Adressing Budget Deficits

In "Public Budgeting in 2020" Joyce and Pattison urge the need to address large budget deficits created by high demands for government services.

To address this deficit effectively, it is required reforms at both ends: revenue and spending. In the revenue side there are i) income ii) sales ii) property taxes. In the spending side i) health care ii) education iii) entitlement iv) infrastructure v) staff vi) transparency and accountability.

The defining characteristic of public budgeting is that it is a continual struggle between the demands placed on government to respond to societal problems and the desires of citizens and the capacity of governments to finance those responses.

In the revenue side, the four big problems of of income tax are i) vulnerability to economic downturns ii) large number of exclusions iii) complexity and obscurity iv) tax on all incomes disencouraging savings and investment. Solutions would be the creation of a structure i) less prone to cyclical variation ii) broader base iii) easier to comply with iv) encourage savings and investment.

The two main problems with sales tax are i) regressive - lower income people pay higher percentages of their income in tax than higher-income people. This problem is somewhat mitigated by the exclusion of some necessities from tax base like food and drug prescription ii) sales transaction over the Internet (use tax). An important solution ro address "use tax" is the Streamlined Sales Tax Project which makes state sales tax administration more uniform and thus easier for remore sellers to comply with.

The two main problems about property tax are i) doing accurate and equitable assessments and ii) tax limitation.

In the spendings side, the government address aging infrastructure with Private-Public Partnerships and other creative financial arrangements. All spending factors should be assessed by Performance Management (PM).

PM focuses on organization's resources and efforts toward achieving specific results that make the most difference to citizens, It also builds a culture of continuous improvement through which organizations are motivated to find and apply interventions that offer the best results for the least amount of money.

PM also relies on communication to be effective. Credible information produced and made available in a usable form help establish accountability throughout the organization and provide improved results to the public.

Budget-decision making requires data collection, organization, interpretation, and access to be improved. Also, it is necessary centralized financial control and staff with "big picture" perspective to determine where to cut services.

New staff need to be critical thinkers and analysts, have knowledge in financial & performance & accounting & auditing & contracts & negotiation as more privatization and outsourcing will occur and there will be more leaner budget offices.