Question

The Chair, Department of Public Administration needs a freshly minted MPA to make a 60-minute presentation to the Civic League and League of Women Voters. You have been chosen to make this very important presentation. Please provide an overview of (a) the role of budgeting in local governance, (b) the major factors influencing local budgets, and (c) what factors should be considered when professionalizing local government budgets.

Answer 1

The role of budgeting in local government is for the following functions:

- The local government is involved in the process of policy making which requires identifying the priorities of expenditure in line with the plans and policies to be made. Allocation of available resources is done with the expenditure priorities. Budgeting of those expenses is thus important.

- The local tax rates, tariffs for fees and fines are charges involved in ploicy making and their amounts are fixed to generate resources sufficient for the planned expenditure. This planning also requires budgeting.

- Budgeting provides financial information to make sure that the expenditure programes made by the government are delivering value for money.

- The revenue generated from such programs and expenditure made on them is evaluated through such budgets.

- It can be used to keep a check on the abusive and fraudulant activities by authorising the expenditures, preventing fiscal defects to ensure solvency.

The factors that influence the local budgets are:

- Citizen involvement- The budget is used by country managers to understand the perspective of citizens towards it. Feedback from citizens is taken on the policies and expenditures allocated for making them. These feedbacks are taken through surveys, forums, meetings and websites.

- Economic influences- Factors like decline of revenue, inflation, decrease in intergovernmental aid, changes in interest rates, competition among local government are economic factors that effect the local budgets.

- Social and demographic factors- The change in the main social and demographic factors like increase or decrease in population, distribution of age of the population and the personal income of the individuals effect the local government budgeting

- Effect of legal and intergovernmental factors- the need of a budgetary balance by the legal environment, imposing mandates on local government, restriction on revenue sources, limitations on tax increase are some examples of how the legal and intergovernmental factors effect the budgeting of local government.