Reference no: EM131402847
Assignment
Budgeting is one of the most important processes carried out by governments, because budgets enable governments to acquire the resources to execute public policy. The funds needed to maintain a police force, pave streets, build government buildings, provide a safety net for the poor, and run school systems are identified through budget processes.
Budgeting requires matching sources of funds with expenditures needed to carry out the business of government. Common sources of funds include property tax, business tax, income tax, sales tax, fees for service, fines, and licensing fees. Expenditures are directed at things like public security, education, culture, social welfare, capital projects and recreation.
One of the great challenges of budgeting is forecasting future revenues. Budgets are developed before government officials know how much revenue they will be able to work with. Generally, governments initially establish a basic budget based on best estimates of revenue at the outset of the budget year. As time passes and the actual value of revenue becomes clearer, budgets are adjusted. If revenues are more bountiful than predicted, budgets can be increased. If there are revenue shortfalls, budgets need to be trimmed. Ultimately, revenues and expenditures need be balanced.
The budget process should begin with an understanding of the community's needs and wants. Governments should establish visions, missions, and goals that target the achievement of these needs and wants. Without tying budgets to defined visions, missions, and goals, governments run the risk of pursuing irrelevant projects and operations.
In this assignment, we examine the government budget process by looking at a real world example of a budget-in-action. Specifically, we look at the budget of Prince William County, Virginia as summarized in Proposed FY2015 Budget: Citizen Guide. Use this Document to answer the assignment questions below.
Questions
1. Based on demographic data supplied in "Our Community" (p. 3), provide a summary of some key characteristics of the community and its members.
2. Beginning in the 1990s, PWC tied its budget to achieving its strategic plan. Explain how PWC uses the strategic plan to establish the foundation of its budget, using specific examples from Citizens Guide.
3. What are the top four sources of revenue for PWC? Do you believe the PWC revenue profile is typical for counties in the USA? Explain your answer.
4. PWC divides its budget into two categories: capital budget and operating budget. What is the difference between the two. What is the primary source of revenue for the capital budget? For the operating budget?
5. A big portion of the PWC budget entails "transfer to schools." What does this mean from both the Revenue and Expenditure perspective? Supplement your answer with data from Citizens Guide. Be sure to look at the special character of this budget item on p. 11.
6. Smart county budgeting requires political sensitivity of elected officials. How is such political sensitivity reflected in the PWC budget process? (Hint: See p. 14.)
7. The PWC Capital Improvement Program (CIP) is reasonably typical for counties in the USA. Why do county (and municipal) budgets distinguish between capital budgets and operating budgets? Which three budget areas dominate anticipated capital budget expenditures? Where do you think the money is being spent in these three areas?