In establishing a new budget process, there are significant things that should be taking into consideration. "The budget process provides the medium for determining what government services will be provided and how they will be financed," (Mikesell, 2007:31). The legislative and executive branches have to communicate to create an effective budget system. The function of a budget process is to possess fiscal control and discipline, set strategic priorities, and create an efficient implementation of the budget.
Division of Powers
The budget process would be modeled after the federal and other state budgets since they already have an adequate foundation of checks and balances.
The first step is the preparation of the budget by the executive branch. In the preparation stage, the executive branch collects requests such as "â€¦inputs from operating agencies, program staff, and special task forces, the budget office prepares recommendations for the executive budget, (Forsythe, 2004:20).
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The second step is the adoption of the budget. In the adoption stage, congress has a chance to evaluate and alter the budget. After alterations, legislators will vote to have the budget implemented. "In most states, the governor can then make further changes through a line-item veto," (Forsythe, 2004:20).
The final step is theÂ executionÂ of the budget. In the execution stage, the budget goes into effect at the beginning of the fiscal year.Â "With the oversight from the budget office, agencies implement spending cuts or new programs, aid payments are made under revised formulae, and changes in taxes take effect," (Forsythe, 2004:20). If any adjustment needs to be made, after implementation, the budget officer will make them by monitoring the budget.
Roles in Budget
The primary participants in executing a budget are operating agencies, chief executive, and legislators. The "operating agencies spend money for the delivery of government services. The agencies focus on the clientele they serve," (Mikesell, 2007:62). The chief executive office hires budgets specialists to perform the task on behalf of the executive branch. Budget analysts are to be consistent with the chief executive office and balance the budget. "Whereas agencies have a clientele orientation, the chief executive must balance the interests of the total population," (Mikesell, 2007:63). Legislators are not focused on an, "overall view of agencies or agencies' program. The legislators are focusing on their constituents, who they represent, which is a narrow portion of the population. In order to be elected, legislators need to take care of the constituents' priorities.
To create a budget that establishes accountability and controllability that has adequate flexibility in making budget decisions, a combination of performance and policy/planning approach is in order. With the policy/planning approach added to the performance budget, lawmakers can have accountability and control with sufficient flexibility in budget decisions. "In the light of large literature on performance budget reforms in the last two decades, as explained in the following paragraphs, it is observed that performance budget reform can enhance communication between budget actors, improve public management in terms of efficiency and effectiveness, facilitate more informed budgetary decision-making, and achieve high transparency and accountability," (Shah and Shen 2007:151). The budget format will help the government to communicates and trust with their constituents.
When dealing with budgets, the government must not underestimate or overestimate the allowances and expenses, ignoring the need for savings, overlooking the unforeseen events, mistaking yearly expenses, and neglecting little but significant information. If the government follows these strategies, then it will create a more secure budget.
One of the first strategies that need to be taken "is cultivation of an active clientele for help in dealing with both legislature and the chief executive," (Mikesell, 2007:64). With the collaboration, electives officials are ensuring expenses be prepared within the level of appropriation, in aÂ methodÂ that comply with legislation objective, guarantying the greatest efficiency in providing program, and projects to the citizens.
The second most beneficial strategy is to have the agency create confidence between government officials and legislation. "Confidence is critical because, in the budget process, many elements of program defense must derive from the judgments of the administrators," (Mikesell, 2007:65). It isÂ extremelyÂ significantÂ that they have confidence since it leads to trust.
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In conclusion, it isÂ essentialÂ to have aÂ proactiveÂ budgetÂ withÂ collaboration that acknowledges planning, control, andÂ evaluationÂ are different (requiring different tools). The budget should be a logical and realisticÂ that concentrates on the resources that constituents need. The executive branch shouldÂ createÂ multi-year budgets to meet deadlines and ensureÂ awarenessÂ of future expenses. The budget should be easier to manage, by the reduction of accounts. The reason why the government should follow these recommendations is that it holds them more responsible.
Individual Income taxes are one of the most difficult taxes to collect. One of the ways to collect taxes includes the government changing laws to ensure that taxpayers are paying their taxes. Lawmakers can writeÂ legislationÂ that would punish individuals that cheat on their taxes. In some cases, a form ofÂ punishmentÂ should beÂ severeÂ such asÂ incarceration. In addition, the Internal Revenue Service canÂ enhanceÂ their programs to increase collection. "The agency proceeded with aggressive pursuit of these objectives, and soon congressional hearings showed dissatisfaction with zealous efforts to improve compliance and media accounts of taxpayer harassment," (Mikesell, 2007:222).
One of the disadvantages to collecting taxes is the economic distortion. Economic distortion gives the government theÂ privilegeÂ of punishing or rewardingÂ certainÂ business, industries and individuals. This can result in businesses moving to other countries, where their businesses receive tax advantages. "This brings considerable economic loss to the nation and decay in the competitive position of American businesses in the world economy," (Mikesell, 2007:339). Government should notÂ discourageÂ competition in the country because it helps the economy, encourage buyerÂ purchasing power, and aid in the trade deficit.
Since most people do not fully comprehend the tax system, people are not obliged to comply with the system. "Voluntary compliance is higher, regardless of enforcement t effort by the tax authorities, if taxpayers understand what they are supposed to do to comply," (Mikesell, 2007:497). Only a small group of experts canÂ fullyÂ understand the complexity of the tax system. "The individual income tax is so complicated that it violates the transparency. Simplification would make the tax more transparent and would reduce its collection costs," (Mikesell, 2007:338). Furthermore, citizens demand more transparency. If there more transparency, then people are less likely toÂ avoidÂ their taxes. When people know where there money is going, citizens are more likely to pay their taxes. People would be willing to for services they believe in such as military, education, and other services.
The government should begin by simplifying the tax code. The government should also increase transparency and encourage business to pay their taxes by incentives. This would encourage taxpayers to pay their taxes.
With mounting federal deficits, the government is trying to find ways to cutÂ programs and get eliminate of excess waste. Performance budget is utilized as a guide to uncover waste and reduce expenses. In addition, "â€¦public officials [might view this budget] as a way to justify their contributions to the community and possibly to expand their budgets," (Mikesell, 2007:205). Some advantages to this budget formatÂ include controlling costs and estimating future expenses. On the other hand, the disadvantages include the cost associated with this type of budget format, and it does not consider whether the activityÂ is worth it or not. Another disadvantage is politicians being informal with the budget because they do not use it often. Even though the government use this budget format, it is hard to measure the results. "Unless the government really will use them as an integral part of public management and decision-making, they are not likely to be a worthy use of government resources," (Mikesell, 2007: 205).
"The use of performance measurement in budgeting entails changes in governments' operations, personnel, structures, and even cultures which always lead to a power struggle and power transfer and, thus, resistance from those who are negatively affected," (Shah and Shen 2007: 24). If lawmakers are focusing on budget balancing and being responsible for expenditures of publicÂ budgeting, then they will choose different budget formats that can be easily influenced and examine all parts of expenditures and revenues. There is a power shift from legislators to the executive branch. As a result of the power-shift, government should make sure legislators still contribute to the process ofÂ the budgetÂ to ensure success.
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With constituents wanting toÂ holdÂ their elective officials more accountability, the government must search for ways to make the constituents content. In order to meet these demands, the governments have been more incline to use performance budget. "Providing information about public sector performance can satisfy the public's need to know, and could also be a useful tool for governments to evaluate their performance," (Public Affairs Division, Public Affairs and Communications Directorate, 2008). Performance budgeting is a tool used to measure results, while improving efficiency. "Performance budgets emphasize agency-activity performance objectives and accomplishments, not the purchase of resources. Budgets present the cost of performing measureable accomplishment units during the budget year, so the budget process has the dual role of providing funds and establishing performance objectives," (Mikesell, 2002:201).