on the quantity of goods produced, number of employees, number of vehicles, square footage of the business or some combination of factors. Transient Occupancy Tax: impose TOT on people staying for 30 days or less in a hotel, inn or other lodging facility. Rates range from 4 to 15 percent of the lodging cost.- Utility User Tax (UUT).
    • Vehicle License Fee (VLF)- Property Tax in Lieu of Vehicle License Fee. In FY 2004–05, cities and counties began receiving additional property tax to replace VLF revenue that was cut when the state repealed the state general fund backfill for the reduction in the VLF.
    • Parcel Tax. This is a special nonvaluebased tax on property, generally based on either a flat per-parcel rate or a variable rate depending on the size, use or number of units on the parcel.
    • Rents, Royalties and Concessions
    • Franchise fees are collected in lieu of rent for use of city streets from refuse collectors, cable television companies and utilities
    • Fines, Forfeitures and Penalties. Cities receive a share of fines and bail forfeitures from misdemeanors and infractions committed within city boundaries.
    • Service Charges and Fees. Cities have authority to impose fees, charges and rates for services and facilities they provide, such as plan checking or recreation classes. Proposition 1A by almost 84 percent — a truly remarkable achievement. As explained in this primer, the passage of Prop. 1A will end the practice of state take-aways of local funds needed to pay for local services.
  3. Public Goods—5-15%
  4. State, Federal, Local budgets—15-20%
  5. Municipal Bonds—20-25%
  6. Fiscal Impact—10%
  7. 604 related—10%
Author
ID
318901
Card Set
PA650
Description
PA 650 COMP Study Guide
Updated
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