Economic Assignment(12 hours)
Lisa1314
4.PuttingthePuzzleTogether9.22.pptxAgenda
Putting the budget together
Balancing the budget
Fiscal sustainability
| Phases of budget cycle | Product of each phase |
| Preparation | Executive’s proposed budget |
| Legislative Approval | Appropriation act |
| Executive implementation | Encumbrance and disbursement of funds |
| Accounting & financial reporting | Comprehensive annual financial report |
Putting the budget together
One of the priorities government has is to maintain fiscal responsibility. Why?
Effective delivery of services
Ensure fairness and accountability
Create an environment of fiscal sustainability
To do so, there are “hard” and “soft” rules:
Hard Fiscal Constraint Rule refers to a rule imposed by another level of government that cannot be changed by government officials independently, or on their own. Changes need to be ratified by voter referendum or initiatives.
Federal income tax is a good example of a hard-rule of fiscal constraint
Soft Rules are imposed by the governing body and can be changed without voter approval. An example would be the implementation of user-fees.
Putting the budget together
Colorado’s Tax Payer Bill of Rights:
http://www.cbpp.org/research/state-budget-and-tax/policy-basics-taxpayer-bill-of-rights-tabor
Colorado’s TABOR helps to protect the voters from government increasing or changing taxes, and other revenue-generating items, without citizen participation.
Balancing the budget
A balanced budget arises when the government entity estimates the same amount of money from revenue collection as it is appropriating for expenditures.
There are times, however, when a deficit occurs despite appropriate fiscal planning and management:
When there is a recession, tax receipts, or revenues, may not be as high as expected
Budget maximizing – those in charge of the budget are more interested in self-advancement than achieving policy goals
Deficit – When total spending is greater than total revenues during a given period
Fiscal sustainability
Fiscal Sustainability – An ongoing ability to match what a government owes to what it can claim as resources
It is important to be able to forecast or predict potential revenue shortfalls:
Compare tax and collection rates of other towns, cities and counties within region
Compare new business investment within region
Compare population changes within region
Evaluate financial condition
Environmental
Organizational
Fiscal sustainability
How does gov’t address budget cutbacks?
Cutback management refers to budget reduction or reducing the amount of money spent on gov’t functions
Right-sizing refers to policies and practices that seek to reduce the size and scope of an organization or gov’t
Cutback Strategies
Across the board cuts
Specific (percentage) reductions
Program reductions
Personnel reductions
Another strategy that gov’ts utilize is setting money aside in a contingency or rainy day fund. This allows them to have resources available for an emergency
