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Using your favorite search engine, locate the federal budget and your state budget for the current fiscal year. Compare and contrast both budgets in an essay consisting of no less than 500 words, and include the following: Discuss the budgeting tools utilized by both government types. Discuss the impact of market inefficiencies on both government types. Discuss the use of rainy day funds by the state and whether or not something similar would work for the federal government. If you feel it would work for the federal government, please explain how you think it would work. If you do not think it will work, please explain your reasoning. – I will upload the study guide and grading rubric401857an hour ago
PLEASE DISREGARD THE COMMENT – THE ASSIGNMENT IS ATTACHED IN THE UPLOADED FILES
PUA 5305, Public Finance and Budgeting 1Course Learning Outcomes for Unit VUpon completion of this unit, students should be able to:
Describe the impact of budgetary deficiencies on public agencies.7.1 Analyze the impact of issues relating to the distribution of the burden of finance.
Apply practical methods to reconstructing finance and budgeting techniques.8.1 Evaluate alternative government financing.Required Unit ResourcesChapter 10: Introduction to Government FinanceChapter 18: Fiscal Federalism and State and Local Government FinanceIn order to access the following resources, click the links below.Watch the following segments from the full video referenced below: Policies of Prejudice (Segment 7 of 30),Racial Discrimination in Sentencing (Segment 25 of 30), and Effect of Mandatory Minimums(Segment 26 of 30).Falconer, D. (Director), Shay, T. (Assistant Director), & Detroit Documentary Production (Producer). (2013).DEFORCE: The past, present, and future of Detroit [Video file]. Retrieved fromhttps://libraryresources.columbiasouthern.edu/login?auth=CAS&url=https://fod.infobase.com/PortalPlaylists.aspx?wID=273866&xtid=50565The transcript for this video can be found by clicking the “Transcript” tab to the right of the video in the Filmson Demand database.Unit LessonAs discussed previously, one of the goals of government is to create market efficiency, and this goal isfacilitated through utilizing public institutions. Budgeting tools or techniques are utilized to appropriate fundingto public institutions. Now, we will discuss how goods and services from public programs are financed.Have you wondered where the government gets its money? Federal, state, and local governments utilize thecollection of taxes as one of their methods to finance public institutions and the goods or services theyprovide (Hyman, 2014). Other forms of revenue include charges, inflation, borrowing, and donations. Policiesor legislation redistribute revenue collected from private production to the government industry.Taxation represents mandated payments and correlates with certain citizens’ activities (Hyman, 2014).Collection of taxes allows government to construct necessary public services and to ultimately restructurecitizens’ capacity to function in the market. Classifications of taxes include income tax, sales tax, property tax,and other levied taxes.The Sixteenth Amendment states that the United States Congress has the power to collect taxes on personalincome. Income tax is the largest source for generating revenue. This tax is typically collected from earningsthat are withheld from a citizen’s pay. Therefore, it is considered a pay-as-you-go tax. This tax reached its100-year anniversary in 2013 (Roberts, 2013). The evolution of the federal income tax system has promptedthe tax code to grow from approximately 400 pages to over 70,000 pages (Russell, 2015).UNIT V STUDY GUIDEGovernment FinancePUA 5305, Public Finance and Budgeting 2UNIT x STUDY GUIDETitleSales tax is a tax on the retail sales price of purchases (Hyman, 2014). State government sets the sales taxrate, and in many cases it varies for different industries and states. Government can levy other taxes as well.For example, alternative financing such as excise tax can be levied by federal, state, and local governmentson luxury items such as alcohol, beverages, furs,tobacco products, telephone services, airline fares,and cruise ship fares (Pashley, Silva, & Windram,2014). Some suggest that sales tax on Internetpurchases should be adopted to offset budgetdeficiencies.A property tax, also known as an ad valorem tax, istypically legislated by state government and collectedat the local level (Hyman, 2014). This tax iscalculated from the assessed value of property fortaxation purposes only. Property tax abatements(distributive policy) are allowed. Nevertheless, it isimportant to note that a buyer and seller agreementdetermines the market value of a property. Propertytax constitutes the major source of revenue for localgovernment (Hyman, 2014). However, the increase inhome foreclosures, the great recession, andshrinking property tax bases have created budgetgaps for local governments. As a result, localgovernment’s capability of providing goods andservices has been weakened (Chernick, Langley, & Reschovsky, 2011). Theories and opinions have emergedthat local government should develop other revenue strategies to bridge budget deficiencies. An interestingfact that may surprise many is that the property tax was plagued with many deficiencies prior to the greatrecession (Bartle, Kriz, & Morozov, 2011). These included a deficiency in the ability to create equitableproperty assessment, the creation of the Taxpayer Bill of Rights, and the Tea Party movement (Phillip &Scott, 2010). Leaders of the Tea Party movement advocated that certain taxpayer rights should exist duringproperty assessments.Many local governments have sought out other revenue options. Some states are decreasing theirdependence on property tax. For example, cities in Alabama are increasing other fees such as license feesand occupation fees. The general belief is these fees provide a more stable flow or source of revenue streamthan that of property tax. Other states following this trend include Oregon, South Carolina, and West Virginia(Bartle et al., 2011).The property tax rate structure reflects the relationship or connection between the amount of revenuecollected and the tax base or value (Hyman, 2014).The tax rate can be determined when dividing the taxcollected by the tax base. A proportional tax structure advocates that taxpayers pay the same share ofincome, whereas a progressive structure advances the idea that higher-income people should pay a largershare of income than lower-income taxpayers. The regressive structure exists when higher-income taxpayerspay smaller shares of their income than lower-income taxpayers.Alternative government financing options must meet requirements such as equity, efficiency, andadministrative ease (Hyman, 2014). The equity requirement is illustrated when tax burdens are dispensedfairly for all citizens. Efficiency incorporates generating revenue with minimal cost in the private sector.Furthermore, efficiency supports the idea that having a choice of alternatives generates the highest probabilityfor officials to decide a given function of resources (Andrews & Entwistle, 2013). Administrative ease refers tothe utility and low maintenance of the revenue option.Financing strategies that meet the aforementioned requirements include debt finance, inflation, donations,user charges, and government run enterprises (Hyman, 2014). Debt finance, which is frequently employed,indicates the utilization of borrowed funds to finance government expenditures. The inflation strategy is usedby the government through increased prices and the supply of money to compensate. Donations arecharacterized by voluntary contributions to governments from individuals or organizations. User charges cantypically be seen in payments for access to services such as highways, bridges, and recreational facilities.Group of people at an airline ticket counter(Tennesseevols33, 2008)PUA 5305, Public Finance and Budgeting 3UNIT x STUDY GUIDETitleThese charges are collected from individuals who consume the goods or utilize the services. There are manyforms of user charges such as admission fees, special assessments, licenses, fares, or tolls.Government enterprises sell goods or services toincrease their capacity to augment revenue (Hyman,2014). Many government units facilitate retail outlets. Thismarket service approach is growing in momentum asstate and local governments seek alternative financing(Hee Soun & Myungjung, 2014). For example, Amtrak is afederally operated service. During the great recession, thefederal government became one of the largestshareholders in market investments (Templin, 2010).Likewise, in many instances, state governmentmonopolizes the alcohol industry (Wettenhall, 2011).Similarly, many local governments dominate publicutilities (Mantz, 2012).Fiscal federalism is an economic effort ofinterdependence of all branches of government(Hyman, 2014). Understandably, central government hasa larger pool of resources. Most agree that subnationalgovernments need financial assistance to accomplishmandates and expenditure responsibilities(Sharma, 2012). As discussed previously in the course, federal grants account for approximately 25% of stategovernment budgets (Hyman, 2014). These categorical grants deliver services in the form of mandatedprograms such as Medicaid and Temporary Assistance to Needy Families (TANF). Public demand for theseservices necessitates a synchronization that can only be achieved collaboratively (Hyman, 2014). Therefore,fiscal federalism ensures the functionality of these programs through cooperative measures. More specifically,fiscal federalism is viewed as redistributive public policy that fosters financial equality in society(Hyman, 2014).Services provided through centralized government promote uniformity of administration across all regions ofthe nation. Decentralized services, unlike central, are provided and made by majority rule (Hyman, 2014).However, some arguments and belief systems assert that decentralization serves to help central governmentsimplement redistributive programs that maximize social welfare (Sharma, 2012). Others argue thatdecentralization reduces federal control, thereby minimizing societal beliefs of potential monopolistic behavior.Hence, decentralization promotes and protects civil liberties (Sharma, 2012).Traits of decentralization include intergovernmental cooperation, revenue sharing, and a system of checksand balances between local and federal government. Intergovernmental fiscal relationships facilitate efficientallocation of resources (Hyman, 2014). Therefore, state and local governments have become dependent onfiscal assistance in forms of categorical grants. Grants represent a transfer of funds such as gifts or subsidies.When society presumes government is acting in their best interests, intergovernmental transfers areconsidered coordinating devices that governments can use to deal with deficiencies, such as fiscalexternalities and inequities (Sharma, 2012). Governments can also use these transfers, Sharma (2012)asserts, to ensure national minimum standards of key public services.The main source of government finance is taxes. Government uses taxes to reallocate resources away fromprivatization toward the government sector. However, market inefficiencies oftentimes destabilize revenues.Therefore, alternative measures are pursued.ReferencesAndrews, R., & Entwistle, T. (2013). Four faces of public service efficiency. Public Management Review,15(2), 246-264.Bartle, J. R., Kriz, K. A., & Morozov, B. (2011). Local government revenue structure: Trends and challenges.Journal of Public Budgeting, Accounting & Financial Management, 23(2), 268-287.Photo of two utility workers clearingdowned power lines(Henderson, 2010)PUA 5305, Public Finance and Budgeting 4UNIT x STUDY GUIDETitleChernick, H., Langley, A., & Reschovsky, A. (2011) Revenue diversification and the financing of largeAmerican central cities. Public Finance & Management, 11(2), 138-159.Henderson, W. (2010, May 13). FEMA – 44314 – Utility equipment and workers in Oklahoma [Photograph].Retrieved from https://commons.wikimedia.org/wiki/File:FEMA_-44314–_Utility_Equipment_and_workers_in_Oklahoma.jpgHee Soun, J., & Myungjung, K. (2014). Enterprising government: The political and financial effects of feesupported municipal services. Public Administration Quarterly, 38(2), 128-162.Hyman, D. N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Stamford, CT:Cengage Learning.Mantz, B. A. (2012). Optimal debt management practices for local government enterprises. Journal ofGovernment Financial Management, 61(3), 18-22.Pashley, S., Silva, J., & Windram, T. (2014). Brining clarity to fuel excise taxes and credits. Tax Adviser,45(4), 245-249Roberts, T. M. (2013). Brackets: A historical perspective. Northwestern University Law Review, 103(3), 925-957.Russell, J. (2015, April 15). Look at how many pages are in the federal tax code. Retrieved fromhttp://www.washingtonexaminer.com/look-at-how-many-pages-are-in-the-federal-taxcode/article/2563032Sharma, C. K. (2012). Beyond gaps and imbalances: Re-structuring the debate on intergovernmental fiscalrelations. Public Administration, 90(1), 99-128.Templin, B. A. (2010). The government shareholder: Regulating public ownership of private enterprise.Administrative Law Review, 62(4), 1127-1215.Tennessvols33. (2008, April 28). Ticket counter [Photograph]. Retrieved fromhttps://commons.wikimedia.org/wiki/File:Ticket_Counter.jpgWettenhall, R. (2011). State enterprise for ethical reasons: Mostly alcohol and tobacco. Policy Studies,32(3), 243-261.
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