Public Budgeting System and ExpendituresPresentation Transcript
PUBLIC BUDGETING SYSTEM AND EXPENDITURES
ETYMOLOGY/DEFINITION BUDGET BOWGETTE (Middle English word) BOUGET ((Middle French word) leather bag Used by King’s treasurer (exheguer) to carry documents explaining the King’s fiscal needs BULGA (Latin) bag or purse
THEORIES / DEFINITIONS YOINGCO considers a definition of the budget arrived at by the American economist, PROFESSOR PHILIP E. TAYLOR (1961), as embracing almost all ideas of term, ancient and modern: “The budget is the master plan of government. It brings together estimates of anticipated revenues and proposed expenditures, implying the schedule of activities to be undertaken and the means of financing those activities. In the budget, fiscal policies are coordinated, and only in the budget can a more unified view of the financial direction which the government is going to be observed.”
THEORIES / DEFINITIONS ALLAN SCHICK views it as a process consisting of a series of activities relating expenditures to a set of goals. GROOVES and BISH consider budgeting as the process through which public expenditures are made. AARON WILDAVSKY viewed budget or budgeting at different levels, from its most literal sense to a recognition of its behavioral aspects.
DIMENSION OF BUDGETING FORNATIONAL DEVELOPMENT Budgeting serves as a tool for learning the relationship of government programs with economic and financial conditions and trends, and for designing suitable economic and financial policies and measures. Since the budget embodies a national fiscal plan for taxing, borrowing and spending a significant segment of the national income, it has a substantial impact on the country’s fiscal soundness and national economy.
TOWARDS A PRACTICAL AND OPERATIONALTHEORY OF THE BUDGET FOR DEVELOPINGCOUNTRIES According to professor of Political Science, V. O. KEY JR., budgeting, as to the meaning, scope and role in national development, it is ironic that there exist no practically no theory on budgeting. Illustrated in the question on expenditure side: On what basis shall it be decided to allocate X dollars to Activity A instead of allocating them to Activity B?
TOWARDS A PRACTICAL AND OPERATIONALTHEORY OF THE BUDGET FOR DEVELOPINGCOUNTRIES Administrators, managers or even planners could hardly provide an exact or profound answer to the basic question. Key inferred that there is lack or no theory of the budget thus, According to FORTRIM, budgeting is a matter of philosophy as can be gleaned in the diverse interests of the present government as well as in the interests of the future ones.
GENERAL APPROPRIATIONS ACT Each year, national government before its authorization or final legislation, is presented in the form of Appropriation Bill (US & developing country like Philippines). The Appropriation Bill (AB) expresses a social consensus which sound akin to the mystic doctrine of the general will. Constantly, in the process of formulating AB, choices have to be made between the demands of the different groups and factors, aside from making the estimates of the relative political strength of contending groups that frequently enter in the decision.
GENERAL APPROPRIATIONS ACT A recognition by the national and political leadership that the allocation of the limited resources of government, which is translated yearly through a GENERAL APPROPRIATIONS ACT (GAA) is one that is based on need, not want. And such need is one that is actually felt and articulated by the target beneficiaries of the programs and projects. Decision makers have to accept the fact that not everything that applies or is made feasible in one country, is expected to similarly work in another country. On the other hand, what may have been ineffective in a developed country’s system, may prove to be effective and useful to a developing country.
DR. JOSE SOBERANO’SPOINTS TO PONDER: The various theories which explain different aspects of budgeting coming from different disciplines, have different ways of looking at the same problems, measuring it and proposing solutions. The problem comes from the very nature of budgeting, which, like all other activities in fiscal administration, have economic, political and administrative aspects. When these theories are transported to developing countries, budgeting becomes even more complicated and unmanageable.
DR. JOSE SOBERANO’SPOINTS TO PONDER: Pointed out 20 years ago that the problem of budgeting in developing countries are rooted in the problems of underdevelopment. Budgeting can only be successful and effective in the context of efforts and understanding and attacking the basic problems of underdevelopment. Economies of Abundance vs. Economies of Poverty Good example: Philippine scenario
DR. JOSE SOBERANO’SPOINTS TO PONDER: Stressed that the problem is not so much a question of theory and technique of budgeting, since Philippines is up-to-date on these, but the very problem of poverty itself. In conditions of underdevelopment, many variables cannot be programmed and controlled including nature.
SUMMARY Budget can be viewed from three frames of reference: BUDGET AS AN ECONOMIC PROCESS Economists look at it as a process of resource allocation wherein LEWIS emphasized on the marginal theory and sophisticated decision-making techniques like cost budget analyses, feasibilities, studies, etc. help the policy maker decide among competing budgetary options BUDGET AS A POLITICAL PROCESS (Pendleton, Herring, Wildavsky & other political scientists) A political process of competition among various groups of limited resources Those who have access to political power get a bigger share of the budget pie.
SUMMARY BUDGET AS AN ADMINISTRATIVE PROCESS Mechanisms for planning, coordination, control and evaluation Talked about line-item budgets and performance budgets