Public Budgeting

Public Budgeting

The means by which public policies translate into substantial, targeted, and developmental acts are public budgets and their respective expenditures. It is paramount to recognize that the well-being of citizens is directly impacted by governmental decisions on how to allocate and distribute financial resources through budgeting. Furthermore, poor allocation and management, wrong prioritization, and misuse of public funding, represent a great challenge in the process of poverty reduction. However, development interventions can be a result of the efficiency and effectiveness of the financial plan that government utilizes. Constituents' participation and the full involvement of civil society in the public budgeting and the country's financial management are essential to success. In order to promote transparency and accountability within public finances, strengthening the fight against corruption and assuring the public that their monies are properly and equally allocated. Public budgets also cover a broad variety of methods and mechanisms which ordinary citizens and civil society organizations can use in order to monitor and exert influence on public budgeting processes and revenue allocation.

The federal budgetary process can be divided into five stages: (1) Budgets are formulated by individual agencies; (2) the executive budget is prepared by the central budget agency, in consultation with the president and his aides; (3) the chief executive presents the budget to the legislative branch; (4) proposed budget received legislative action and enactment of funds appropriation; and (5) the executive power enacts the budget. There is not one determined theory for budget development, although, the managerial approach advocates three types of budgeting primarily. Those budgets are: performance budgeting, program budgeting, and zero-based budgeting. The reason behind such endorsement is the strong structure, agency effectiveness and economic efficiency that these formats promote. "Budget classifications focus on different stages of the expenditure-delivery system, from resources purchased (line item) through activities performed (traditional performance) to services delivered (program)" (Mikesell, 2007.p.196). This analysis will compare and contrast the performance budget to the program budget format.

Program Budgets

Program budgets classify services provided by the government without any regard for the administrative unit in charge of service provision (Mikesell, 2007). This budgeting format also reviews and organizes expenditures based in the consumer's participation towards public goals. Program-budgets aim to better the governments' ability to maintain operations consistent with what the citizenry needs. Overall, program-budgets try to arrange details in a manner to better decide capacity and therefore make rational budgeting choices. This particular budgeting format diverts relevancy from government purchases to the services rendered to society while disseminating limits between governmental agencies. A complete program budget competes for funding within real alternatives by combining services contributing to a general objective. Unlike other budgets, program-based budgets do not compete with the same agencies or departments. Instead, competition takes places within similar units. "While almost all obligations in the Agriculture function (350) are by USDA [U.S. Department of Agriculture], that function represents only about 41 percent of the spending by the department. Over 40 percent of USDA's obligations are for the Income Security function (600)" (Mikesell, 2007.p.210). One important aspect of this particular budgeting is that sometimes public services contribute to more than one public goal. Therefore, the specific identification of the primary issues raised by the primary expenditure is critical. A downfall of this budget is that it re-categorizes expenditure activities therefore becoming less useful.

Performance Budgets

The most important concept behind performance budgets is that public decisions