Essay Questions

  1. According to the chapter readings, what is public budgeting?  
    • The process by which elected and appointed officials, acting in the interest of the governed, determine methods of collecting government resources and securing assets through forms of taxation or appropriation (e.g., the holding of public lands, forests, surface waters, etc.) and then allocating those financial and associated resources on priorities determined by the democratic political process.

  2. List the six major steps taken in the process of a building a state or local government budget.
    1. Preparation of revenue and expenditure estimates.
    2. An executive budget is compiled and submitted to a legislative body.
    3. The legislative body deliberates and issues budgetary approval.
    4. The executive signs the legislative enactment containing the budget(s) into law.
    5. Budget execution occurs with the allocation of resources to public agencies.
    6. Systematic post-authorization audits are conducted to monitor budgetary compliance.

  3. List and discuss three considerations made when agencies prepare expenditure estimates.
    • Existing statutes and rules: Agencies consider the statutory requirements that they are required to accomplish. State and local elected officials often develop new policies or adjust older policies through new or revised legislation, then work to estimate the costs associated with these new policies and programs.
    • Statutes and rule additions and changes: Agencies consider the costs of implementing and enforcing statutes through administrative rules and other policies. Agency interpretations of the meaning of statutes—frequently subject to the accession of elected leaders and the courts—will affect the expenditure estimates associated with implementation and goal accomplishment.
    • Federalism impacts: State and local government agencies often must consider the statutory and administrative rule requirements emanating from other levels of government. Local governments are often impacted by state and national laws, rules, and resource provision; states are responsive to national politics and policy.
    • Demographics: Many budgetary priorities are a function of population—the numbers and types of people who live in a jurisdiction currently and who are expected to live there in the future. As demographic changes occur (e.g., school-aged population, percentage of population requiring public health services, etc.), the public expenditures associated with accomplishing certain priorities change as a result.
    • Agency-related issues: Public agencies at the state and local government level must consider the changing role and nature of their personnel and their operations (e.g., computerization of records, adoption of e-government links to the public, etc.). Agency anticipated expenditures often rise or fall independently of statutory additions or changes.

  4. List and discuss five commonly recognized taxes.
    • Sales and gross receipts taxes
    • Personal income taxes
    • License fees
    • Corporate income taxes
    • Property taxes
    • Severance taxes

  5. As discussed in the chapter readings, what is the Master Agreement? Discuss.

    One major revenue stream for state government comes from the 1998 tobacco settlement. One element of the settlement, the Master Agreement requires that "U.S. tobacco companies … pay approximately $229 billion between 1999 and 2025 to 46 states, the District of Columbia, and five U.S. territories" (Johnson 2004, 113). Johnson found that states are using the tobacco settlement monies primarily for healthcare, education, infrastructure projects, and the basis for debt issuance. Nevertheless, state budget makers should consider this funding a short-term fix to any future revenue problems—2025 is no longer on the dim horizon. As a slack resource, the tobacco settlement monies could serve as an important part of the public policy innovations necessary to build sustainable governance. Slack resources have been shown to have a positive effect on the budget process and outcomes (see Marlowe 2005).

  6. List and discuss the top three expenditures in state budgets overall.
    • Education
    • Public welfare
    • Insurance trust expenditure

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