Section 2- Part 2-4 Flashcards
Central Role of the Budget
The budget is a fundamental document that both defines and constrains government operations. This section begins with a discussion on the role of the budget, then examines the budget process and budget objectives in detail. It concludes with a review of legal aspects of the budget, various budget control devices, and how the budget relates to other steps in the financial management cycle
What does the Budget Represent
As noted earlier, a government budget is a law or at the local level, an ordinance. It results from a lengthy and perhaps contentious budgetary process. Both the process and the resulting budget play crucial roles in a representative democracy.
Budget has ____ ____ ____ , unlike laws
A limited life
Public Policy and Budget
The budget is also an expression of public policy. It reflects negotiations between the legislative and executive branches over priorities, and embodies the resolution of conflicting views on how resources should be raised and used. As demands on government increase and available resources decrease, the priority-setting role of the budget becomes more critical.
Budget process in Govt vs Private Section
Government:
A government budget is a control device that limits expenditures by purpose, time and amount. The budget may further restrict spending by fund, object class and program.
n contrast, private sector budgets have fewer controls and much greater flexibility. In the for-profit sector, a budget is just one of many management tools. It can be revised throughout the year in response to changing markets and revenue-generating opportunities.
Budget Process Examined
- Democratic Process
- Continuous Cycle (General Model)
- Strategic Planning and the Budget
Democratic Process
The budgetary process embodies the essence of democracy—citizen involvement, separation of powers, and checks and balances. Private citizens and public interest groups try to influence elected representatives. The executive branch tries to influence decisions in the legislative branch; one legislative house tries to influence the other. The judicial branch may issue decisions that require or restrain budgetary actions by all other players.
Continuous Cycle
The budget process never sleeps. On the date that the chief executive submits his or her proposed budget to the legislative branch, debates are in progress over the size and details of the next budget, and still more debates are under way on how to reprogram funds in the current budget.
Purpose of the Budget Process
The primary purpose of the budget process is to prioritize government expenditures among competing programs and allocate the financial resources to be raised to finance government expenditures.
Condensed Budget Process
The executive branch proposes to the legislative branch the amount it believes should be spent on various programs, and the legislative branch concurs or directs that the amounts be modified. But this summary does not do justice to the myriad negotiations and debates that comprise the process.
The budget process begins with debates on government objectives and priorities. Through hearings and debates, supporters and dissenters examine tradeoffs in government priorities. Government officials must consider external factors, such as the economy, demographic changes and international affairs (at the national level), as well as the needs and concerns of citizens.
As the process progresses, budgetary details emerge. Resource requirements are defined in terms of personnel, equipment, systems and capital investments. Funding sources are defined in terms of taxes, borrowing, user fees and intergovernmental transfers.
General Model (Budget Process) - Part 1
Formal, public hearings and town hall meetings encourage citizens to comment on public needs and government priorities. These hearings may be organized by executive branch agencies, by the legislative branch or by citizens themselves. Informally, individual citizens communicate needs and concerns directly to elected representatives
General Model (Budget Process)- Part 2
Debates and hearings within the executive branch help the chief executive refine and finalize the executive budget. Many chief executives use external advisers (often called “council of economic advisers”) to help project economic activity and government revenues.
General Model (Budget Process)- Part 3
Central management agencies also play a key role.5 They provide budget targets to other agencies and help the chief executive fine-tune budget proposals. For example, a state budget office gives the state’s transportation department a target budget level for the next period. The transportation department then submits a detailed spending plan based on the target. The Department may also submit and defend a request for a higher budget. Deliberations within the executive branch determine the final outline of the executive budget.
General Model (Budget Process)- Part 4
After the executive budget is submitted to the legislative branch, legislative committees hold hearings and debate budget priorities. These include public hearings. At all levels of government, proposed budgets are open to public examination and are adopted only after public hearings.
General Model (Budget Process)- Part 5
Again, central support offices (such as the Congressional Budget Office and Legislative Service Offices within the states) play a major role. They shape debates and advise legislators on the probable outcome of differing scenarios. Citizens, public interest groups and lobbyists continue to express their concerns and priorities.
