final study guide

 What is a budget call?

They provide the budget information to each department or agency to tell them how to make their own departmental budget – done by the budget office – tell them how much revenue they make and how much their budget should be

What are agency requests

Every department or agency will make their own budget and submit their own budget to the budget office

What is an executive review of the agency requests?

 The budget office will do an executive review of the agency request

 What are the budget office’s roles? Can the budget office directly make cuts to the agency requests?

No they cannot directly make cuts to other departments budget they need to ask the leadership to do the cuts – the budget office roles – forecasting budget call review different agencies budget put together the executive budget

What are some cutback strategies?

targeted and across the board cuts hiring freeze making cuts to the benefits or salaries

What is a targeted cut?

you specifically cut a specific program or department

What is an across-the-board cut?

cutting the budget for every department

 What are the major steps of the budget review process?

Legislative branch holds several legislative hearings – state and federal level does a community review and the legislature will approve the budget later – after the budget is passed the executive branch can veto the budget

 What is pork-barrel spending?

when the legislature try to put unnecessary things into the budget

What is logrolling?

when the legislatures help each other to try and pass their own bill

What is veto power?

They will send the budget back to the legislature to reconsideration

What is line-item veto power?

sending part of the budget back to the legislature

How to override veto?

The legislative branch need to have a super majority vote to override the veto

What is the Congressional Budget Office?

they help the legislatures review the budget

 Why the federal government had surpluses between 1998 and 2002?

During those years the federal government had balanced budget requirements

What are apportionments (federal) and allotments (state and local)?

Apportionments at the federal level allotments are at the state and local level – after the budget is passed the legislature needs to split the revenues and expenditures into 12 months unevenly.

 What is a budget variance analysis?

Comparing the forecast number with the actual number

What is a rescission?

the end of the fiscal year if a government still has a lot of budget they cannot use them and need to tell the legislature recission is cutting the budget and moving the money back to the entire government

What is a supplemental appropriation (supplemental budget)?

if they ask the legislature for more budget because they are running out of money

 What is competitive bidding?

when every possible contractor can participate in the bidding process to get a government contract

What is no-bid contracting?

when the government can directly award the contract to someone without them having to bid – done during an emergency or small scale purchase

What is lowest-bid procurement?

the company with the lowest price will win the contract

What is best value procurement?

when the government reviews to see who has the best skills techniques and figure out who is the best contractor

What are the major forms of corruption?

Bribery, Embezzlement, Theft and Fraud, Extortion (using threats or coercion), Abuse of Discretion, Conflicting Interests (e.g., insider trading), Improper Political Contributions

Bribery

Giving or receiving money, gifts, or favors to influence someone’s official decisions.

Embezzlement, Theft and Fraud

Taking or using other people’s money or property without permission, often by someone trusted, or using lies to steal or deceive for financial gain.

Extortion (using threats or coercion)

Forcing someone to give money, property, or a favor by threatening harm, exposure, or other coercion.

Abuse of Discretion

Using your power or decision-making authority unfairly or without proper justification.

Favoritism and Nepotism

Giving jobs, contracts, or advantages to friends or family instead of choosing people by merit.

Conflicting Interests (e.g., insider trading)

When someone’s private interests clash with their public duties, so they may benefit personally from decisions they make.

Improper Political Contributions

Giving money or support to influence political decisions or gain undue access, in ways that break rules or ethics.

What are some possible ways to prevent and detect corruption?

Strict punishment or higher salaries/benefits
Employee training

Separation of duties

Provide the government officials with good incentives like good salaries – make punishments for corruption – whistleblowers are important to detect corruption

What are the definitions of fiscal health?

neutral
- “the ability of government to meet its financial and service
obligations.” (Hendrick, 2004)

What are the definitions of fiscal condition?

neutral
- “a government’s ability to finance its services on a continuing basis.”
(Maher, 2011)

What are the definitions of fiscal distress?

“the condition of local finances in which the government cannot
provide public services and meet its own operating needs to the
extent that it previously did.” (Gorina & Maher, 2016)

What are the definitions of fiscal stress?

neutral

Fiscal health and fiscal condition are neutral terms they are not negative terms fiscal distress is a slightly negative term a small negative sign fiscal stress is a big negative sign

What are tax and expenditure limits (TELs)?

Example of TELs: Colorado’s Taxpayers’ Bill of Rights

(TABOR) Major rules:

- Governments cannot impose new taxes or raise tax rates

without passing a tax referendum.

- Revenue growth cannot exceed the combination of inflation

rate and population growth rate.

- Excessive revenue should be returned to taxpayers, unless

voters pass a revenue referendum.

Fiscal Rules

What are tax and expenditure limits effects?

Example of TELs: Colorado’s Taxpayers’ Bill of Rights

(TABOR) Effects:

- TABOR limits the growth of revenues, which may cause

massive reductions in public services.

- If revenues drop significantly during economic downturns, it

may take a long time for revenues to go back to the level

before economic downturns.

- Maher, Park, and Liao (2019) found that it might be easier for

larger cities to pass referenda. Thus, it may expand the urban-

rural divide.

There are limits on the revenue or expenditures to control their growth many states require a referendum to increase tax or go over the limits

 What are balanced budget requirements (BBRs)?

means that mostly at the state and local level they are required to make a balanced budget – some states are only required to have a balanced budget when they make it some have to have it at the end of the year

What are supermajority rules (SMRs)?

some states when they want to pass the budget or increase the budget they need to have a super majority

What are debt limits?

is in most of the states they have a limit for their total debts amount and some states have debt limits for their debt service – debt service is debt repayment plus interest payment

What are composite indexes of fiscal conditions? What are individual indicators of fiscal conditions? What are some pros and cons of them? Which may be better?

looking at indicators to construct their index — con is that using an index or individual then some negative signs might be offset by some positive signs - individual indicators are better than composite indexes

 What are some pros and cons of state fiscal monitoring systems?

Pros – the state can help local governments deal with their fiscal issues in a timely manner

Cons – some local government officials are afraid of being held accountable or punished by the state government officials

Fiscal monitoring system is when the states closely monitor local governments fiscal condition and step in if a local government is in trouble

What are the major challenges of public participation?

Public participation is usually late in the budget process and usually the participation rate is low and then government officials might not take the feedback into consideration

What are the major types of public participation methods in the United States?

Open records (e.g., ACFR, PAFR)
Public hearings (public meetings)
Focus groups
Advisory committees
Public surveys/Budget simulations
Participatory budgeting

Pros and cons of public hearings?

Pros
Share information with residents
Open to the public
Sometimes, participants can provide feedback
Cons
Usually, one-way communication
Sometimes used late in the budgeting process and only
used to meet the participation requirements
Not representative
May be dominated by interest groups

Pros and cons of advisory committees

Pros
Can hear from different voices
Participants are selected based on expertise or interests
and may have more knowledge to make informed
decisions
Cons
Only include limited participants
Not representative
Sometimes, participants’ recommendations may be
ignored

Pros and cons of focus groups

Pros
Can hear from different voices
Participants can provide local knowledge
Cons
Only include limited participants
Not representative
May be dominated by some participants (group
thinking)

 What is a traditional budget simulation?

the revenues and expenditures and weather their balanced or not – it is useful for public engagement consensus building and scenario testing

What is a prioritizing tool?

if you have a certain budget you choose projects that the citizens can choose from and then prioritize those projects

What are traditional budget simulation and prioritizing tool suitable for?

it is useful for resource allocation strategic planning and program evaluation

What is participatory budgeting? Where was it originated from?

governments provide a small amount of budget for the public to decide how to use it – it was first developed in Brazil in 1989 – Chicago was the first in the us NYC was the second one

 What are some keys to successful public participation?

If they actually impacted the budget there would be more participation and if the government got people to be involved more there would be more participation

 What are the major features of capital projects?

They are irreversible they are long standing, they are expensive

 What are the two major types of infrastructure?

Transportation and water

What are some typologies of public infrastructure? What are some examples? (visible vs. less-visible; NIMBY vs. non-NIMBY; self-liquidating vs. not self-liquidating)

Visible less visible (sewer system maintenance) not in my backyard which we really don’t want in the community like having some pollution or public safety concern – incinerator power plant waste water plant – self liquidating projects can generate revenues to cover their expense – toll bridges airport terminals parking lots

 What is infrastructure failure?

Some infrastructure project fail without maintenance or monitoring – the dams in Michigan the interstate bridge collapse

 In recent years, U.S. governments spent more money on new capital projects or operation and maintenance. Why?

Because a lot of public infrastructure projects in the us were developed a long time ago and need more money to do maintenance

 What is a general obligation bond (GO bond)?

when governments issue debt to cover annual deficits

What is a revenue bond?

when they want to build something expensive they issue a revenue bond which are issued for a specific project that can help them repay the bond

Major differences between general obligation bond and revenue bond?

general obligation bonds are less risky because their sponsored by the government revenue bonds are more risky because a project might fail

What is debt per capita?

debt divided by population, per capita is divided by population – we compare the debt with the economy to see if they can repay the debt

What is debt as a percentage of GDP or GSP?

the suggested ration of debt to gdp ratio should be below 50% currently it is greater than 120% - gdp is labors produced in the year

What is debt-to-property-valuation ratio?

compares local governments debt level within a state – different states have different property valuation rules

Gross Domestic Product (GDP)

the total monetary or market value of all finished goods and services produced within a country's borders during a specific period

Gross State product

the state-level equivalent of Gross Domestic Product (GDP)

When can we use debt-to-property-valuation ratio?

When its in the same state

 What are some pros and cons of issuing debt?

Pro – we can get the money quick Con – we need to repay the debt and interest

What is internal debt?

when we borrow money from companies or individuals withing the country

What is external debt?

external debt is from outside the countries

which debt is better, Internal or external?

internal debt is better

 Why, in some years, the federal debt went over the debt ceiling?

Because of entitlements or mandatory spending – no matter what we need to spen money on entitlements or mandatory spending

 What are some major causes of debt increases since 2000?

The wars in the middle east the great recession entitlements and mandatory spending

 What is the current total federal debt amount?

$39.2 trillion

 What do intergovernmental transfers mean?

mean grants and contracts but mostly grants

What are competitive grants?

you have to compete and the upper government will determine who gets it

What are formula grants?

the grants are written in law and the upper government will use a formula to determine what governments get what grants

What are categorical grants?

when the grants must be used for a specific function

 What are block grants?

a set of function you can use the money on and are more flexible