Sample H07 from Rhode Island Legislative Council. Research Report Number 2, 1961. Uniform Fiscal Year for Municipalities. Pp. 11-25. 0010-1990 A part of the XML version of the Brown Corpus2,114 words 2 (0.1%) quotesH07

Rhode Island Legislative Council. Research Report Number 2, 1961. Uniform Fiscal Year for Municipalities. Pp. 11-25. 0010-1990

Arbitrary Hyphen: change-over [1120]Typographical Errors: to missing [0020] actual actual [0970]

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Special districts in Rhode island .

It is not within the scope of this report to elaborate in any great detail upon special districts in Rhode Island . However , a word should be mentioned in regard to them as independent units of government .

There are forty-seven special district governments in Rhode Island ( excluding two regional school districts , four housing authorities , and the Kent County Water Authority ) . These forty-seven special purpose governments have the authority to levy taxes , to borrow money , own property , sue and be sued , and in general to exercise normal corporate powers . Unlike cities and towns , however , they do not have to submit any financial statements to the state Bureau of Audits . It is not an exaggeration to say that the state government has little or no fiscal control over these units of government . In addition to the collection of service charges , the special districts levy annual property taxes of approximately $450,000 .

Fiscal years in other states comparative data .

A review of practices in other states regarding fiscal uniformity is pertinent to this report . Included in the findings are : 1 .

Forty-six states , including Rhode Island , end their fiscal year on June 30 . The other four states end on varying dates : Alabama ( Sept. 30 ) , New York ( March 31 ) , Pennsylvania ( May 31 ) , and Texas ( August 31 ) . 2 .

In sixteen states , the fiscal year ending of the cities ( June 30 ) is the same as that of the state : Alaska , Arizona , California , Delaware , Massachusetts , Montana , Nevada , New Mexico , North Carolina , North Dakota , Oklahoma , Oregon , Vermont , West Virginia , Wyoming , and Hawaii ) . 3 .

In eleven states , the fiscal year of the cities ends on December 31 , while the state fiscal year ends on June 30 ( Arkansas , Colorado , Indiana , Kansas , New Hampshire , New Jersey , Ohio , South Dakota , Utah , Washington , and Wisconsin ) . 4 .

In eight states whose fiscal years close on June 30 , a majority of their cities close their fiscal year on December 31 : : ( Georgia , Iowa , Kentucky , Maine , Maryland , Minnesota , Virginia , and South Carolina ) . 5 .

One state , Alabama , closes its fiscal year on September 30 , and all cities in the state , with one exception , also close fiscal years on September 30 . 6 .

Mississippi closes its fiscal year on June 30 , while all of its cities close their fiscal years on September 30 . 7 .

Pennsylvania closes its fiscal year on May 31 . All of its cities close their fiscal years on December 31 .

The remaining twelve states have varying fiscal years for the state , city and local governments . However , only Illinois , Oregon , Louisiana and Rhode Island have a situation in which the sundry units of government vary widely in relation to fiscal uniformity .

Fiscal uniformity : advantages and disadvantages advantages .

An excellent summary of advantages concerning the uniform fiscal year and coordinated fiscal calendars was contained in a paper presented by a public finance authority recently . He listed among the values of fiscal uniformity : 1 .

The uniform fiscal year requires compliance with common sense administration of local finances : adoption of the budget , or financial plan , in advance of spending . 2 .

The uniform fiscal year ensures conformance with another common sense rule , that of having cash in the bank before checks are drawn . It enables towns to make more economical purchases and to take advantage of cash discounts . 3 .

The uniform fiscal year promotes more careful budgeting and strengthens control over expenditures . By fixing the tax rate in advance of spending , upper limits are set on expenditures . 4 .

The uniform fiscal year brings the town's fiscal year into line with that of the schools , which expend the largest share of local disbursements . This greatly simplifies the town's bookkeeping and financial reporting . 5 .

The uniform fiscal year eliminates interest charges on money borrowed in the form of tax anticipation notes . Furthermore , tax collections not immediately needed for current expenditures may be invested in short-term treasury notes , augmenting the town's miscellaneous revenues and reducing the tax levy . 6 .

The uniform fiscal year facilitates inter-town comparison of revenues and expenditures . When towns have the same fiscal year it is relatively easy to make meaningful comparisons ; ; and as the cost of local government increases , the demand for such comparison also increases . Towns having different fiscal years are difficult to compare .

Of all advantages , probably none is more important than the elimination of tax anticipation notes . Borrowing in anticipation of current taxes and other revenues is a routine procedure of the majority of municipalities at all times . It may be by bank loans , sale of notes or warrants , or by the somewhat casual method of issuance and registration of warrants . In any event it is a form of borrowing which could be and should be rendered unnecessary . Its elimination would result in the saving of interest costs , heavy when short-term money rates are high , and in freedom from dependence on credit which is not always available when needed most . This type of borrowing can be reduced to a minimum if quarterly installment payment of taxes is instituted and the first payment placed near the opening of the fiscal year . Any approach toward such a system looks toward saving and security .

It should be noted that there are other and equally important reasons for establishing meaningful intergovernmental reporting bases on a uniform fiscal year . Both the federal and state governments commence their fiscal years on July 1 . Both units of government contribute increasingly large sums of money to the several local governments in this state as indicated below :

It has been said that when local government revenues were mostly produced locally from the property tax , the lack of a uniform fiscal year was no great handicap ; ; but with the growth of state and federal fiscal aid , the emphasis on equalization , and the state-local sharing of responsibility for certain important functions , this is no longer true . The haphazard fiscal year calendar is an obstacle to the planning of clear and efficient state-local revenue and expenditure relationships . Disadvantages .

Although there are many sound reasons for adopting uniform and coordinated fiscal years in Rhode Island , there are also certain difficulties encountered . These involve more the mechanics employed in adjusting to fiscal uniformity than they do actual disadvantages to the principle . One problem is a matter of shifting dates ; ; the other , is how to finance the transition .

Little can be done about the changing of dates . This is an inherent part of adjusting fiscal calendars . It usually means a confused and disgruntled tax-paying public for a period of time . But cooperation and understanding between local officials and the citizenry help lessen this problem .

The other problem is the matter of financing the transition period in the several cities and towns . This will be covered more fully later . It should be kept in mind that the ease or difficulty with which a town or city can convert to the proposed plan is directly dependent upon the financial condition of that town or city . Fortunately , there are no cities or towns in the state , with one or two possible exceptions that are in too difficult a position to finance the proposed change . Sacrifice will have to be made in some cases , but it is to the municipality's advantage to finance the change-over for a short period of time rather than pay interest on tax anticipation notes indefinitely .

Adjusting the fiscal calendars The advantages of a uniform fiscal year and well synchronized fiscal and tax collection calendars are sufficiently great for Rhode Island municipalities to exert effort to secure them . The type of program desired can be determined by the nature and extent of the adjustments needed . Two features are immediately evident . First , the present situation is too varied to be systematized by any single formula . Second , the shift to a uniform July 1 to June 30 fiscal year will , of itself , improve the tax collection calendars of the great majority of cities and towns . There are at least two problems to consider : one is a matter of adjusting the fiscal calendar ; ; the other is how to finance the adjustments when necessary . The latter matter is considered in detail in a later section .

Twelve cities and towns in Rhode Island presently indicate some plans to establish a uniform and/or coordinated fiscal tax year calendar . Plans vary from the `` talking stage '' to establishing special committees to accomplish this end . What is important here is that many of the cities and towns recognize the need for improved fiscal practices and are taking the initiative to obtain them .

An analysis of the fiscal tax collection year calendars throughout the state indicates that transition may not be as painful as is commonly thought . However , it must be stressed that much depends upon the financial condition of the individual cities and towns involved .

The adjustments needed to establish a uniform and coordinated fiscal tax collection year calendar throughout Rhode Island , based on a July 1 to June 30 year , are shown below . No adjustment needed .

Six cities and towns are presently on a July 1 to June 30 fiscal year and have coordinated their tax collection year with it . No change is required for these towns . These municipalities include : Barrington , Lincoln , Middletown , Newport , North Kingstown , and South Kingstown . Adjustment of fiscal year .

One town and one city , Coventry and East Providence , require an adjustment of their fiscal year only . This change will automatically adjust their tax collection year calendar so as to make all tax installments due and payable in the fiscal year collectible within that year . Adjustment of tax collection year .

Six cities and towns are now on a July 1 to June 30 fiscal year and will need only to adjust their tax collection year calendar to establish uniformity . These cities and towns include Bristol , Glocester , Pawtucket , Cumberland , Central Falls , and Woonsocket . Simultaneous adjustments .

Two cities to be considered , Providence and Cranston , are an enigma . Both have excellent integration of their fiscal tax collection year calendars . However , neither of these two cities is on the desired July 1 to June 30 fiscal year .

The adjustment to a uniform and coordinated fiscal period could be accomplished relatively easily for them . In that both cities end their fiscal years on September 30 , they could levy taxes for an interim period of nine months , commencing with September 30 and ending with June 30 . These three installment dates would be : October 26 , January 26 , and April 25 ( Providence ) and November 15 , February 16 and May 15 ( Cranston ) . Both would start their new fiscal year on July 1 . Their tax collection calendar could then be : July 25 , October 26 , January 26 , and April 25 , ( Providence ) ; ; and August 15 , November 15 , February 17 , and May 15 , ( Cranston ) . Under this plan both Cranston and Providence would be on the uniform fiscal year but would still be using the same installment periods . Varying adjustments .

The remaining twenty-three towns have fiscal years which end prior to June 30 . All of these towns will require adjustments of both their fiscal and tax collection years . Assuming an adjustment to the July 1 to June 30 fiscal year , the required adjustment of the tax collection years and the towns involved are shown in Table 3 .

Methods of financing adjustments Aside from the matter of adjusting the fiscal and tax calendars , there is the problem of financing the adjustment when this is necessary . It should be emphasized strongly that adjustments in fiscal dates or adoption of interim budgets do not necessarily mean financing over and above normal governmental requirements . In many communities there is simply no financial problem ; ; it is only a matter of adjusting accounting methods , careful fiscal planning and management , or some like combination of techniques . In other municipalities the difficulties in overcoming the financial burden have been sufficiently great to dishearten proponents of fiscal year changes . Fortunately , such cases in Rhode Island are more the exception than the rule .

As shown earlier in Table 1 , the several cities and towns use widely varied fiscal and tax collection calendars . In addition , no two Rhode Island communities are identical in relation to their over-all financial condition . These factors practically insure that no single financing formula is feasible ; ; each situation must be studied and a plan developed that takes into consideration such factors as the effect of the existing and prospective tax calendars , the financial condition of the treasuries , and the length of the transition interval . Suitable plans range from those that are very easy to develop to those that are difficult to formulate and require borrowing ranging from short-term serial notes to long-term bonds .

The financial problem , where it exists , usually stems from the adoption of a budget for the transitional or adjustment period . For those communities which have financial difficulties in effecting adjustments , there are a number of alternatives any one of which alone , or in combination with others , would minimize if not even eliminate the problem .