1 chapter 7 budget preparation: the decision process decisions on budget requests budget documents

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Chapter 7Budget Preparation:The Decision Process

•Decisions on Budget Requests•Budget Documents

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Decisions on Budget Requests

Concerns of the Chief Executive

• Strategic Concerns

Sense of prioritiesEconomic impact of the budgetSocial justice and immigrationGenerational effectsOther concerns?

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Concerns of the Chief Executive (continued)

• Use of cost-effectiveness analyses

• Projections for budget surpluses and deficits

• Tactical ConcernsReactions from public and legislature, intergovernmental reactions

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Revenue Deliberations

• Revenue estimates for each revenue source• Limitations on taxes• Balanced budget requirements and revenue

estimates• Eliminating some tax expenditures as an

alternative to raising taxes• Tax earmarking—Balkanizing decision making

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Spending Deliberations

• Entitlements and other commitments

• Competition among organizations for role in budget decision making

Office of Management and Budget, Councilof Economic Advisers, Director of NationalIntelligence, etc.

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Spending Deliberations (continued)

• Budget office roles

• Agency expectations and deliberations

Competition for funding, across-the-boardcuts

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Spending Deliberations (continued)

• Budget office and agency relationsHow is the budget office organized towork with agencies?

• Budget office recommendations to the chief executive

Serves the executive’s prioritiesProvides neutral competence

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Downsizing, Rightsizing, and Spending Cutbacks

• Fiscal stress forces cuts in spending in the short-term and long-term

• Cutback management

• Budget office often increases its role during periods of cutbacks

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Downsizing (continued)

• Legislatures may both push for cutbacks and try to block them

• What areas are common targets for budget cutting?

• How does budget cutting relate to systems of budgeting (see Chapter 6)?

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Final Preparation Deliberations

• Chief executive deeply involved

• Who looks at the budget as a whole during this part of budget preparation?

• Give examples of tradeoffs that must be made in putting a budget together

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Budget Documents

Number and Types of Documents

• Document characteristicsPhysical size, use of charts and otherillustrations, amount of space devoted torevenues and expenditures, space devoted

to each department andorganization

• Budget-in-Brief

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Budget DocumentsNumber and Types of Documents (continued)

• Federal Budget Documents

Budget of the United State GovernmentBudget AppendixAnalytical PerspectivesHistorical Tables

Other relevant OMB documents—PART, etc.

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Budget Documents

Number and Types of Documents (continued)

• Other Federal Documents

Economic Report of the President

Combined Statement of Receipts, Outlays,and Balances of the United States Government

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Budget Documents

Number and Types of Documents (continued)

• Tax expenditures. See Figure 7-1

• Budget messages. See Figure 7-2

• Publication of proposed and approved budgets

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Budget Documents

Coverage

• State and local governments use special funds as well as general funds

• Federal budget coverageUnified budget and the off-budget

• Alternative budget presentations

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Budget DocumentsCoverage (continued)• The special case of credit and insurance

liabilities. See Figure 7-3 and Table 7-1.

Direct loans, guaranteed loans, insuranceprograms, government sponsoredenterprises

Federal liability reforms—Federal CreditReform Act and Debt CollectionImprovement Act

State and local government liabilityreforms

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Budget Documents

Information Displays

• Revenues. See Table 7-2• Expenditures

Personnel. See Tables 7-3 and 7-4Current Services. See Table 7-5Program Information. See Table 7-6Use of Program Structure Program Measures. See Table 7-7 and Figure 7-4Program Revisions. See Figure 7-5

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Budget Documents

Information Displays (continued)

• Future years

• Space limitations

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Summary