What process do budgetary policies follow? What legislative committee is assigned to each part?
When it comes to budget, most of the people presumed that it is something occurs due to lack in funds. The students usually turn into a budgeting mode to meet their expenses within limited resources. The word budget is mainly taken as the number of instances and perspectives, however, the main purpose of the budgeting is not for specified scenarios such as to manage expenses within tight financial situation but it is for everyone either for rich or poor in a similar manner. Budget is usually referred as the anticipation of the incomes and expenses for a particular span of time in the future. A budget can be affiliated with a number of demographic groups for instance, it can be originated for an individual, family, private or government institutions, multi-national companies and all of those aspects that create and use the money. The concept of budget comes under the jurisdiction of microeconomics that sheds a light towards the process of tradeoff that means to forgo best available alternative to purchase the other good. On the other hand, there are three forms of budgets include surplus, balanced and deficit budget. The surplus budget can be elucidated as the anticipated profits, whereas the balanced budget is directed towards the revenues that are perhaps equivalent to the expenses . In the case of a deficit budget, the expenses will rise above the revenues. The budget can be structured in a number of manners and are usually designed and evaluated in different interval of times in a year. The amendments within the budget can be taken place on the basis of the objectives set by the budgeting organization.
There are certain aspects that deem important while making and presenting the budget in front of a state or a given country of the world. The policy makers always make such strategies and policies from which they can take all sorts of economic and strategic decisions in particular. Budget is an effective stance which is equally important and effective for the sake of the organization as well as for a country which institutionalized that how much the country or a state would be getting in a given financial year, and how much they have to expense out and how much they have to utilize accordingly.
There are a number of states in the United States which are utilizing different methods and policies to set out some specific budgets for the sake of their states and among these mediums and solutions, the name of Medicaid is one of them. Medicaid is basically an entitlement program which used for the purpose of properly allocated the budget of the country or a given state, and this is one of those programs which had been used by the economy of the United States (US) during the current economic crisis in which unemployment rate of the country increased heavily. Apart from these challenges, Hurricane Katrina is one of the major challenges due to which the country would try to allocate sufficient funds to get the victims out of rage . The Medicaid based medium is an important medium which had been taken into account by the Government of the United States.
Government policies related aggregate revenue collection, expenditure, spending, taxation and many other plans and policies are known as Budget management or Budgetary/Fiscal policy. It regulates and controls different aspects of the economy that is the employment rate, manage over inflation and interest rates, and it also focuses to steady out business cycles. This budgetary policy seeks to get target long term goals for the benefits of the country and in the public good. Government officials, federal states and authorities are responsible to carter their nation and public with by making good fiscal policies in order to achieve highly effective goals to develop the country's economy and growth. In budgetary policy, the government uses two major tools which are
- taxation
- spending
These two tools help to regulate the economy in various situations as taxes is a vital resource to fund the government, and it increases the revenue. Every kind of income, gain on investment, sales and provides taxes. This tool works for the policy to bring a change in the economy, in a way that whenever there is a recession, the government tends to lower down the rate of tax this enhances the growth of the economy because lower the taxes higher will be the spending and so the higher will be economical. Another tool spending helps to fuel the economy growth. All governments own spending in public works, transferring of payments, the flow of money in the form of subsidies, salaries, etc. comes under this tool which gives more ways to spend which creates the job and thus lowering the unemployment rate. Regulators are obliged to seek balance in these two tools which because unplanned increase of any of the tools may bring uncertainty to the economy of the country. Budgetary policy has vital importance in the economy and Overall Government has to make such productive budgetary policy which boost the overall condition of the economy in different sectors like public, private, industrial, agricultural, health, education, food, security and may more. The efficient policy regarding each sector will flourish the whole economy .
The budgeted policies which used by the policy makers to make specific and special budgets are perfect and well organized as it is based upon the prior result and future based estimation or anticipation. The budgetary process and commentary follow the traditional ways of making the budget of a chosen country of a given state at the same time. Usually Finance Minister is the one who makes and presents the budget of the country or a state in front of the people and citizen of the country who are in the stance of a decision making stance. The legislative committee which used to assess and make a budget is the Finance Ministry of the country or state, which is held responsible for taking and making the budget of a country.
The legislative budgeting committee always becomes a significant part of any state as it passes the directions and advices regarding fiscal and monetary to the government to run the economy in an efficient manner. The committee reacts as an eye and ears for the regulators to make sure that the executive committee has passed and implementing budgeting legislative policy in a cost proficient and well organized way .
Traditionally, the process of the budget would have been based upon the prior result or the last year’s budgetary deficit as well. Current Account Balance and the current economic situation are some of the major aspects and policies which have been taken into consideration while making and leaping over a result. When it comes to the United States, then there are certain aspects that deem important and significant for the sake of the organization as far as taking economic and effective decisions and among some of the major aspects, the name of unemployment, and current account balance with Balance of Payment (BOP) would be taken into account.
How does Budgetary Change Affect the Community?
The essence of the budget is extremely important and effective for the sake of the country or a state. Any change in Budgetary in either side has a direct or indirect effect, relationship or linkage with the community in particular. All of the budgetary changes would bring either positive or negative effects on the sake of the country. The High budget allocation towards a state would certainly boost up the moral of the state to an impeccable and perfect which remain the best as far as taking timely and economic decision is concerned. On the basis of the budgetary change, the state can take an enormous amount of decisions for the sake of their economy. In the United States, California is one of the largest states of the country in terms of size and revenue generation as well, and it is one of those states which have its own importance and significance lies in the country.
Which would you recommend be prioritized: a deficit and cuts, or a surplus and additional funding?
Up till now, it is clear that the effectiveness of budget and budgeting is extremely effective and important for the sake of the country or state as different decisions would have been taken on the same basis. There are certain definitions and terms which have been used and cover under the ambit of Budgeting, which predominantly are surplus and deficit . Anything which comes in excess as compared to its budgeted amount, then it is known budgeted surplus while any shortage then the actual budgeted figure would have been categorized as the budget deficit.
I would recommend, a cut as compared to a deficit, because the deficit is a negative term which means that the country or the state of the country is not competent enough from which they cannot manage their deficit. This particular aspect of cut the budget is more effective than the deficit for sure. On the other hand, a surplus would be more worthwhile than additional funding because the surplus is an indemnity that the country achieved their budget and perform a better job.
What is the political climate of your state? How does this drive the agenda? How does this differ from developing legislation?
California is the state which has been taken into account for the same analysis.
California is one of the dynamic and active states within the premises of the United States. It is the most economically viable state that makes a considerable economic contribution for the well being of the country as a whole. The state is considered as the most densely populated state containing more than 38 million people and verified as the third largest state in terms of area where the Alaska and Texas hold the first and second position. Sacramento is the capital of the state and Los Angeles is classified as the hub and largest city of the state. The median household income is likely to be US$61,021 that shows the stability of the state’s economy. By the year 2012, the state has recorded a gross domestic state product of US$2.003 trillion which is incomparable and the largest in the United States (BEA, 2014). However, the state has contributed US$ 15.5 trillion gross domestic product which is 12.3 percent of the entire GDP of U.S. Moreover, the economy of California is highly reliant on domestic and international trade that makes up one-quarter of the state’s economy. Agriculture is the mainstream sector that urges the economy of California where the exploitation of cutting edge technology measures and active farmlands plays an effective role for intense improvement in this sector.
It is analyzed that the financial and economic condition of California is improving year by year (YBY) unlikely the other states of the United States (US). In the fiscal year 2011, the state faced an immediate shortfall amounting to US$ 26.6 billion manifesting a budget gap or budget deficit of US$ 20 billion. Even in this year, the state has envisaged a budget gap of $ 5 billion in total. Apart from the financial, the political situation of the state is also effective and organized. This particular aspect drive an agenda that the economy of the US is starting to enter in a new phase of development and recovery, and it is equally like the developing legislation.
References
Last, D. (2009). A Basic Model of Performance-Based Budgeting. Olympia: International Monetary Fund.
Premchand, A. (2007). Government Budgeting and Expenditure Controls: Theory and Practice. Dallas: International Monetary Fund.
Shim, A. I. (2011). Budgeting Basics and Beyond. London: John Wiley & Sons.
Steiss, A. W. (2011). Strategic Facilities Planning: Capital Budgeting and Debt Administration. New York: Lexington Books.
Walker, D. M. (2007). Local Budgeting. Chicago: World Bank Publications.
BEA,. (2014). BEA News Release (GDP by State). Bea.gov. Retrieved 3 June 2014, from http://www.bea.gov/newsreleases/regional/gdp_state/gsp_newsrelease.htm
