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West Virginia: A Review of the Budgeting Process - Term Paper Example

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This essay declares the state of West Virginia prepares a balanced budget that takes to account the needs of all local council governments within the state. Local council budgets are therefore bound to follow the same trends as the state government in preparation of their budgets…
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West Virginia: A Review of the Budgeting Process
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Lecturer: West Virginia: A Review of the Budgeting Process Introduction The of West Virginia prepares a balanced budget that takes to account the needs of all local council governments within the state. Local council budgets are therefore bound to follow the same trends as the state government in preparation of their budgets with consideration of their expenditure requirements, the sources and other details about the budget. Of the 50 states in the USA, West Virginia is the 38th most populous and 41st largest by area. Its economy largely relies on coal production. This analytical report takes to account the budget analysis of West Virginia as a local government to the people that resides in it. With reference to this issue, it will review the budgetary process, provide a description of the operating and capital budgets and then make an overview of the sources of revenue. In essence, it will finish off with determining the short comings of the budget process used by this government. Budget Process The budget planning process takes to account three issues; consideration of the long range issues (infrastructure), the actual overview (process description) and the important aspect of the human resource in the government. According to the governor, the budget process starts almost one year prior to the beginning of the ideal fiscal year. At this time, the greatest task is to make appropriations. The government fiscal year starts on 1st July and ends on 30th June of the following year. Guidelines are then made by the secretary of revenue, the office of the governor and the state budget office. These groups of professionals standardize the processes that are used by the various units in the government. The guidelines are then used to create a “current level” for all the departments. At this level, the definition of the current level is defined and the 2016 budget determined that funds will be allowed to move across departments as long as effective recording is made. Provisions are made in that there can never be any requests beyond the appropriations of the current year. It is at this level that all the available accounts are considered as viable for funding. A review of all the requests for appropriation above the current level is made by the same professionals in charge of preparation as indicated. They are then submitted as an “improvement package”. It states the purpose, the benefits and why additional funding is needed. These are however rarely considered given the financial constraints. The appropriation request then undergoes a review process which leads to the process of budget hearing. All the bureaus, commissions and agencies take the opportunity to present to the governor with the reasons as to why they should be accorded additional funding. It also provides time to discuss the future projects in capital and the options for funding. The reason for bringing together all the agencies, commissions and the other stakeholders is that they help in summarizing the projects and plans for the current, coming and future financial dears. A balanced budget emanates from the negotiation process realized through the budget hearings. The governor takes the chance to make the budget recommendations with consideration of special issues such as court orders and other requirements. The balanced budget is therefore prepared based on appropriations and recommendations of the “official revenue estimate”. The process continues to the level of other stakeholders such as the house and senate finance sections approving the recommended budget and set for approval and signing by the state revenue cabinet secretary. From ana analytical perspective, the budget process passes through enough sections that can handle any matter of importance that can make it not function as effectively as it is intended. Operating and Capital Budgets From the perspective of the West Virginia state government, there is several capital and operating perspectives of the budget as expressed. The capital budgeting in this case refers to allocation of funds to resources that would increase the infrastructural development of the state. The operating expenditure of the revenues is spread as per the following table: The capital budgets therefore take to account development in which case there is investment in infrastructural projects such as highways and public transport, public education and health care. On the other hand, the government must also provide pensions, education, insurance and other facilities. These take a drastic section of the revenue by the state government. The overview of the budget provides effective demarcation of the required estimates in each of the sections determined as capital and operating budget. Revenue Sources The sources of revenue in this government are quite diverse: Fund Percentage (%) 1 Federal funds 38.9 2 General revenue funds 34.6 3 Appropriated special funds /special revenue funds 13.7 4 State road funds 9.4 5 Lottery funds 3.4 General Revenue Fund This mostly consists of the taxes that are levied on goods in the state and is the primary source of revenue. Examples are the Personal Income Tax, Business and Occupation Tax and many others. State Road Fund These consist of revenues that are obtained from the use of motor car on the roads in the state. Motor Fuel Excise Tax and others are examples of such taxes. All these revenues that are obtained from the construction and reconstruction of the roads are usually part of the state consolidated fund. Lottery Funds This consists of all the revenues that are obtained from sale of all tickets for lottery or games. These funds are also appropriated effectively by the state legislature and used for funding education, tourism and parks maintenance among other uses. Federal Funds These are funds that are received directly from the central government. They only serve the purpose for which they were intended. They come in terms of loans, grants, subsidies and other forms viable in the state. They fund issues of importance to the national government such as education. Special Revenue Funds These are individualised accounts that generate revenue that is obtained from permits and licences. Shortcomings of the Budget Development The adapted design is inflexible to contingencies. It is a design that has a strong focus on focussing on the already budgeted for projects and there is little provision for changes in the budget at the proposal of the agencies and the commissions. It is only the courts that can determine an increased expenditure in a given section of the expenditure especially the additional funds for additional projects that always come up during a planning process. Secondly, the budget development process is quite dependent on issues related to capital expenditure and the economic forecast does not directly link with the availability of the funds to implement it. Therefore, worth noting is the fact that the state government may stall if the budgeting process does not change to effective developmental process. Recommendations One of the first things to note is that external activities strongly outdate the process of budgeting. This refers to contingencies that should be strongly provided during the budgeting process. They should be strongly provided for in the budgeting process. The second required improvement is the aspect of having a task force that would always seek to review and improve the process so that it fits every dynamic situation in the market. Works Cited Tomblin, Earl Ray. State of West Virginia Executive Budget Fiscal Year 2016 Volume I Budget Report. Print. Charleston: Office of the Governor State Capitol, 2015. Read More
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