Fiscal Dispensability
Budgets are a very important tool in managing fiscal sustainability as it relates to both public and private organizations. In addition, the preceding statement is almost always accompanied by the discussion of the need or dispensability of budget transparency for implicated stakeholders. Therefore, budgets are key documents since they lay out a government’s priorities in terms of policies and programs.
Budget transparency for public systems refers to the extent and ease with which citizens can access information about and provide feedback on government revenues, allocations, and expenditures (Lee, Johnson, & Joyce, 2013). One of the many benefits to budget transparency and oversight is the ability to identify how resources are allocated and …show more content…
spent. Which is also a powerful disincentive for officials to misuse or misappropriate funds, reducing the likelihood of corruption. Furthermore, if budgets are open to the public and effective legislative scrutiny, there is also less room for deviation from policy decisions and reversal of budget allocations. Lastly, budget transparency allows citizens to provide feedback on the quality and adequacy of services and infrastructure provided.
On an opposing continuum and an issue which is often disregarded in the debate of budget transparency is the need for budget discretion as it relates to transparency. It is evident that budget is a tool for private and public organizations to allocate resources to achieve their objectives. However, it could be argued that too much transparency has the potential to reduce the ability for these organizations to do so. The preceding is true for intergovernmental relations at the local, state and national level.
A brief example of this can be referenced to the theory of fiscal spillover and the implications that it has for all governments.
Take for example; the American Recovery and Reinvestment Act of 2009 (ARRA), commonly referred to as the Stimulus or The Recovery Act, was an “economic stimulus package enacted by the 111th United States Congress in February of 2009” (Recovery.gov, n.d.). To respond to the Great Recession, the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy. The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019. Although the supporters and non-supporters of the Act would quickly debate the negative and positive implications of the act for present and future citizens. No one would be as quick to debate that this stimulus has had fiscal spillover which has positively affected other nations. Some recent studies that investigate spillover effects of fiscal policy in Germany, found that the average “effect of a fiscal stimulus of a 1 percent of Gross Domestic Production (GDP) in Germany had an increase of .23 percent in foreign GDP for a spending increase and 0.06 percent for a net tax cut, within two years” (International Monetary Fund, …show more content…
2011).
The preceding example illustrates why budget transparency is not always the solution for fiscal sustainability. Specifically when public organizations must use budgeting tools to gain a strategic advantage over competing jurisdictions. This is because at the heart of budgets are “referenda revenue sources (bonds, income, property, and sales tax)” which may be used by citizens to keep checks and balances on public administrators but may also be use by competing governments to gain competitive advantages over each other (University of Pennsylvania, 2011).
References
International Monetary Fund. (2011, September). Do Fiscal Spillovers Matter?. Retrieved from http://www.imf.org/external/pubs/ft/wp/2011/wp11211.pdf
Lee, R.
D., Johnson, R. W., & Joyce, P. G. (2013). Public budgeting systems (09th ed.).Burlington, MA: Jones & Bartlett Learning.
Recovery.gov. (n.d.). The Recovery Act. Retrieved August 30, 2015, from http://www.recovery.gov/arra/About/Pages/The_Act.aspx University of Pennsylvania. (2011, September 12). Do Local Government Fiscal Spillovers
Exist? Evidence from Counties, Municipalities, and School Districts. Retrieved from
https://bepp.wharton.upenn.edu/bepp/assets/File/Fiscal%20spillovers.pdf
Budget transparency for public systems refers to the extent and ease with which citizens can access information about and provide feedback on government revenues, allocations, and expenditures (Lee, Johnson, & Joyce, 2013). One of the many benefits to budget transparency and oversight is the ability to identify how resources are allocated and …show more content…
spent. Which is also a powerful disincentive for officials to misuse or misappropriate funds, reducing the likelihood of corruption. Furthermore, if budgets are open to the public and effective legislative scrutiny, there is also less room for deviation from policy decisions and reversal of budget allocations. Lastly, budget transparency allows citizens to provide feedback on the quality and adequacy of services and infrastructure provided.
On an opposing continuum and an issue which is often disregarded in the debate of budget transparency is the need for budget discretion as it relates to transparency. It is evident that budget is a tool for private and public organizations to allocate resources to achieve their objectives. However, it could be argued that too much transparency has the potential to reduce the ability for these organizations to do so. The preceding is true for intergovernmental relations at the local, state and national level.
A brief example of this can be referenced to the theory of fiscal spillover and the implications that it has for all governments.
Take for example; the American Recovery and Reinvestment Act of 2009 (ARRA), commonly referred to as the Stimulus or The Recovery Act, was an “economic stimulus package enacted by the 111th United States Congress in February of 2009” (Recovery.gov, n.d.). To respond to the Great Recession, the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy. The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019. Although the supporters and non-supporters of the Act would quickly debate the negative and positive implications of the act for present and future citizens. No one would be as quick to debate that this stimulus has had fiscal spillover which has positively affected other nations. Some recent studies that investigate spillover effects of fiscal policy in Germany, found that the average “effect of a fiscal stimulus of a 1 percent of Gross Domestic Production (GDP) in Germany had an increase of .23 percent in foreign GDP for a spending increase and 0.06 percent for a net tax cut, within two years” (International Monetary Fund, …show more content…
2011).
The preceding example illustrates why budget transparency is not always the solution for fiscal sustainability. Specifically when public organizations must use budgeting tools to gain a strategic advantage over competing jurisdictions. This is because at the heart of budgets are “referenda revenue sources (bonds, income, property, and sales tax)” which may be used by citizens to keep checks and balances on public administrators but may also be use by competing governments to gain competitive advantages over each other (University of Pennsylvania, 2011).
References
International Monetary Fund. (2011, September). Do Fiscal Spillovers Matter?. Retrieved from http://www.imf.org/external/pubs/ft/wp/2011/wp11211.pdf
Lee, R.
D., Johnson, R. W., & Joyce, P. G. (2013). Public budgeting systems (09th ed.).Burlington, MA: Jones & Bartlett Learning.
Recovery.gov. (n.d.). The Recovery Act. Retrieved August 30, 2015, from http://www.recovery.gov/arra/About/Pages/The_Act.aspx University of Pennsylvania. (2011, September 12). Do Local Government Fiscal Spillovers
Exist? Evidence from Counties, Municipalities, and School Districts. Retrieved from
https://bepp.wharton.upenn.edu/bepp/assets/File/Fiscal%20spillovers.pdf