The Federal Government needs a financial budget to run its operations every year. The budget defines what activities will be funded during the following one year. However, every year the Federal Government operates on a deficit of about 10%. However, these gaps in the funding must be filled through one way or another. The Government is usually tasked with determining where the additional funds will come from or what projects will be eliminated to reduce on the expenses incurred. There exists various through which a deficit in the budget can be rectified. A budget deficit is witnessed when the allocated funds are less that the desired funds (Rubin and Dnes, 88). That is, the available funds are not enough to sustain the activities described within the budget.
Cost Saving Options
This is one of the most common options used to deal with a deficit. This refers to the process of reducing the expenses incurred in a bid to reduce the need for funds. By eliminating some of the expenses, some funds will be freed up to fill in the gap formed by the deficit in the budget. Some of these options include cutting down on some of the luxury expenses that are incurred in various departments (Diermeier and Fong, 98). For example, the department can stop providing tea and snacks for the employees. Depending on the size of the organization, this can have a significant impact in the budget in terms of cost savings. Another method of cutting down on the cost of operations is by refraining from hiring new employees to the company. This is regardless of whether the new personnel are required or not. For this reason, the remaining personnel will have to work extra hard to meet the objectives of the department.
Revenue Sources
Another common method of dealing with a deficit in a budget is by looking for more funds to sustain the budget. The government has various tools at its disposal that it can use. For example, the government can decide to increase various taxes or introduce new ones. This will provide a new source of funds for the government to fund the deficit in the budget (Hewitt, 109). The government mainly acquires its funds from taxes. Therefore, increasing additional taxes would be an easier way out. However, tax increment may be met with a lot of resistance from the public as it raises the cost of living. Another option that can be used by the various departments is the sale of certain assets through auctions. An inventory of the assets that are not in use anymore is done. This will determine the assets that will be sold and in return raise additional funds to fund the deficit.
Conclusion
A deficit in a budget hinders the operations that have been described within the budget. However, there are several funding sources that can be used to fund the budget. Failure to address the deficit within the budget will lead to a budget crisis. A budget is supposed to help in managing the available resources and divide them accurately. It is in the best interests of any department to avoid having a deficit in the budget as much as possible. For this reason, it is advisable to work with the funds that are available to the department to conduct its operations. Deficits cause unnecessary strain on the available finances and provides the urgency to source for new funds.
Works Cited
Diermeier, Daniel, and Fong, Pohan. “Bargaining over the Budget”. Social Choice and
Welfare 36.3/4 (2011): 565–589. Springer Press. 2011. Print.
Hewitt, Victor. “Budget Essentials”. Fortnight 474 (2010): 4–6. Fortnight Publications. 2010.
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Rubin, Paul H., and Dnes, Antony. “Managerial Economics: A Forward Looking
