Ramifications for Overspending in the Budgeting System of the US

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Table of Contents

Introduction
Minimize the Effects
References

Introduction

The budgeting system of the US often fails to maintain approvals within the appropriation limits. The government applies few consequences of the process, including line-item veto, which proves to be ineffective (Douglas, 2017). To increase local governments’ responsibility for overspending, the legislation should enact the next measures: force the local government’s State Controller to resign in case of such overspending; create a procedure of reimbursing local taxpayers by their government with an amount overspent in the current period. By applying the first measure, the legislation ensures the State Controller’s responsibility for monitoring the budgeting. As long as one’s position depends on budgeting effectiveness directly, the State Controller will oversee and prevent overspending more proactively. The second measure forces the local government to plan its expenditures efficiently, as any exceeds of the appropriation limits in the present year will cause its burden of refund in the following year.

Minimize the Effects

One way for a government to confront effects of unexpected events is creating reserve funds for a case of such events. The Master Settlement Agreement has obliged the major tobacco companies to fund the treatment and discouraging of smoking programs in each state (Jayawardhana, Bradford, Jones, Nietert, & Silvestri, 2014). In an imaginary situation, the coffee producers are forced to compensate an amount of $10 million for each state, similarly to the tobacco companies, but have settled on an amount of $1 million. The result is a shortfall in unemployment benefits funding. To compensate for the deficiency, the states’ governments should additionally form the unemployment benefits funding reserves from the coffee taxes. The following way $1 million from compensation is complemented by approximately $9 million from tax revenue per state. Supposing, if the named amount causes additional budget asymmetry, the quantity can be less. For instance, in the case of $4 million utilization from the revenues, the states can cut the planned amount in two for each unemployed instead of shrinking it ten times.

References

Douglas, J. W. (2017). Maintaining higher taxes and spending more with the line-item veto: Uncommon events that sting. Public Budgeting & Finance, 38(2), 3-22. Web.

Jayawardhana, J., Bradford, W. D., Jones, W., Nietert, P. J., & Silvestri, G. (2014). Master Settlement Agreement (MSA) spending and tobacco control efforts. PLoS ONE, 9(12). Web.

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Ramifications for Overspending in the Budgeting System of the US

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