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Municipal Budgtes - Speech or Presentation Example

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Municipal Budgtes

Main types are line – item and program budgets (NACSLB 37). Thus, neither budgeting method is perfect as each serves a different purpose: such as performance maximization or objective – activity alignment. A perfect budget should satisfy twelve principles. As indicated in the definition of the budget process, these principles are creation of goals based on stakeholder analysis, their implementation, including efficiency analysis and adjustments (NACSLB, 1999, p.5). The first type is line – item budget. This approach arose at the beginning of the 20th century (Tyer & Willand). It lists categories of expenses, such as “personnel, operating and capital expenses” (Tyer & Willand). Incremental approach belongs to this type as well. In this approach, previous year’s budget is adjusted for legislative changes, price, wage inflation and any other change that might take place in the new fiscal year (Northern Ireland Assembly 5). Since changes take place on a marginal basis in comparison to the last year’s levels, the base, this method is called incremental budgeting (Northern Ireland Assembly 5). This method saves time and resources. ...
Incremental budgeting method is based on negotiations and compromise (Northern Ireland Assembly 5). Wages and allocations of resources are negotiated, and oftentimes based on political decisions. As a result, this type of budgeting is efficient only if the political system is stable and transparent (Northern Ireland Assembly 5). Otherwise, the budget will favor few at the expense of the majority. Moreover, this method has several disadvantages. The first disadvantage is the fact that this method is backward looking since it is based on a previous year’s budget. As a result, it does not make adjustments for unexpected changes. Moreover, performance is hard to evaluate in this method, as it is based on compromise rather than standards such as cost minimization. Thus, data tend to be outdated, inconsistent with new priorities and say nothing about efficiency (O’Connor 2). Though still used even in some fire departments, such as the Muscatine Fire Department, efficiency measurement capabilities of other methods make it an unattractive option (O’Connor 2). In response to line – item budget disadvantages, performance budgets were established in the 1950’s (Tyer & Willand). Such budgets emphasize activities, rather than items paid, and focus on connecting performance with allocation of resources (Tyer & Willand). As a result, each such budget must contain information on inputs, output, productivity or efficiency, and level of objective implementation, e.g. number of miles to be swept during the fiscal year (Morgan 6). Before budget design, objectives and measurement tools must be set up to evaluate each proposed activity. After ...Show more


Name Professor Name Class Date Municipal Budgets Allocation of resources in the public sector has given rise to the need for budgeting (Northern Ireland Assembly 4). Creation of a good budget is a forward looking process that links organizational goals with outcomes, while encouraging stakeholder dialogue (National Advisory Council on State and Local Budgeting [NACSLB] 3)…
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