Understanding Government Budgeting and Revenue Sources

Development Charges

Development charges are fees imposed by local governments to offset the costs associated with new construction projects and their impact on public services. These charges help fund off-site improvements and cover expenses related to building inspections.

Property Tax Benefits

Property taxes offer several advantages as a source of revenue for local governments:

• Stable Source of Revenue: Property taxes provide a consistent and predictable income stream.
• Exportable Reach: Non-resident property owners who benefit from local services also contribute to the tax base.
• Equitable Financing: Property taxes support property-related services like police, fire protection, and infrastructure development (streets, sidewalks, storm drainage).
• Administrative Efficiency: Property taxes are difficult to evade, simplifying collection and enforcement.
• Local Autonomy: Reliance on property taxes grants local governments a degree of financial independence from state and federal control.
• Adaptability: Property tax systems can be tailored to accommodate specific needs and preferences, such as exemptions and assessment incentives.

Budgeting Methods

Line-Item Budget

A line-item budget categorizes departmental revenues and expenditures based on specific items or groups of items required for purchases. Each line represents a distinct expense category.

Zero-Based Budget

Zero-based budgeting mandates that departments justify their entire budget requests from scratch, ranking proposed expenditures by priority. Funding is allocated based on these rankings until resources are depleted.

Target-Base Budgeting (TBB)

In target-based budgeting, departments receive a maximum budget allocation. Any proposed spending exceeding this target requires detailed justification to the budget office.

Performance Budgeting

Performance budgeting links budget allocations to specific performance goals and objectives. It emphasizes measurable outcomes, efficiency, and effectiveness for each program proposed by government organizations.

Planning, Programming, Budgeting Systems (PPBS)

PPBS organizes budgetary information and funding allocation around programs rather than individual departments. A program encompasses a set of activities sharing a common goal.

Entrepreneurial Budgeting

Entrepreneurial budgeting incorporates market-driven principles into the budget process. This approach emphasizes performance contracting, competition, outcome-based budgeting, responsibility-centered management, and balanced scorecards.