Aaronsborough’s city manager, Thomas Smith, is facing a financial dilemma. The General Fund will not have enough revenues to cover the current year’s expenditures. After an all- night session, he reduced the expenditures by only 5 percent, which is not enough to balance the budget. His wife mentions to him that whenever they did not have enough money to meet their bills for a particular month, she merely borrowed money from the bank. Smith decides to borrow from the Pension Trust Fund. His intention is to repay the loan as soon as possible. Will the loan solve his problem? Explain. Is an ethical problem raised here? Explain.

  • CreatedDecember 30, 2014
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