Page 110 - Honorable Mayor and Members of the City Council

Trend analysis assumes that revenues are a function of time. Once revenues are separated into line item accounts,
the City's future collections can be projected based upon trends experienced over past years. Data collection over the
past ten years is used to make revenue forecasts. Since there are obvious drawbacks in relying on past trends to
predict future patterns, the projections also include adjustments based upon the opinions of several department heads.

The per capita method of forecasting revenues involves the development of long-range population projections for the
City. The current year's revenue is divided by the current population to get a per capita revenue amount. Per capita
revenue amounts are then applied to the projected rate of inflation and the projected population to compute the
estimated revenue in each of the future years. Again, this method uses past experience to project future trends. The
opinions of the City's department heads are also factored into this approach before finalizing these projections.

EXPENDITURE METHODOLOGY

In addition to each of the revenue forecasting methods explained above, Benbrook's financial forecast for expenditures
includes a combination of the incremental and deterministic forecasting models. The following summary outlines the
major characteristics of the expenditure portion of the forecast.

1) The expenditure forecast assumes "a constant level of services" that accounts for inflation, but ignores service
enhancements.

2) The forecast does not allow for personnel increases based on projected population increases but does include
salary adjustments based on the projected rate of inflation.

3) The forecast separates expenditures into a variety of line items, and projects those expenditures based on a
separate set of inflation factors or rates.

4) The forecast includes operational and maintenance costs associated with new capital facilities.

These revenue and expenditure forecasts combine to form the basis of a comprehensive financial condition analysis
of each of the City's operating funds.

CITY OF BENBROOK 2018-19 ANNUAL BUDGET
109