Budgeting Process for the State of New York - Essay Example

Introduction Based on the need to effectively utilize the available resources for the benefits of residents who are the tax payers, it is imperativefor every state to come up with a clear budget that portrays total revenues and expenses. In its budgeting process, New York State emulates an executive budget model. One of the notable aspects of this model is that the executive is responsible for preparing and developing the budget after which the legislature modifies it and enacts it as a law. According to the New York State Constitution, the governor is under obligation to coordinate all the requests from the state government agencies to come up with a balanced budget. A balanced budget should indicate all the proposed revenues and expenditure. Another responsibility of the governor as stipulated by the constitution is to present appropriation bills and other related legislations to the legislature whose duties includes to carry on the governors recommendations. Similarly, through his administrative actions, the governor is supposed to manage the budget in order to ensure the budget is followed to the letter during the fiscal year. While the fiscal year starts on April 1 up to March 31, the budget cycle that entails the preparation up to final disbursement stage lasts for 27 months. The budget process in the state of New York is established in state finance law as well as in the state constitution. One of the notable aspects of the New York budget making process is that as compared to other states, the governor of New York has considerable powers in the process. This paper aims at analyzing the budget process for the state of New York. Agency budget preparation The first step of the budget process starts at the subdepartmental level. During this stage, the staff working in various agencies prepares their own requests as directed by the heads of departments. During the same time the agency head arrange for meetings with the program managers during when the budgetary needs of the agency programs are discussed. Even though the official stage of budget preparation takes place between June and September, the agencies analyze their budgetary needs as early as April, May or June. With the issue of a policy memorandum or the call letter to the heads of the agencies by the budget director, the budget process starts. Another duty of the call letter is to notify the agency officers of the fiscal constraints that are expected during the implementation of the budget. Additionally, the letter indicates the governor priorities and the schedules that the agency heads should follow during the submitting of the requests to the budget division1. A program package is then prepared by each of agency which is then reviewed by the division of the budget before it is approved by the heads of the agencies. Even though it is the staff at the top agency office who decide on the final submission of the agencies, the formulation of the budget requests are different in each of the agencies. In addition, the agency officials who are under obligatory to serve their agency constituencies as needed by the constitution must adhere to the rules set by the governor and the budget director. A notable aspect of the formal budget hearings is that only the representatives selected by the fiscal committee attend the hearing and ask questions. The hearings are closed to the members of the public; however the process is fair and all inclusive. Review of the budget After the heads of agencies approves the program package, the agencies submits the budget requests for review and analysis. The major body within the division of budget that is responsible for the review and the analysis of the budget is the examination body. Apart from analyzing of the budget requests, the examination body may seek for extra information from the agencies regarding their requests. Likewise, the unit holds meeting with the heads of the agencies in order to have a clear picture of the budget requests and the priorities of the agencies. After the arrangement of the agencies priorities, the examination units come up with the funding requirements in order to carry on with the agency programs. This is followed up by conduction of budget hearings in the month of November. During the hearings, the agency heads are provided with chances to discuss their budget requirements with the budget director. On their part, the division of budget and the governors are given an opportunity to discuss and criticize the priorities and the policy formulated by the agency heads. Other parties that are included in the budget hearings include the assistant governors and the members of the legislature. Another vital aspect that occurs during this stage is the forecast of taxes and revenues. Through an amendment that was done on the budget process and introduction of quick start budget in 2007, the senate, comptroller, assembly as well as the division of budget comes up with estimated expenditure and revenue that will be generated in a particular fiscal year. The forecast must be released by November 52. After making public hearings with all the stakeholders including the assembly, division of budget and the senate agrees on the forecast that are then released before November 15. Before the end of November, the agency requests are transformed into preliminary budget by the examiners. At the same time the director together with examiners makes personal recommendations including initiating appropriation bills and legislations that are aimed at improving the usage of the revenues and incurring adequate expenditure on the priorities. At the same time, the division of budgets embarks on assessing the economic projections and investigating the revenue structure in order to reduce the constraints that may occur. Other tasks that are performed by the division of budget includes assessing federal sources of funds, preparing financial plans that shows revenue and expenditure forecasts. In order to ensure a balanced budget, the financial plan prepared by the division of budget emulates Generally Accepted Accounting Principles (GAAP). In this way, the budget becomes easy to understand while at the same time it emulates standard accounting principles that are internationally accepted. During the month of December, the division of budget makes full recommendations of the state revenue and expenditures that are then passed to the staff in the governor’s office as well as to the governor himself or herself. One of the major roles of the budget staff that is presented with the recommendations is to prepare narratives that are attached on the agency budget. While the governors comes up with the appropriation bills, other kinds of bills referred to as the Article VII budget bills are adopted in order to come up with a balanced executive budget. Three types of Article VII budget bills are tax and revenue proposal, miscellaneous measures that will be adopted to implement the budget and government efficiency proposals. Governor’s decisions As the division of budget and the governor’s staff work towards development of a budget and regularly communicating with the legislature, the governor is regularly updated on the progress of the budget process. Similarly, the governor is updated on the revenue forecasts and any change on the economy that may cause a change on the budget. Based on the economic changes and the recommendations from the stakeholders, executive budget recommendations are made. These are established after holding regular meetings between the governor and the division of budget. Legislative action During the month of January, the executive budget is presented to the legislature by the governor. The budget accompanies of the budget bills, the appropriation bills as well as the revenue forecasts. Other documents that are presented to the legislature during this stage are five year financial plan, five year capital plan and other financial information that is needed to support the executive budget. After the presentation of the executive budget to the legislature, the fiscal committee that includes the Assembly ways and means as well as Senate Finance analyzes the revenue and expenditure estimates while at the same time holding meeting to get more information on the key programs. Additionally, to ensure that the needs of all the stakeholders are met and changes on the fiscal economy are taken into consideration, the fiscal committee holds regular meeting with the division of budget as well as other state agencies with an aim of gathering additional information on the programs and priorities. According to the budget reform legislation of 2007, the two houses must come with conference meetings where they deliberate and set priorities and finally reach an agreement on the budget. Similarly, the legislature and the executive must come up with economic forecasting conferences where they discuss on the various issues affecting the budgeting process. Such conferences should also show a consensus report on the matters relating to tax, various forms of receipts and lottery. In cases where the stakeholders do not reach a consensus, a binding revenue forecast must be presented before or on March 5 by the comptroller. One of the key aspects that are involved in the stage of legislation action is deliberation on expenditure and revenue recommendations. The agreement on the recommendations must be based on the appropriation bills as indicated by the governor’s office. Before the appropriation bills are passed, the members of the legislature must be issued with the summary of the changes that have been proposed by stakeholders. Similarly, the division of budget must provide a report that depicts the implications of the legislature actions on the sate financial plan. Afterwards, the governor undertakes a review process that aims at evaluating the legislature actions. This is followed by issuing of a comprehensive budget report that indicates the financial projections of the coming fiscal years. Legislative authorizes the stakeholders for usage of public funds but the items that were added during the period that the bill was in legislature is not allocated any fund. The legislature and judiciary are a located the necessary fund so that the bill will move to the next stage, and then the governor declares it as a law without any further action. The governor has the power to approve or disapprove for fund allocation to both legislature and judiciary. The governor will mostly consider the items that were added in the legislature and thus likely to disapprove those items added making sure that the governor will approve the remaining part of the bill. The constitution of New York states clearly that after the governor approves the bill then the legislature is suppose to pass it with two third as the majority in each house. And this makes the authorization of fund and the expenditure during the coming fiscal year. If the authorization and expenditure of the bill did not pass in the legislature they are suppose to give and direct well the proposed changes that is needed for it to be approved. Those who are responsible for the treasury and budget estimators must then make sure that they have a comprehensive report that will be explaining why the legislature did not make the bill to be a coming fiscal year plan. After the governor checks the bill analyzing it critically and reviews the legislature proposed ideas, and the division represent their comprehensive report stating clearly the plans for the coming fiscal year to the state officials. The legislature will have to give a report to the state agency employment levels why the authorization and the expenditure of bill were not effective and the changes the bill need to be approved. Budget execution Budget execution is done in months of April and May and it must be within the budget process in order to ensure that democracy is enhanced to the individuals who are going to contribute to the process of budgeting. The activities that are related to the use of funds must be considered first and the congress approves them. The congress must have a detailed planning of how the fund is used appropriately making sure that the fund is well controlled while in the use since the fund that is used must be kept as a record that is going to be presented to the congress when they meet. Taxes and revenue are people resource and the revenue must be controlled to make sure that the state will appropriately make use of the fund to economically develop New York3. The budget must be balanced clearly since there is need to distribute fund to all sectors making it useful in the growth of economy and thus the reason to execute the budget. During this stage, the budget enters a new phase that is crucial since the budget will have to be provided. The first stage is that the division approves genuine certificates that are issued so that the budget can be allocated4. Then they will have to make sure that they will inform the officer in charge of fiscal affairs of the state that the fund will be allocated according to the certificates and vouchers they have been provided with, making sure that the accounts are going to be honored. The division of the budget is responsible of the fund that have been allocated to different certificates that were issued during April to May, this means that they have to watch throughout the year how the fund is being used or how the revenue is flowing and the expenditures as stipulated in the certificate. The usage of public funds must be submitted to the legislature within duration of four months indicating what have been achieved with the budget allocation and what has not been achieved and the remaining budget to the accounts5. This ensures that transparency to the usage of public fund is achieved and accountability of the same. This is done in April, July and in October, the governor will then be involved in budget execution since a report that is comprehensively written must be submitted to the state compliance indicating new debt that were allocated after on 31st on march. The governor still will write another report to the state and is written annually and will indicate findings of what have been achieved during that financial year explaining financial plan updates in the month of October. The reports and the updates are important since they are used for accountability and transparency of the budget allocation explaining each and every dollar whether it has been implemented in the way it was supposed to be used or plans have been diverted for other issues. Again, the updates are useful since they are going to be used by financial managers in the fiscal year and still will help the governor and the legislature about mismanagement of public fund and if any problem have emanated from the budget execution6. The updates and the progress will also ensure that any balance that is left to the accounts of different certificate will be taken back to the treasury and planning of the state fiscal year will start again. This means that the year has ended and thus there is importance of the division of the budget to have some of reports that are comprehensive indicating the audit of the year that is ending. Secondly a report showing what has been achieved during that year indicating the expenditure and if there is need to change the budget coming fiscal year. New York state budget process New York budget process age References Berezin, M. 2005. Emotions and the Economy. Handbook of Economic Sociology. NJ: Princeton University Press. Carol, W and Bartley, H. 2012. Budgeting: Politics and Power. New York: Oxford University Press. Fehr, E and Schmidt, M.2005. The Economics of Fairness, Reciprocity and Altruism - experimental Evidence and new Theories. Discussion PAPER 2005-20, Munich John, P.1999. Taxation and Finance. New York: Macmillan Publishers. Sullivan, A and Steven, S. 2003. Economics: Principles in action. New Jersey: Pearson Prentice Hall. Toy, S. 2009. The Financial District Attracts Families. The New York Times. Read More