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Government budgets

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State Information

A government budget is a summary of financial documents that outline the key financial facts about what a particular unit of government expects to spend and raise over a period of time, usually a year.

Informative budgets include information that breaks down revenues and expenses into useful categories that enable citizens to evaluate where their money is being spent.

Budgets can be more or less useful, depending on how they are prepared and presented to the public. For example, a budget for a school district that includes a category for administrative salaries and a category for teaching salaries is considerably more informative than a budget that only has one category for all payroll expenses.

State budget process

The budget process varies from state to state. However most state constitutions require that state budgets be balanced; in other words, the state cannot have a remaining deficit in the new state budget. Most budgets cover a fiscal year which begins July 1 and ends June 30 of the following year. Some states approve a biennial budget and revise the budget as needed during the off-year.

State budget issues


What is Medicaid?

The Medicaid Program was established in 1965 as part of the Social Security Act and provides medical benefits to groups of low-income people. Medicaid is managed by the states within federal guidelines.[1] Federal Center for Medicare and Medicaid Services (“CMS”) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards.[2] Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States. In 2008, it covered nearly 63 million individuals.[1] Under the Healthcare Bill, Medicaid will be expanded to cover all individuals whose income is 133 percent of the Federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.[3]

Medicaid does not provide health care directly. Instead, it pays hospitals, physicians, nursing homes, managed care plans, and other health-care providers for covered services that they deliver to eligible patients.[4]

How is it funded?

Medicaid is jointly funded by state and federal government.[5] States provide up to half of the funding for the Medicaid program. In some states, counties also contribute funds.[6]

The federal government contributes at least $1 in matching funds for every $1 a state spends on its Medicaid program[1] The fixed percentage the federal government pays, known as the Federal Medical Assistance Percentages (“FMAP”), varies from state to state, with poorer states receiving larger federal amounts for each dollar they spend than wealthier states.[7][8] The national average is about 57 percent.[1]

On average, states spend approximately 22% of their budgets on Medicaid.[9]

Why are states concerned about the budget implications of the newly passed Healthcare Bill?

Thirteen states, with Florida taking the lead, filed suit in federal district court in Pensacola, Florida. The 13 states include South Carolina, Nebraska, Texas, Michigan, Utah, Alabama, South Dakota, Idaho, Washington, Colorado, and Louisiana. Virginia has filed a separate law suit.[10]

The lawsuit filed by the 13 states challenges the health care bill on two grounds: the mandate that citizens have insurance and that the bill is an unfunded mandate.[10] First, it maintains that the Constitution does not give Congress the power to mandate that citizens have health-care coverage. "The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage," the lawsuit reads.[10]

The Constitution gives Congress the authority to regulate commerce in the “commerce clause.” The suit argues that Congress is expanding its right to regulate commerce beyond what the Constitution envisioned. Those opposed to the bill maintain that the "commerce clause" does not give the government power to require an individual to engage in economic activity or require that a person purchase anything, let alone health insurance.[10]

"Just being alive is not interstate commerce," said Virginia Attorney General Ken Cuccinelli in a statement before the lawsuit was officially filed.[11] Virginia's General Assembly passed a law earlier this year stating that no resident can be compelled to have health insurance.[11] Second, the states’ suit also claims that forcing a mandate on the states without providing resources to pay for it, as the Healthcare Bill does, is unconstitutional. The suit filed in Florida claims that “the Act converts what had been a voluntary federal-state partnership into a compulsory top-down federal program in which the discretion of the . . . states is removed, in derogation of the core constitutional principle of federalism upon which this Nation was founded.” [10]

Budget reform

Crafting a budget is the primary task of legislators, and their funding choices largely reflect the political landscape of a state. One approach to budget reform is the Priorities of Government (PoG) budget model.[12] Whereas conventional budgeting typically involves simply adjusting expenditures upward for inflation, changes in population and the expansion of agency functions, the PoG strategy builds a budget based upon program efficacy as well as shared principles of governing.[12]

Defining core governing principles is the first step in PoG. Absent clarity about what services government agencies are supposed to deliver, there’s no meaningful measurement of program efficiency and effectiveness. These core principles are grounded in the philosophies of the political parties and their respective views about the proper role of government.[13]

Once core functions are prioritized, spending decisions can be made accordingly.

Applying the PoG model requires legislators to answer four basic questions during the budget process:

1. What are the essential services that state government must deliver?
  • Legislators are advised to limit the list to no more than 10 core functions of government. These core functions reflect the governing principles to be applied in budgeting.
2. What is the most effective and efficient means of service delivery?
  • A variety of options should be examined, including the most appropriate level of government for service delivery and the benefits of public-private partnerships.
3. How will success/failure in the delivery of government services be measured?
  • The evaluation of services requires identifying measurable indicators of success.
4. How much money does the state have to spend?
  • Legislators should know the revenue forecasts for both the current budget cycle and the one to follow before funding deliberations commence.

Answers to these four questions provide a logical place to begin a meaningful debate.

Local budgets

Main article: Local government budgets

Local government budgets include the budgets of cities, counties, school districts, and other local taxing authorities, such as park or community college districts.

Budgets on government websites

See also: States with spending online

Required by Sunshine Review

  • The budget for the current fiscal year.
  • A copy of the budgets for the past 3-5 years.

Items highly recommended by Sunshine Review

  • It should be very easy for people to find this information when they visit the website. This means that prominent navigational features enabling someone to locate the budget should be included on the homepage of the website.
  • Graphic features that compare the current budget to past year's budgets should be incorporated, to enable people to make sense of trends over time.
  • Narrative features should be incorporated into descriptions of the budget. For example, if the current year budget is 1.2% higher, or 5% lower, or 14.7% higher than the previous year's budget, it is helpful to citizens to provide this comparative explanation at the beginning of a summary about the budget.
  • Definitions of technical terms and explanation of legally mandated formulas are useful.
  • The checkbook register, which should include:
  1. The amount of the payment
  2. Date
  3. Check number
  4. To whom the payment was made
  5. What it was for
  6. Scan of Purchase Order or Check Request or Invoice (this provides invaluable detail including who approved the payment)

The level of searchable detail posted online should be sufficient to facilitate specific requests for further information, such as

  1. Addresses or other contact data for vendors
  2. Budgetary authority for the expenditure
  3. Functional expenditure category
  4. Sources of funds
  5. Links to the relevant contracts under which the payment was made
  6. Credit card receipts

See also