Sample Finance Essay Paper on Government budget and public policy


Government budget and public policy

Budgeting is a critical function of the government. It is one of the most important public policy for any government whose implementation has both local and cross border implications. A government budget is a document that highlights the proposals based on the revenue and expenditure for a given financial period. In most cases is passed by the legislature and approved by the president and presented by the finance minister to the nation. Public policy is an honorable guide that informs action that is taken by the executive in addressing certain concerns in the country; the issues are then addressed in consistent with rules (Gosling, 2009). It has been ascertained that public policy is founded on the constitutional laws and regulations. It is considered strong if it solves issues efficiently and in the most effective way while serving justice and supporting institutions of the government and their policies (Gosling, 2009). The relationship that exists between government budget and public policy is that the budget is prepared to allocate resources in reflecting policy priorities. The budget will link resources to the policy objectives; it is widely pronounced that most policies require several linkages so as to meet the objectives set. One of the linkages is the budget prepared by the government, and because most budgets are prepared along departmental lines, public policy is required to provide direction.  

Federal budget process and state budgeting

It has been established that the major difference between the federal budget process and the state is budgeting is the how fiscal deficit is handled in the entire process, whereas state require the law to balance and initiate the process of budgeting, the federal government is allowed to run a deficit and to borrow money to meet its obligation during the budget making process. Moreover, it has been established that the process of making a federal budget may require the issuing of currency whereas the local and state budget process do not involve printing of currency as that would fuel inflation in the state (Gosling, 2009). It has been proven that the variety of revenue foundations also help distinguish federal budgeting from state and local budget process (Gosling, 2009). The federal budget process will largely rely on the incomes, taxes and excise duty to fund their activities whereas state and local governments amass sales taxes, fuel taxes, property taxes and fees from special licenses to fund their budgeting process. Examples of non-policy decision include support for the working populations and backing of business and creation of opportunities.

Agency budget

The agency budget is the budget that is allocated to specific institutions or department in the government for example the fiscal year 2017 budget request by the U.S department of homeland security. It is believed that the aim of this agency is to provide security to the nation while protecting the country from hazards and threats (Gosling, 2009). It has a mandate of reducing the occurrence of potential security risks and attacks, it has been established that for the agency to fulfill its mandate and responsibilities there is need for consistent funding of the activities through a budget. It is believed that through funding the agency is able to be more vigilant in the face of evolving and emerging threats and other challenges (Plesser, 2007). It has been discovered that for the financial year 2017 the agency provided a budget of 40.6 billion dollars with an additional 6.7 billion dollars for managing tragedy. The priorities of the budget comprise prevention of terrorism and enhancing security, securing and managing the borders, enforcing and administering immigration laws, safeguarding and securing cyberspace and strengthening national preparedness and resilience to security attacks (Plesser, 2007).

Policy making in the context of budgets

It has been established that policy making is the act or procedure of making laws or setting standards and objectives for a government on how certain issues in the country will be addressed. For example, a policy making may be in the situation where a president and his staff drafts and passes a bill on how to tackle crime in the country.  In the context of budgets, effective budgets must take account and look into the issues affecting a country or a business, the issues that are advocated for in the policies must address the strategies for doing so and must directly be dependent on the political and policy context in which that work is to be done. For instance, policy making will address issues to do with poverty, to ascertain whether to secure a needed budget allocations, to establish the amount of information needed for the budget process and to discover the context of the democratic participation of the government in budget making process. Economists have established that policy making is strongly connected and related to budget making process, this is supported by the assertion that budget is central to policy making in the country or business. “This is because it represents and provides the vital tool for authorizing, constraining and controlling expenditure, and regulating the relationships between the electorate and the legislature, the legislature and the executive, and the executive and the bureaucracy in the country” (Plesser, 2007). Experts have confirmed the notion that to effectively address issues affecting the people in the nation then a policy document is required to detail on how the issues are to be addressed, in this situation a budget must be integrated to authorize on how expenses are to be incurred in solving the issues.

Tax incentives

It has been ascertained that there are several reasons why tax incentives can be used in health and community development and include speaking to business and individuals in their own interests (Plesser, 2007). It has been ascertained that individuals and businesses always feel free to offer for something that will advance their own interests just like people will work because they will get paid. Secondly, it has been established that the use of tax incentives will make allies rather than adversaries; this is because it makes individuals or businesses to be partners to the government in meeting the development goals. For instance, it is easy to work with a land developer who will abide by all standards to ensure that he gets his investment back in the end. Third, using tax incentives can convince business that community-based projects are feasible and profitable in the short and long run. Fourth, it is also an effective way of using tax payers money, it has been opined that they can bring in far more in cash and social benefits than they cost in lost revenue. For example, when tax incentives are provided to employers, they may be in a position to offer health insurance packages to their employees, in a situation that there is no insurance, the cost of providing free care, extensive use of hospital wards may be so much expensive for the government.

There are several cases when tax incentives can be used and include when a government is trying to encourage or limit the rate of growth (Schick, 2007). For instance, they can be used to encourage developments in certain areas of the country as they can inspire the size of progresses, invite the protection of open space, shoot the revitalization of uninhibited sites, or foster the restoration of empty buildings into reasonable housing. Second, they can also be used when the business or government is stimulating neighborhoods, communities, or rural areas. In this case, tax incentives will attract industry and commerce to develop income generating housing and to support businesses and community at large. Third, they can also be used in cases when a business or the government is trying to meet the needs of the community, it is asserted that tax incentives are often used to assist in the development of affordable housing, but can also contribute to meeting needs in education, employment, health among other community needs. Fourth, they can be used in cases where authorities are in the process of preventing or providing solutions to environmental problems, for instance, tax incentives can be used in building a green environment, purchasing and installing environmentally conscious equipment, energy conservation and researching on environment savvy industries. Lastly, they can be used when they are part of a coordinated strategy of planning to yield best results for community development.

There are several groups or people, who can use tax incentives to support health and community development and comprise the government at any level, direct beneficiaries of tax incentives, human service providers and advocates for the poor, economic developers and community planners, local officials, businesses, corporations, real estate developers and environmental activists.

Tax incentives can be used to support health and community development by providing affordable housing to people, it has been pronounced that tax incentives can be used in bringing about preservation of building as affordable housing to members of community. It will aid in redeveloping undeveloped housing with certain degree of affordability. Secondly, they can be used in developing the neighborhood through rehabilitation of abandoned buildings, leaning up and re-using industrial sites to create job opportunities. Financial analysts have alluded that neighborhood development is a particularly a fertile area for the use of tax incentives, since there are so numerous potentials. Third, tax incentives can also be used in preserving the historical importance of building and neighborhoods, this is because it is asserted that such structures are often deteriorated and are torn down to make way for newer structures (Schick, 2007). Fourth, they can be used to establish enterprise zones; it is believed that such zones are financially distraught areas that have been beleaguered by states or the federal government for economic development. Fifth, they can be used to enforce environmental responsibility for example preserving residential areas, public spaces and brownfield. Fifth, tax incentives can also be used in preserving energy to mitigate the impacts of pollution, global; warming and green house effects. This can be achieved through purchasing alternative energy, recycling and facilitating on-site power generation. Lastly, they can be used in employment and workforce development through job creation, training and hiring special groups. “Deficit in legislative effectiveness has the effect of impeding and decelerating the process of planning and management of fiscal resources in a country” (Schick, 2007).

Federal budget

It has been established that the major players of the federal budget are the people and it is believed that at times the budget does not meet their needs. Preparing a budget is a complicated process with complex activities some of which are forced to be written into law and it t has been affirmed that it is like the president drafting the budget and others strategies come from the realities of the political system (White, 2014). “In the creation of the budget the president first submits a budget request, the house and senate will then pass the resolutions by allowing each member of the houses to vote to affirm the resolutions” (White, 2014). It has been established that after the voting the house committees will mark-up the appropriation bills to determine the precise levels of authority, each member of the committees will then vote for the appropriation, it will then be taken to the president for assent before the budget becomes law (White, 2014). It has been asserted that the president must sign the entire twelve appropriation bill to signify the completion of the budget making process; this is usually before the start of the financial year. It has been identified that the government also runs a supplement appropriation to handle situations like natural calamities (White, 2014). The problems experienced while making the budget include inadequate incentives for budgeting, lack of real limits, changing committee roles and the limitation of budget estimates. The strategy that used in the process is ensuring all the bills are discussed before so that the budget is ready before the start of the fiscal year in which the budget will fund (Van, 2006). 

US federal budget process and state/local budgeting

It has been asserted that in US the budget processes are alike across the federal, state and local levels of the government; however, several differences manifest themselves to distinguish federal budgeting from the state and local presentation. First, the state and local governments are required by law to balance their budgets while on the other hand the federal governments are allowed to run deficits and even borrow to meet its responsibilities. The federal budget process is always directed by the economic influence; this is because federal government has the responsibilities of controlling the economy of the country and thus carries a greater budget implication. The constitution allows the federal government to print currencies to meets its budgetary obligation and on the other hand, the local and state governments cannot print currencies (Van, 2006). Third, the federal budget captures spending on the defense and military by allocating through the process, salaries of the military personnel and on the other hand, the state and local budget is limited in spending to just national guards (Van, 2006). Budget making process and activities is determined by the amount of revenues available, it has been established that the federal government collects more revenue from taxes while the revenues to fund the budget of local and state mainly come from lotteries, alcohol and tobacco taxes among others. It has been pronounced by experts that this makes the federal budget process more lengthy and elaborate than the state and local budgeting (Van, 2006).    


Gosling, J. J. (2009). Budgetary politics in American governments. New York: Routledge.

Plesser, C. S. (2007). Congress of the United States: Oversight, processes and procedures. New

            York: Nova Science Publishers.

Schick, A. (2007). The federal budget: Politics, policy, process. Washington, D.C: Brookings

            Institution Press.

Van, H. C. E. (2006). The state of the states. Washington, D.C: CQ Press.

White, W. H. (2014). America’s fiscal constitution: Its triumph and collapse. New York: