Question

create a narrative budget blueprint for a local unit of government. Put yourself in the shoes of an administrator in a newly formed municipality that has never developed a municipal budget before. How would you complete the task? Where would you start? What process would you follow? Who would be involved? What concerns do you have, how do you resolve them? How do you budget for capital items and link them to the operational budget, etc.? Be as detailed as possible to display a comprehensive understanding of the course material.

Answer 1

Municipal Budget :

A municipality is a general-purpose administrative subdivision. It is an urban area usally a city or town .

Generally Municipalities create Budget on Annual basis. Budget consists of anticipation of Expected Revenue and Estimated Expenditure.

Generally we start from

a) Revenue :

i) Revenue may be Grants received from Central Government for specific purpouse or general purpouse.

ii) any local taxes collected from individuals etc will become revenue .

b) Expenditure :

As it is newly formed local unit it can take the basis of any muncipality which is already existing so that it can cover all administrative expenses like electricity, water, Telephone charges etc.

Sometimes expenditure may be Planned or Unplanned . Therefore amount should be kept aside as Contingency for UNplanned portion.

Proper authorisation should be there for each and every expenditure.

Expenditure may be for salaries, maintenance of road ways, public parks ,libraries or to provide Safety services for public, funds for Schools etc

While preparing Budget there might be conflict of ideas.It can be overcomed by meeting the concerned head of the department.

For Capital budgets Proper Approval, Sanction details Should be verified.

Every member in the unit should be aware of Guidelines respective to there Department. Through which errors can be avoided.As requisition and payment process done from the unit , there should be proper segregation between CApital and revenue expenditure.This can be done if there are seprate Rules and guidelines for capital and revenue expenditure.

So, in Budget major Focus will be on Revenue and Expenditure.