Budgets are significant in the budget formulation process. Budgeting as a tool is the make-up of public policy (Smith & Lynch, 2004).
Budgets exist at all levels of government, local, state, and federal. When describing revenue sources in public budgeting, it is important to describe the source of revenue, the source of the funding, importance of informed financial decisions, financial analysis tools used, and organizational financial analysis alternatives (University of Phoenix, 2012).
What is a Budget?
A budget is a plan of allocation of resources to accomplish and organizations’ objectives and goals for a specific amount of time (Ganapati, n.d.).
The budget gives a detailed analysis of how an organization will spend and receive money in a fiscal period.
Why is a Budget Required?
Accountability and prioritization are two reasons for a budget requirement. Accountability refers to the taxation of the public, which means that the government cannot tax more than required for government purposes (Ganapati, n.d.).
Prioritization refers to allocating funds and resources to areas that require priority over another area (Ganapati, n.d.).
Public Budgets
There are different budget cycles at the local, state, and federal levels; however, the major components of any budget, regardless of government level are revenues and expenditures.
The Term Paper on Trade-Off Between Equity and Efficiency: Government Revenue and Expenditure
Equity and Efficiency: Government Revenues and Expenditures of OECD Countries Government policy for social equity and economic efficiency has been a long-standing subject of heated political debates as it is believed among economists that that there is a trade-off between efficiency and the pursuit of greater equality, which is known as the equity-efficiency trade-off. Altruist people benefit from ...
Revenues
Revenues are funds raised through various entities. “Revenue estimation is very important in local and state government, particularly in the planning and analysis phase because elected leaders must balance their budgets” (Smith & Lynch, 2004, p. 47).
federal government Revenues
Granted, the federal government collects the most amount of tax, state and local governments have more options on taxing. For example, the federal government taxes individual and corporate taxes, manufacturing taxes, social security tax (Federal Insurance Contributions Act, FICA), estate or inheritance tax, and borrowings such as treasury bonds.
State Government Revenues
State government also receives money through tax revenues as well as other entities. State governments receive money through intergovernmental transfers, individual and corporate taxes, sales taxes, fuel taxes, estate and inheritance taxes, special taxes on items such as alcohol and tobacco, lottery, state bonds, and licenses. Examples of states receiving taxes on licensing include motor vehicles, hunting and fishing, firearms, motor vehicle operators, public utilities.
Local Government Revenues
Like the federal and state governments, local governments of cities and counties also receive revenues through intergovernmental transfers, local taxes of property and sales tax, local bonds, school districts, businesses, and water management.
Local governments differ in review and deciding of budgets. Many local budgets use line item for expenditures and revenues.
Expenditures
Expenditures are funds for spending on specific programs or capital projects. Expenditures include public programs, capital projects, debt servicing, and administration. Public programs can be education programs, welfare programs, medical programs, environmental programs, and housing programs. Capital projects include construction and reconstruction of highways, sewage, water, utilities, and building costs. Administration includes city and county employees.
The Business plan on Government Budget chapter 1
... budgeting procedure is that it forces prioritization of government programs and activities. With the prospect of insufficient revenue ... is to rank the decision packages. The decision package is a ... of the budgeting process and the people’s state of mind ... budgeting process that a government agency undertakes. The taxpayers will be assured that the government funds, which mostly came from the taxes ...
Decision-Making
Managers and administrators today must prepare to make difficult financial decisions. Analytical tools and processes are important in decision-making, planning, control, and analysis of financial budgets. Managers must identify potential financial problems and formulate alternatives (American Management Association, n.d.).
Financial Decisions
Financial decisions vary depending on size of the organization, needs of the organization, location of the organization, financing options available to the firm (American Management Association, n.d.).
Analysis Tools
Techniques in financial analysis are significant in the financing and budgeting of an organization include long-term and short-term planning, security of costs and benefits, investment decisions, financing decisions, and dividend policies (American Management Association, n.d.).
Conclusion
Most budget approaches involve time, planning, decision-making, analysis, accountability, and prioritization at the local, state, and federal levels of government. Two major components at each level are revenues and expenditures, which is how each level of government earns and spends money.
References
American Management Association. (n.d.).
Financial decision-making. Retrieved from http://www.flexstudy.com/catalog/schpdf.cfm?coursenum=96088 City of Milwaukee. (2012).
Retrieved from http://city.milwaukee.gov/ImageLibrary/User/crystali/2012budget/2012proposedbook.pdf U.S. Department of Justice. (2012).
Federal Bureau of Investigation financial report fiscal year 2011. Retrieved from http://www.justice.gov/oig/reports/2012/a1216.pdf Ganapati, N. (n.d.).
Budgeting. Retrieved from http://www2.fiu.edu/~ganapati/3003/budget.html Smith, R. W.; and Lynch, T.D. (2004).
Public budgeting in America, (5th ed.).
Upper Saddle River, NJ. Pearson/Prentice Hall. University of Phoenix. (2012).
The Term Paper on Operational Budgeting and Profit Planning
Introduction: Why Budget? While a budget planning is a laborious process it is crucial for the success of any company. The budgeting process forces managers to be proactive in planning for the future while fostering communication and coordination within a company. Different departments must work together in order to develop a proper budget. A properly formulated budget will aid to define a ...
Course design guide. Retrieved from University of Phoenix, AJS522 – Finance and Budgeting in Justice and Security Wisconsin Department of Public Instruction. (2010).
Wisconsin Department of Public Instruction. Retrieved from http://dpi.state.wi.us/pb/pdf/combinedfair.pdf
