Public Budgeting

The process of budgeting cannot be underestimated. Budgeting is believed to the process of allocating resources to defined tasks (Premchand, 1987). Budgeting can be defined as any process that entails the “compilation, adoption, and supervision of budgets” (Hinka, 2007, p.4). A wealth of literature considers budgeting as a process of planning that is conducted at all management levels in organizations (Hinka, 2007). Government budgeting is budgeting done at the government level and is different from the general budget because it separates the Payer and Decider, as well as decider from the beneficiary (Rubin, 2005). Needless to say, all budgets are clustered, segmented, and interruptible.

Government budgets are characterized by the separation of the payer from the decider. Unlike any budget, this budget takes into account the difference that exists between the two entities. Through the separation of the payer from the decider, the budgeting process produces a budget that reinforces public accountability and ethical use of public resources (Rubin, 2005). In most cases, ethical issues arise when government agencies fail to use resources in the right way as expected by the payers. In addition, government budgeting creates a division between the payer and the beneficiary. Because of this, citizens who pay for services may not be the one who will benefit because the government can choose to provide services other populations.

It is believed that budgets have segments and can be interrupted (Rubin, 2005). This notion stems from the fact that government policies can delay specific decisions that can affect the budget or even cause them not to be affected. Moreover, budgets can suffer when government agencies reorder their priorities thus interrupting the budget document (Rubin, 2005). However, budgets have segments that can be implemented even when other sections are delayed.

Decision clusters are at the core of budget segmentation. Through budget segmentation, budgets are divided into clusters also termed as decision streams. These cluster streams are:

a)      Process stream. This stream is concerned with how decisions are made in budgets. It determines who should take part in the budgeting process, as well as checking the influence of various interest groups. This stream also shapes the outcome of decisions made in the budget deliberations.

b)      The revenue cluster, gives details of estimates of income that will remain in a given financial year. It also shapes the decision to lower tax or not and the granting of tax breaks. Most important, the revenue cluster helped in placing emphasis in a given tax source or region or a demographic group.

c) The balance cluster influences the need to balance the budget with the year’s revenues. It also informs the decision, whether it is necessary to borrow funds to balance the budget when a deficit arises.

d)      The expenditure cluster entails the technical estimates of expenditures such as grants and costs resulting from unemployment. It also determines who will benefit from programs funded in a budget.

e)      The budget implementation cluster concerns the question on the closeness of expenditure to a budget. It also helps in the justification of variation of a budget and expenditure.

         Through the process of real-time budgeting, each of the clusters generates its own questions, which attract different actors with varied levels of politics. The outcome of this process ties all the clusters into a seamless process that allow the government to budget on how to provide service to its population. The real-time process allows conflict to be solved during the process of budgeting with actors making decisions that provide finer adjustment to each of the clusters. Ultimately, the crusted budget process becomes complete with each cluster overlapping the other in a sequence.

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