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Public Budgeting

Public budgeting is how the government plans their decisions about resource allocation and how to spend their financial resources. It is a plan made up of the expectation for incomes and expenditures for the upcoming fiscal year, which is a twelve-month period. The public budget is simply the difference between the revenue the government receives less its expenditures. Taxes are an example of revenue and fiscal stimulus are an example of expenditures. 

There are multiple tools used in making public budgets and expenditures. Budget transparency is a precondition for pubic participation in budget processes and is the disclosure of public fiscal information. Budget transparency and public participation can dramatically improve corruption and assist public funding. Independent budget analysis is the effort made by civil society organizations to suggest changes to budget. Independent budget analysis can increase public awareness of budget issues and reallocate budget resources. Public expenditure tracking is the tracking of the flow of public resources for the provision of public goods and services.

Public budgeting generally follows the process of preparation, approval, implementation, and evaluation/audit. The preparation for public budgeting involves developing expenditure estimates with available revenues. The next step is that the budget estimates are sent to a board for assessment and may receive input from the public. The municipal departments then implement the budget and the performance of the governmental units is measured throughout the fiscal year.

The major benefits of public budgets includes a greater influence over the public when making decisions about resource allocation, decreased corruption, and a greater sense of trust between the public and the government in the decisions about economic processes. These indicators are evaluated by the end of the year to make changes to or improve the budget process for the next year¹.



1. MacManus, Susan A. and Charles S. Bullock, III. "The Form, Structure, and Composition of America's Municipalities in the New Millenium." Washington, DC: International City/County Management Association, 2003

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