CGFO Revenue Administration 3 — Questions and Answers
Question 1: A government finance officer is reviewing the revenue forecast for the upcoming budget year. Which forecasting technique uses historical revenue data and statistical regression to project future collections?
- Consensus forecasting
- Trend analysis / econometric modeling (Correct answer)
- Judgmental forecasting
- Expenditure-driven forecasting
Correct answer: Trend analysis / econometric modeling
Econometric/trend analysis applies regression and statistical methods to historical data to project future revenue streams objectively.
Question 2: Impact fees charged to developers for new residential construction are legally required to:
- Be deposited in the general fund for unrestricted use
- Be proportional to the infrastructure demand created by the development (Correct answer)
- Equal the full cost of all existing infrastructure
- Be approved by state legislature each year
Correct answer: Be proportional to the infrastructure demand created by the development
Impact fees must be roughly proportional to the burden a new development places on public infrastructure to withstand legal challenges.
Question 3: Which statement best describes the difference between a license fee and a regulatory fee in government revenue?
- License fees fund specific services; regulatory fees fund general operations
- License fees are for the privilege of conducting an activity; regulatory fees recover the cost of oversight (Correct answer)
- License fees require annual renewal; regulatory fees are one-time charges
- License fees are state-only; regulatory fees are local-only
Correct answer: License fees are for the privilege of conducting an activity; regulatory fees recover the cost of oversight
A license fee grants permission for an activity, while a regulatory fee is designed to recoup the government's cost of regulating that activity.
Question 4: A county government has an agreement where the state collects the county's sales tax and remits it monthly. This arrangement is called:
- Intergovernmental grant
- Piggyback tax or tax sharing agreement (Correct answer)
- Enterprise fund subsidy
- Revenue anticipation note
Correct answer: Piggyback tax or tax sharing agreement
A piggyback tax allows local governments to add their rate to the state rate, with the state collecting and remitting the combined revenue.
Question 5: When a government issues a Revenue Anticipation Note (RAN), the repayment source is:
- Future property tax levies
- Bond proceeds from a subsequent bond issuance
- Specific anticipated revenues not yet collected (Correct answer)
- Federal reimbursement grants
Correct answer: Specific anticipated revenues not yet collected
RANs are short-term borrowings backed by and repaid from identified revenues expected to be collected later in the fiscal year.
Question 6: In a cost-of-service rate study for a municipal utility, the primary goal is to ensure that:
- Rates exceed costs to build fund reserves
- Each class of customer pays rates reflecting the cost of serving that class (Correct answer)
- The utility maximizes revenue from commercial customers
- Rates remain flat regardless of consumption levels
Correct answer: Each class of customer pays rates reflecting the cost of serving that class
Cost-of-service studies allocate utility costs to customer classes so rates are equitable and each class recovers the cost attributable to its service.
Question 7: Which GASB statement established the framework for imposed nonexchange revenues such as property taxes?
- GASB Statement No. 34
- GASB Statement No. 33 (Correct answer)
- GASB Statement No. 54
- GASB Statement No. 84
Correct answer: GASB Statement No. 33
GASB Statement No. 33 classifies nonexchange transactions and sets recognition criteria for imposed revenues like property taxes and fines.
CGFO Revenue Administration 3
A government finance officer is reviewing the revenue forecast for the upcoming budget year.
Which forecasting technique uses historical revenue data and statistical regression to project future collections?