Module 8 Lecture
Public Budgeting and Citizen Participation
Introduction
Public budgeting involves the management and decision-making processes related to financial resources in government operations.
This week’s focus will be on understanding the public budgeting process, its significance, as well as the role of citizen participation.
Overview of Public Budgeting
Definition of Budgeting:
Budgeting is the comprehensive process of obtaining, distributing, and spending funds necessary for governmental operations.
The budgeting process influences national economic stabilization and growth.
Significance of Budget Decisions:
Budgeting reflects societal values and government priorities.
It establishes a contractual agreement on how government finances will be allocated for the upcoming year, focusing on future expenditures rather than historical spending patterns.
Implications of Budgeting:
Budgets guide governmental departments and agencies in executing their programs.
A well-implemented budget promotes consistent public services and policy programs.
Budgets provide insights into government operations and priorities, indicated by changes in funding for areas like social welfare and military expenses.
Budgeting Process
General Steps in Budgeting Process:
Preparing budget proposals
Developing budget proposals
Approval of the budget
Implementation of the approved budget
Auditing process to evaluate budget administration
The preparation and approval processes occur throughout the fiscal year, which will be the focus of this discussion.
Federal Government Budgeting Process
Begins with the President's Budget Proposal (Budget Request):
Due the first Monday in February each year.
Outlines spending priorities, revenue plans, and supporting documents.
Example: President Obama's budget proposal for fiscal year 2017, totaling $4.2 trillion, with major allocations towards social security and Medicare.
Types of Federal Spending:
Mandatory Spending:
Comprises expenditures that are mandated by existing laws, primarily benefits and welfare programs. These funds do not go through annual appropriation processes.
Example: Approximately 66% of President Obama's proposed budget allocated to mandatory spending.
Discretionary Spending:
It constitutes about one-third of the total federal budget and consists of expenditures that require annual approval by Congress; this includes budget requests made by the President.
Example: Approximately 27% of the federal budget proposed as discretionary spending in Obama’s budget.
Legislative Process of Budgeting
The legislative branch checks and balances the executive branch through its influence over the budgeting process.
After the President's proposal:
The House of Representatives and the Senate create their budget plans based on the presidential proposal, past budgets, and new projects.
These plans are called resolutions, which serve as a rough outline for budget consideration.
A conference committee reconciles discrepancies between the House and Senate resolutions, creating joint budget resolutions.
Once finalized, appropriations committees from both legislative bodies determine specific allocations across 12 spending categories:
Energy
State Department
Transportation and Urban Development
Financial Services
Intergovernmental Affairs
Veterans Affairs
Military Construction
Commerce, Justice, and Science
Agriculture and Rural Development
Legislative Branch
Homeland Security
Labor, Health and Human Services, and Education
Finalized bills are sent back to respective houses for approval and then to the President for signing.
Must be completed by October 1, the commencement date of the new federal fiscal year.
Revenue Sources and Expenditures
Federal Government Revenue:
Derived from taxes, including income, payroll, and corporate taxes.
State and Local Governments:
Revenue varies by region; typically generated through sales and property taxes, along with potential income and corporate taxes.
Expenditures at state/local levels primarily fund public education and welfare programs.
Types of Budgets
Operating Budgets vs. Capital Budgets:
Operating Budgets: Short-term, annually budgeted for day-to-day operations, often sourced from tax revenue.
Capital Budgets: Long-term plans for significant expenditures like infrastructure, financed through bonds and borrowing.
Line Item Budgets:
Display expenditures explicitly in individual items (e.g., salaries, operational costs); commonly used by local governments.
Performance Budgets:
Allocate funds based on prior performance metrics of departments, focusing on outputs (quantified services) and outcomes (fulfillment of goals).
Example: Tracking street cleanliness through service outputs versus more subjective outcomes like public satisfaction.
Zero-Based Budgeting:
Requires justification for all expenditures each period, focusing on resource allocation based on priorities.
Ensures resources are allocated to where they are most needed but can be time-intensive.
Program Budgeting System (PBBS):
Uses cost-benefit analysis to prioritize programs for funding, weighing tangible versus intangible benefits.
Citizen Participation
Definition:
A process where citizens, not in government roles, participate in decision-making affecting their communities, particularly post-civil rights movement.
Importance of Participation:
Reduces distrust in government decisions and strengthens community needs.
Enables collaborative negotiations to meet citizen interests efficiently.
Barriers to Effective Participation:
Limited time and location accessibility of meetings.
Administrative perspectives viewing citizens as less informed.
Citizen fatigue in attending public meetings due to busy schedules.
Examples of Citizen Participation Models:
Ohio (Passive): Citizens react post-decision with no control in policy formulation.
Missouri (Active): Citizens control the policy-making process from initiation.
Indiana (Hybrid): Citizens advise during policy development, sharing control with agencies.
Challenges and Failures:
Heightened difficulties in achieving productive participation; often occurs post-decision.
Example of NIMBY (Not In My Backyard) illustrates resistance to unwanted facilities without proper input.
Conclusion and Future Topics
The ultimate aim is for public administration to embrace democratic values, fostering genuine participation.
Next week's focus will shift to public performance and program evaluation, exploring metrics of success in public sector engagements.