Running Head: BUDGET MAKING
Budget Making
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Question 1
Part a
One of the property tax revenues that have suffered under the current regime is the value
taxation. The government applies the value of the real estate in assessing the tax rate that will be
charged. Accordingly, the recent decline in the value during the financial crisis has seen the tax
revenue collected from the property tax rates significantly declining. This has worsened by the
falling consumer confidence and foreclosures that are lowering the value of the properties.
Similarly, tax revenue collected from property gains has declined significantly under the current
environment. This has been caused by the declining value of the properties due to foreclosures
that are causing the demand of the properties to decline. Thus, the gains taxable from the
property transactions are declining significantly slowing the amount of revenue municipal and
local governments collect from properties. Another type of property tax revenue that has been
affected is the mill rate revenue. Mill rate revenue is collected by assessing the value of a
property and multiplying it by a determined mill rate. Owing to the declining value of the
properties in the market, the mill rate revenue has been negatively affected significantly. This is
due to the declining revenue been collected due to falling value of the properties.
Part b
The deficit chart and the 2012 budget have the potential of enabling an analyst to predict
the level of revenues to be collected. One of the indications that have the potential of helping in
predicting the revenue levels is the borrowing estimates (Arnold, 2011). This borrowing amounts
in the federal budget illustrates the money the government will raise from debts to finance it
fiscal programs. Thus, the debt amount in the 2012 fiscal budget will enable one to estimate the
total revenue the government will collect to fill the deficit gap. Similarly, deficit chart of 2012
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will help in predicting the revenue level that will be achieved by comparing the spending
planned with the deficit anticipated. Thus, the revenue the government will collect will be
indicated by subtracting the deficit amount illustrated in the deficit chart from the budget total
allocations. Another way the revenue level will be predicted from the deficit chart and budget for
year 2012 is allocation cuts in the different fiscal programs due to fill the deficit gap indicated by
the deficit chart (Boyes & Melvin, 2013). The aggregate budget cuts proposed in the budget and
deficit chart helps in predicting the possible revenue level the government is expecting to collect
to finance it programs.
Question 2
Part A
There two major reasons that made Irene Rubin to argue that budgeting process is a
political process. One of the major reasons the overriding of the short term goals over the
democratic process and long-term interest of the nation (Stillman, 2010). Budgets that are made
by current and past regimes are highly based on the interest of the regime in retaining it power by
engaging in fiscal programs that will serve the interest of the electorate in the short run. This is
done to maintain good relation with the voters to ensure they will re-elect the same
administration. However, this strategy has the danger of eroding accountability and long-term
benefits due to biased and populous fiscal programs (Stillman, 2010). The power struggle
between experienced in the different levels of the government has the potential of causing the
incumbent to misuse the public revenue by engaging in unproductive programs to flatter voters.
This erodes democratic analysis of budget making and preserving the long-term benefit of the
public. Similarly, budget is seen as a political since it is a contract between the governments and
governed on means of raising and spending the money (Stillman, 2010). Consequently,
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governments are bound by the political consequence in coming up with a budget proposal that is
agreeable to the public. This has the tendency of causing the budget to be in tendency with the
current thinking and attitude on economic and social orders in showing priorities that should be
considered. Accordingly, budget is a political tool since the political environment of a nation
influences it process and considerations.
Part B
One of the way the deficit chart and 2012 budget allocations can help in determining the
nature of politics of budgets is the allocation of the funds across the various fiscal programs and
activities. The fiscal activities and programs receiving the biggest portion of the budget
allocation and lowest budget cuts under the deficit chart illustrate the social and economic
considerations receiving priority due to the political environment (Boyes & Melvin, 2013).
Consequently, the defense and health are the political priorities of the budget making due to their
high budget allocation and low deficit distribution. Similarly, 2012 budget and deficit chart
indicates the political nature of the US budgets through the budget allocations experiencing
expansive allocation from the previous budgets and declining deficit distribution (Stillman,
2010). Accordingly, welfare priority is increasing its political influence in the budget making of
the US federal budget.
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Reference
Arnold, R. A. (2011). Macroconomics. Mason, OH: South-Western/Cengage Learning.
Boyes, W. J., & Melvin, M. (2013). Economics. Australia: Cengage Learning South-Western.
Stillman, R. J. (2010). Public administration: Concepts and cases. Belmont, CA: Wadsworth
Cengage Learning.