Pressures Affecting Public Budgeting

In at least 250 words, using at minimum two (2) scholarly, peer-reviewed references, reply to the below original poste as it relates to Pressures Affecting Public Budgeting.  All responses must bring forth new ideas.  All citations must be in APA 7th Edition, including appropriate in-text citations and a References page at the end of the document.

Practical Pressures Issues Affecting Public Sector Budgeting Designed to Deliver Public Good and Services

                Government budgets outline plans for programs and goals throughout a period of time and the monetary value of any revenue and it varies from private sector budgets as it becomes a legal document when signed (Oyakojo, 2015). The entire public sector budgeting process is political as it is impacted by the public and political changes in the government (Oyakojo, 2015). On the other hand, practical issues that impact public sector budgeting include economic influences and social and demographic changes (ICMA, 2016).

                Politics have the ability to impact the public sector budgeting process through input from the public via citizens, stakeholders, and interest groups. Opening input on the public budget to the public brings new issues to the forefront of the discussion, as the budgeting officials may not feel that something is as important as the public does, but it also creates transparency between the public sector and the public (ILG, 2008). Including the public in budgetary discussions can include public outreach and education, public surveys, budget advisory committees, budget workshops, and forums for public/stakeholder deliberation (ILG, 2008). A real world examples of the public’s input on the public sector budget is the Dollars and Sense Campaign in Thurston County, Washington. The county found that their revenues would not fully fund current services, the county then asked citizens “How would you spend $500 in the county’s budget? (Hartman, 2019).â€� The results are then presented to the Board during the development of the upcoming budget (Thurston County, 2023). Thurston County saw a problem in which no solution by the Board would appease every member of the public, therefore the County developed a survey to receive input from the public to better make decisions on behalf of the public. The public impacts the public sector budget by providing input, lobbying for desired outcomes, and advocating for budget changes as when the voices of the public are heard, the Board can then take those voices into consideration.

                Politics also influence the public budget through political changes within the government. One of these influences from the government include the federal government shut down which caused a “trickle-downâ€� effect on local governments. Washington D.C. missed out on $47 million in both income and sales revenue during the shutdown and the city’s chief financial officer estimated that 40 percent of that could be regained over time but still leaves the city without crucial revenue (Fisher, 2019). Decisions made by higher levels of government, such as the federal government shutdown, impact public sector budgets as it can decrease the amount of revenue that the local government has to utilize which would result in reductions in various portions of the budget. Another example of a governmental impact is a change in leadership, such as the president, as an election of a new leader often results in changes in opinions for allocation of government funds. While evaluating the budget the Joe Biden first provided, health and human services alone would go from $108.4 billion in 2021 to a proposed $133.7 billion (Taylor, 2021). Due to the change in president and political party, the beliefs of federal spending change, which then changed the amount of funds that are received by local governments for their local budgets and programs. This increase in the funding for health and human services would provide states with additional funding to expand income guidelines for social assistance.

                Not only politics influence the public budget but also practical issues. The economic state of the country greatly impacts the public budget as economic downturns can cause there to be a decline in sales and property tax and intergovernmental aid to local governments may decline (ICMA, 2016). These impacts include general economic downturns, inflation, and increases in interest rates (ICMA, 2016). When the economy is experiencing changes public sector budgets are also experiencing changes due to lost revenue and lost intergovernmental aid, especially for local governments, which may cause governments to need to adjust their budget and cut costs where possible. Additionally, when there is a change in the population, age distribution, or personal income in the public it is expected that there will be a change in the public sector budget. Increases and decreases in population can result in either a need to increase or decrease spending, which can be difficult to quickly adjust, therefore causing delays in adjustments to budgetary spending (ICMA, 2016). When the age distribution changes in an area, it then changed the program that needs spending, as it can go from education when the population is young to assistance for elderly as the population begins to age. This change demonstrates a need to evaluate data while forming a budget and the ways in which a budget changes over time (ICMA, 2016). Finally, personal incomes also effects the public budget. If there is an increase in the median household income the government will begin to see more revenue through sales and property tax as the public is spending more, which can then provide more funding for needed programs, that will most likely increase in need as the income increases (ICMA, 2016).

Consequences of Two Externalities and Their Impact on Public Sector Budgeting

                 The Environmental Protection Agency (EPA) has long advocated for changes in the amount of spending that is dedicated for environmental care, such as reducing air pollutants. Many government officials argue against the need for spending public sector funds on environmental protection. The estimated spending on asthma in the United States was $53 billion and the Medicare and Medicaid combined pay for 41.7 percent of the costs of asthma, over $22 billion a year (Altman, 2011). Knowing that the cost of asthma is so high and air pollutants contribute to asthma, it is recommended that government officials address air pollution before it leads to an ongoing treatment of asthma in citizens. Knowing what an externality leads to can greatly influence the decision-making process of the Board, as it can save money to address the concerns prior to chronic concerns are developed.

                Traffic congestion impacts the economy as it makes people late to work, delays deliveries, and causes an increase in money spent on gas (Badger, 2013). According to Badger (2013), it was found that higher levels of congestion can initially be associated with higher economic growth but at a “certain thresholdâ€� the congestion begins to slow growth. When it gets to be too concerning would be about 35 to 37 hours of delay per commuter per year (Badger, 2013). This discrepancy means that congestion is beneficial in some cities while bad in others. It has also been found that the cost of using congestion reducing methods can sometimes cost more than having congestion (Badger, 2013). According to Badger (2013), it was also found that the quality of life is also related to the economic impacts, as those that are stuck in traffic with either begin to require higher wages or will look for another job. The higher levels of congestion can be related to an increase in sales tax which can provide the city with more revenue to increase the budget. With too much traffic congestion it can lead to members of the public requesting higher pay or leaving their job, which can negatively impact the budget as sales tax from revenue would then be reduced. Finally, if a government is spending too much to reduce congestion it can be pulling unnecessary funds from their budget.

Practical Way to Study the Fiscal Impacts on Public Sector Budgeting

                In order to study the fiscal impacts of public sector budgeting, it is important to map the future impact of the budget by including revenue and spending projections for the next five years, which benefits by showing trends in the budget (McNichol, Palacios, & Johnson, 2014). It is also important for states to evaluate fiscal notes with estimate savings for the next five years and preparing a baseline of the cost to continue providing the same services as the current budget throughout the five-year period (McNichol, Palacios, & Johnson, 2014). It is also important for states to ensure that the budget remain non-partisan by creating an agreement known as a consensus revenue forecast while also calling for regular reviews of the budget by outside authorities (McNichol, Palacios, & Johnson, 2014). There are also ways to ensure that the budget remains on track including rainy day funds and using various tools to ensure continuous oversight (McNichol, Palacios, & Johnson, 2014).

                More specifically, the comparable city methodology of fiscal impact analysis is the most practical, as it allows for government officials to spend less time speaking with outside sources and allows for research to be conducted on cities with similarities to their own. Although the comparable city methodology is the most practical due to ease to complete, the case study methodology appears to be the most reliable as it involved the public’s opinion (Harrison & French, n.d.).

References

Altman, P. (2011, April 6). Air Pollution and the Federal Budget. NRDC. Retrieved February 27, 2023, from https://www.nrdc.org/experts/pete-altman/air-pollution-and-federal-budgetLinks to an external site.

Badger, E. (2013, October 22). How Traffic Congestion Affects Economic Growth. Bloomberg.com. Retrieved February 27, 2023, from https://www.bloomberg.com/news/articles/2013-10-22/how-traffic-congestion-affects-economic-growth

Fisher, B. (2019, January 28). External Factors Play Large Part in Local Budgets. IC System. Retrieved February 27, 2023, from https://www.icsystem.com/external-factors-play-large-part-in-local-budgets/Links to an external site.

Harrison, T., & French, C. (n.d.). Fiscal Impact Analysis Factsheet . Retrieved February 27, 2023, from https://extension.unh.edu/sites/default/files/migrated_unmanaged_files/Resource002700_Rep3989.pdf

Hartman, L. (2019, March 4). Innovative Examples of Participatory Budgeting in Government. OpenGov. Retrieved February 27, 2023, from https://opengov.com/article/innovative-examples-of-participatory-budgeting-in-government/

ICMA. (2016, April 26). 4 Factors Influencing Local Government Financial Decisions. ICMA. Retrieved February 27, 2023, from https://icma.org/blog-posts/4-factors-influencing-local-government-financial-decisionsLinks to an external site.

ILG. (2008, November). Public involvement in budgeting: Options for local officials. Institute for Local Government. Retrieved February 27, 2023, from https://www.ca-ilg.org/post/public-involvement-budgeting-options-local-officials

McNichol, E., Palacios, V., & Johnson, N. (2014, February 4). Budgeting for the future: Fiscal planning tools can show the way. Center on Budget and Policy Priorities. Retrieved February 27, 2023, from https://www.cbpp.org/research/state-budget-and-tax/budgeting-for-the-future-fiscal-planning-tools-can-show-the-way

Oyakojo, M. (2015, February 17). The political dynamics behind Government Budgeting Process. PA Times Online. Retrieved February 27, 2023, from https://patimes.org/political-dynamics-government-budgeting-process/Links to an external site.

Taylor, A. (2021, May 28). Biden’s $6T Budget: Social Spending, Taxes on Business. AP NEWS. Retrieved February 27, 2023, from https://apnews.com/article/donald-trump-business-government-and-politics-40c614b9e2703a549815c5d73043b03e

Thurston County. (2023). Dollars and sense. Thurston County, WA. Retrieved February 27, 2023, from https://www.thurstoncountywa.gov/tchome/Pages/opengov-dollars-and-sense.aspx