An Analysis of Public Finance and Budgeting in the US Government

This report provides an overview of public finance and budgeting within state and federal governments. It explores the annual budgeting process, revenue generation, and expenditure approval in Florida, contrasting it with the federal budget process. The report highlights budgeting tools such as revenue and expenditure statements used for forecasting and planning. It further examines the impact of market inefficiencies, such as recessions and changing economic policies, on government budgets and revenue. Additionally, it discusses the role of rainy day funds in maintaining stability during economic downturns, differentiating their applicability between state and federal levels. The report references key academic sources to support its analysis of public finance concepts.

Running head: PUBLIC FINANCE AND BUDGETING
PUBLIC FINANCE AND BUDGETING

PUBLIC FINANCE AND BUDGETING 1
Budgeting in state and federal government
The federal budget of a country is determined annually, and there is forecasting for the amount of
money that will be spent on a variety of expenses in the upcoming year.
In Florida, lawmakers and public officials are elected in part to manage the state finances which
mainly includes generation of revenues, i.e., the money coming into states from the various sources
and approving the expenditures, i.e., the money spent on the governmental functions and servicing the
state debt.
Budgets play an important role in operations of the state and federal and also helps in capital
budgeting. In the state, the budget is always presented to its legislature as their first priority, after
getting the approval from the legislature it is then presented to the Governor who is the main member
of law.
In the federal budgets, the congress passes the budget that will be signed by the president, in short, it
is being analyzed that the budgets must pass through the two legislative bodies before they pass into
law. The government makes the decisions of the budget on the basis of the revenues and the taxes
paid on revenues. They also help the government in servicing of their expenditures. (Davis,2016)
Budgeting tools used by the state and the federal government
The budgeting tool being used by both the governments is Revenue and the expenditure statement for
at least five years, as this will help the government in the development of the trends that can occur in
the near future. They use the expenditure projections which use to allow the legislators to debate more
on these issues.
Secondly, the state needs bills that affect the taxes and the expenditure both within the same period in
which the plan of budget is being covered, this is needed timely with the fiscal notes that will be
timely accessible. Both the governments use the current statements as a base for the planning for the
future so that the people can get the quality services. (Gonzalez,2013)

PUBLIC FINANCE AND BUDGETING 2
Impact of market inefficiencies on the state and the federal government
The budgets downturn effects both the government in the same manner, as if the government raise the
taxes by a big amount which is being done the federal government during its recession, due to the
recession the generation of revenue goes down. Due to high prices, many of the people cut down their
expenditures to the large extent. So the recession makes both of them at the level in which it is very
difficult to recover, even after the adjustment of inflation the government lies at the low levels. Impact
on the market efficiencies can be even due to the changing policies of an economy.( Stiglitz, J,2015)
Rainy day funds
The rainy day funds are those funds that allow the state to keep aside the excess revenues which
should be used in order to cover an unexpected shortfall in the revenues during the recession period or
in the budget deficit. Due to rainy day funds, the state had maintained the level of stability during the
recession period in the year 2001. This is not at useful for the federal government because they use to
print notes only when there is a deficit.( Eckl, Corina,2013)

PUBLIC FINANCE AND BUDGETING 3
References
Eckl, Corina, and Jed Kee, (2013), "Rainy Day Funds (Budget Stabilization, Budget Reserve Funds),"
in Encyclopedia of Taxation and Tax Policy, 2nd ed. (Washington: The Urban Institute, 2005).
Gonzalez, Christian, and Arik Levinson, (2013) "State Rainy Day Funds and the State Budget Crisis
of 2002-?" State Tax Notes (August 11, 2003).
Davis, Michael W. R. (2016). Detroit's Wartime Industry: Arsenal of Democracy (Images of
America). Arcadia Publishing.
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector: Fourth International
Student Edition. WW Norton & Company.