Government Numbers in the News

    Government financial news differsa bit from business financial news. Knowledge of some of those differenceswill help you find and correct errors in certain government stories. 
    Governments, like businesses, have revenues. Butgovernment revenues generally come from taxes, licenses, fees and fines. 

A Word About Taxes

    For most government entities,the major revenue source is taxes. Taxes are imposed and collected by cities,counties, states, the nation, school districts and certain other specialdistricts. 
    There are several types of taxes. Those most oftenin the news are income, sales and property. They invariably are in thenews when rate changes are considered or made. 
    Income taxes are imposed and collected by the federaland state governments and by some cities. Income tax rates are relativelystable, usually changing slightly every several years. 
    Sales taxes are levied by federal and state governmentsand by some counties and cities. Sales tax rates tend to change slightlyevery few years, a bit more often than income tax rates. 
    Property taxes are levied by state, county, schooland city governments. They usually are the major source of revenue forcities, counties and schools. Often property tax rates change annually. 

A Word About Budgets

    Government budget makingis a topic for several news stories each year. Budget making is the processin which government officials decide how much they will spend on variousgovernmental activities for the coming year. In some places, laws requiregovernments to keep spending within budgeted amounts. 
    The president, the Congress, state legislatures,city councils, county commissions and school boards make important publicpolicy decisions during the annual budget-making process. Their decisionsprovide insight about how tax money will be spent, and those decisionshave tax-rate implications. Many readers are interested in these topics. 
    Stories about government budget approvals tend tofollow a predictable format. The copy editor's responsibility is to assurethat the stories: 

  • Include all the information readers want to know.
  • Present the information in an easy-to-understand way.
  • Get the numbers right.
  • Don’t ever make the reader do math. You do it.
    The first part is relatively easy. Readers mostly wantto know three things about budgets: 
  • What is the approved budget total? How much more or less is it than lastyear?
  • Will my taxes go up or down? If so, by how much?
  • What important actions and discussions led to the budget approval decision?

A Warm-UpExercise

    The second, third andfourth parts of the copy editor's responsibility with budget stories --making it easy to understand, getting the numbers right and doing the mathfor the reader -- require that you understand some basic procedures thatare best illustrated by walking through a detailed example. The followingwarm-up exercise will prepare you for our in-class editing exercise. 
    Here is an example of a typical annual budget story.Read through it, keeping in mind that you will want to assure yourselfthat all of the underlined numbers are correct before you allow the storyto be published. 
         Note:Iwill be giving you handouts related to this practice exercise. The handoutsmerely duplicate what appears below. All the relevant information associatedwith the exercise is included here, but you may find it easier with theprinted handouts. Of course, if you want to do this before I issue thehandouts, you simply have to print this document. To make that easier,I have created three different pages with the three documents you'll need:1. the news story,2. the Lawrencebudget information, and 3. thedepartment summaries. Print them out individually and work from them.For the news story, I recommend copying it into your word processing programand editing it on your computer. If you have any questions, ask me in classor e-mail me

Property taxes to rise 9 percent

    The Lawrence City Council votedyesterday to adopt a budget of $12,910,300 for next year with a propertytax of $22.82 for each $1,000 in assessed valuation. 
    That tax rate is an increase of $1.75 per $1,000in assessed valuation, an increase of 9.3 percent. Last year's budget totalwas $11,613,130, with a tax rate of $20.92 per $1,000. 
    The new budget means that owners of property assessedat $45,000 will pay $912.80 in taxes and that owners of property assessedat $95,000 will pay $1,824.60 in taxes. 
    City Manager Mike Wildgen had recommended a budgetof $13,864,260 which would have required a tax rate of $26.32 per $1,000in assessed valuation. 
    The council's rejection of Wildgen's recommendationsaved the taxpayers $2.43 per $1,000 in assessed valuation. 
    Despite the council's cuts, several city expenditureswill increase sharply under next year's budget. Those include planningand research, up 107.69 percent, general overhead, up 75 percent, and airportmaintenance, up 103.3 percent. 


    When you set out to edit such a story, your firststep should be to contact the reporter to obtain the budget handouts fromthe meeting. Such handouts will provide key clues as you verify all thenumbers in the budget story. 

    Note:Themeeting handout (Lawrencebudget information and thedepartment summaries) associated with this warm-up exercise budgetstory appears immediately below. (I suggest you copy it and print it outbefore checking the above numbers.) Note that the upper third of the documentsummarizes by category all of the Lawrence city government's expendituresfor the current year (left column) and the comparable proposed-budget amountsfor the coming year (right column). The bottom third of the page is entitledDepartment Summaries, and it is a more detailed explanation of the GeneralOperating Fund expenditures for the current year and the comparable informationfrom the proposed budget. The middle of the page contains several otherpieces of information about the city's financial circumstances and theproposed budget. 

Lawrence Budget Information

$   5,769,450
 General Operating Fund
$  6,267,150
 Firemen's Pension Fund
 Policemen's Pension Fund
 Tourist Development Center
 Social Security
 Debt Service
 General Improvements (in lieu of bonds)
Notes on budget information:
* Current year mill levy: 20.920
* Tangible assessed value of real property: $317,987,940 (Assessedvaluation is 50% of market value. Average home has market value of $60,000.
* Funds raised from ad valorem taxes are supplemented by fees, licenses,fines, etc., and the total makes up the total expenditure.
* Total indebtedness: $66,113,372.
* Ad valorem tax requirement for proposed budget: $8,211,750.

Department Summaries
    Note:FY means "fiscal year"
Department (or category)
1996-97 FY
1997-98 FY
City Commission
     $       38,150
$      16,600
City Manager
Planning and Research
City Clerk
City Treasurer/Purchasing Agent
Building Inspector
Buildings and Grounds
Police Court
General Overhead
Police Department
Animal Control
Parking Meter
Fire Department
Street Department
Street Lights
Parks Department
Airport Maintenance
Health Department
Contingency Appropriation
     Often it is not possible to verify the numbersin the order they appear in the story. So as you are able to verify a numberin the above story, bold face it (or check it off on your printed copy)so you can keep up with which numbers you still need to verify. 
     Look over the meeting handout to see if thereare any numbers from the story that can be verified immediately. 

    1. One that you should be ableto note is in the second paragraph: "last year's budget total was $11,613,130."Note that the same number appears at the bottom of the column headed "1996-97Expenditures." Once you understand this verification, check off $11,613,130in the story. 

    2. You can do the same thingfor this fourth-paragraph number: "Wildgen had recommended a budget of$13,864,260." That same number appears at the bottom of the column headed"1997-98 Expenditures (Proposed)" in the top third of the chart above.When you see this verification, check off the $13,864,260 in the story'sthird paragraph. 

    3. Note that the story's leadsays the council voted to adopt a budget of $12,910,300. The handout doesnot reflect this number, and the story does not explain the differencebetween the $13,864,260 proposal and the $12,910,300 adopted. So you needto ask the writer to explain. 

    When you do so, you learn that council members decidedto eliminate the $953,960 for General Improvement (in Lieu of Bonds) fromWildgen's proposal. You find that the $953,960 is the last item in the1997-98 Expenditures (Proposed) column, so you subtract it from the $13,864,260total proposed budget. Doing so, you confirm that the $12,910,300 in thestory lead is the correct amount for the adopted budget. So you check offthe $12,910,300 in the story. 

    4. Note next that the seconditem in the section below the smaller chart says, "Tangible assessed valueof real property: $317,987,940," and the last item in that section says"Ad valorem tax requirement for proposed budget: $8,211,750." These twopieces of information equip you to see if the lead of the story is correctwhen it says that the adopted budget will call for a property tax of $22.82for each $1,000 in assessed valuation. 

    To use this information, you need to understand thesefactors: 

  • For taxing purposes, city governments (and/or counties) establish a valuefor each piece of real estate in their jurisdictions. It's called the tangibleassessed value of  real property.
  • The term ad valorem tax technically means a tax based on a portion of thevalue of the asset being taxed. But it is commonly used as a synonym forproperty taxes. It should be avoided in copy because most readers willnot understand its meaning.
  • The statement current year mill levy: 20.920 means that the tax rate forthe current year is $20.92 per $1,000 of assessed value.
  • The formula for computing the amount of revenue a government can raisefrom property taxes is:
   Revenue Potential = Tax Ratex (Assessed Value ÷ $1,000)

    Note: The assessed valuemust be divided by $1,000 because the tax is levied per $1,000 of assessedvalue. 

    Given that you want to verify the tax rate mentionedin this story's lead, you need to recast this formula to solve for thetax rate as follows: 

Tax Rate = Revenue Potential ÷ (AssessedValue ÷ $1,000)

    As noted above, you know the assessed value ("Tangibleassessed value of real property: $317,987,940"). You also can see (fromthe information below the smaller chart)  that the revenue potentialanticipated in the original budget proposal ("Ad valorem tax requirementfor proposed budget: $8,211,750"). However, you also know from your conversationwith the writer that the council cut the proposed budget by $953,960. Soyou need to subtract $953,960 from $8,211,750, which gives you $7,257,790.This is the ad valorem tax requirement for the adopted budget, and it isthe number you need to use in the formula for verifying the tax rate. Thus,your calculation is: 

Tax Rate = $7,257,790 ÷ ($317,987,940÷ $1,000) = 22.8241 or $22.82
 Or: Tax rate = $7,257,790 divided by $317,997.940equals 22.8241 or $22.82

    When you do this calculation, you learn that theresulting tax rate is $22.82. This is the number given for the tax ratein the lead, so you can now check off that number. 

    5. The story's second paragraphrefers to last year's tax rate of $20.92 per $1,000 in assessed value.The information below the smaller chart shows "Current year mill levy:20.920," and you know from the previous page that a mill levy of 20.920is the same as a tax rate of $20.92 per $1,000 in assessed value. So youcan put a checkmark by the $20.92 in the story's second paragraph. 

    6. That second paragraph alsosays "That tax rate ($22.82) is an increase of $1.75 per $1,000 in assessedvaluation." You can verify that rate by subtracting the current year taxrate ($20.92) from the adopted budget tax rate ($22.82). The resulting$1.90 differs from what the story says. Your reaction should be to lookback over the analysis that has yielded this conflicting number. Once youare confident your analysis is reliable, you should edit out the $1.75and replace it with the correct $1.90 (and put a checkmark beside the $1.90). 

    7. The second paragraph alsosays the newly adopted tax rate ($22.82) is an increase of 9.3 percentover the current year's rate ($20.92). You recall from the Questfor Accurate Numbers section of this course packet that the formulafor percent change calculations is: 

% change = (new rate — old rate) ÷ oldrate

    So you can calculate the percent the adopted taxrate has increased over the current rate as follows: 

% change = ($22.82 — $20.92) ÷ $20.92= .0908221 or 9.1 percent

    When you subtract $20.92 from $22.83, you get $1.90.When you divide that by the old rate of $20.92, you get .0908221. You knowthis means the rate increase is 9.1 percent. This is a slight differencefrom the 9.3 percent that appears in the story. If you feel you need precisionto a third decimal place (remember, a whole-number percentage representsa value of two decimal places), you need to change the 9.3 percent in thesecond paragraph to 9.1 percent. If you prefer to simplify the story forreader understanding, you might opt for a change to 9 percent. In eithercase, you can put a checkmark where you edited the 9.3 percent. 

    8. The next unverified numberin the story is in the fourth paragraph, where it says the city manager'soriginal proposed budget would have required a tax rate of $26.32 per $1,000in assessed valuation. You can verify this number using the same formulaused to verify the tax rate in the story's lead: 

Tax Rate = Revenue Potential ÷ (AssessedValue ÷ $1,000)

    The revenue potential for the tax rate associatedwith the proposed budget is given in information below the smaller chart:Ad valorem tax requirement for proposed budget: $8,211,750. And alreadyyou know that the assessed value is $317,987,940. So you can calculatethe tax rate that would have been required for the proposed budget as follows: 

Tax Rate = $8,211,750 ÷ ($317,987,940÷ $1,000) = 25.824098
or $25.82

    The resulting 25.824092 tells you that the tax ratecalled for in the proposed budget was $25.82 per $1,000, not the $26.32contained in the story's fourth paragraph. So once you are confident ofyour analysis, you should edit out the $26.32, insert the $25.82 and checkoff this number.

    9. The fifth paragraph says,"The council's rejection of Wildgen's recommendation saved the taxpayers$2.43 per $1,000 in assessed valuation." To verify this number you mustsubtract the adopted budget's tax rate ($22.82) from the proposed budget'stax rate ($25.82). The result is $3. So the $2.43 in the story is incorrect,and it should be changed to $3 and checked off. 

    10. The third paragraph ofthe story says, "The new budget means that owners of property assessedat $45,000 will pay $912.80 in taxes, and owners of property assessed at$95,000 will pay $1,824.60 in taxes." To verify these two numbers, youneed to employ this formula used earlier in #4: 

Revenue Potential = Tax Rate x (Assessed Value÷ $1,000)

     Note: The AssessedValue must be divided by $1,000 because the tax is levied per $1,000 ofassessed value. 

    When you apply the property values from the fifthparagraph, you get these calculations: 

Revenue Potential = $22.82 x ($45,000 ÷$1,000) or $1,026.90
Revenue Potential = $22.82 x ($95,000 ÷$1,000) or $2,167.90

    This tells you that both of the third-paragraph numbersyou are seeking to verify are incorrect. So, after you are confident youranalysis is correct, you should edit the story to include the correct numbers. 

    11.The story's final paragraph says the adopted budget contains sharp increasesfor several expenditure categories, including these: 
    Planning and research, up 107.69 percent; generaloverhead, up 75 percent; and airport maintenance, up 103.3 percent. Toverify these three numbers you again recall from the Questfor Accurate Numbers section of this course packet that the formulafor percent change calculations is: 

% change = (new rate — old rate) ÷ oldrate

    So you can calculate the percent these expense categorieshave changed as follows: 

Planning and research % change
($151,600 — $73,350)÷$73,350=1.0668029 or
General overhead % change=($144,000 — $82,950)÷$82,950=0.7359855 or
Airport maintenance % change=($61,600 — $21,000)÷$21,000=1.9333333
    These calculationsindicate that all three of the numbers in the story's last paragraph needto be corrected. Once you are confident your analysis is sound, you shouldchange these three numbers. 

    Congratulations. Younow have succeeded in verifying all of the numbers in the Lawrence citybudget story. Once you have mastered the techniques discussed here, youwill be in a position to verify the important numbers in most budget stories. 

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Updated on Aug. 13, 1999.
Note: If you find any errors or discrepancies, pleasee-mail Prof. G ASAP. Thanks.