Government budgeting is the critical exercise of allocating revenues and borrowed funds to attain the economic and social goals of the country. It also entails the management of government expenditures in such a way that will create the most economic impact from the production and delivery of goods and services while supporting a healthy fiscal position.
In general, a government budget is the financial plan of a government for a given period, usually for a fiscal year, which shows what its resources are, and how they will be generated and used over the fiscal period. The budget is the government’s key instrument for promoting its socio-economic objectives.
Budgeting approaches or modes and techniques used in the Philippine government are characterized into three major orientations: * Control-orientation in budgeting is the process of enforcing or applying limitations and conditions that are set in the budget * Management-oriented budgeting involves the use of budgetary authority at both agency levels to ensure the efficient use of resources * Planning-orientation in budgeting is the process of determining public objectives and the evaluation of alternative programs.
FOUR (4) BUDGETING METHODS
1. Line-Item Budgeting
The line-item budgeting approach emphasizes listing of objects for itemized expenditure such as personnel, supplies, and equipment without much regard for the purpose of programs or projects for which such items are proposed. It also controls expenditures at the department or agency level giving emphasis on the accounting aspect of the government operations in terms of items bought or paid.
2. Performance Budgeting
In performance budgeting, objects of expenditures are grouped into categories related to the specific services or products an institution produces, as against objects it purchases, and the development of product cost measurements of activities or services so that managers can measure the efficiency or productivity of spending agencies.
3. Planning, Programming and Budgeting System
PPBS is an answer to the need for an economic allocation of resources and the undertaking of government policy, program analysis, and cost utility analysis to improve the policy decision process of government. The scheme requires agency managers to identify program objectives, develop measuring program output, calculate total program costs over the long-run, prepare detailed multi-year program and financial plans, and analyze the costs and benefits of alternative program designs. The system provides a strong linkage between planning and budgeting. 4. Zero-Based Budgeting
ZBB is an operating, planning, and budgeting method which requires every agency manager to justify his entire budget systems in detail and transfers the burden of proof to each manager why he should spend any money. It underscores the analysis of all budgetary expenditures to answer effectiveness in achieving organizational goals. The term “zero-based” refers to the yearly analysis, evaluation, and justification of each program/project/activity starting form zero performance level.
BUDGET CYCLE (FOUR PHASES)
1. Budget Preparation
This involves the formulation or devisement of a national budget based on budgetary priorities and activities given available revenues and borrowing limits.
The Development Budget Coordination Committee (DBCC), an interagency body, conducts consultations and studies on fiscal and financial issues with the objective of determining overall expenditure levels, revenue projection, deficit levels, and the financing plan. These are then forwarded to the cabinet and the President for approval. After approval by the President, the Department of Budget and Management (DBM) issues a Budget Call. The call usually issued in November directs the different agencies to prepare their respective budget proposals in accordance with approved budget ceilings.
2. Budget Authorization or Legislation
In this phase of the budget cycle, the budget is reviewed by the House of Representatives and followed by the Senate through consultation and justification by department and agency heads of their budget proposals. Conflicting provisions are worked out and harmonized by a conference committee. Once a common budget bill has been approved by both chambers, it is submitted to the President for approval. The product of the President’s approval of the proposed budget legislation is the General Appropriations Act (GAA).
3. Budget Execution
This phase of budget cycle is the implementation of the General Appropriations Act. The Department of Budget and Management (DBM) implements the national budget through the administrative supervision of the President. The Bureau of Treasury of the Department of Finance (DOF) coordinates with the DBM so that cash releases by the latter are based on collected revenues by DOF.
4. Budget Accountability
Budget accountability is the analysis and review of the agency operating performance, systems and procedures, and the evaluation of agency accomplishments relative to cost incurred. It compares actual expenditures and performance with the planned expenditures and predetermined targets of the organization.
While distinctly separate, these processes overlap in the implementation during a budget year. Budget preparation for the next budget year proceeds while government agencies are executing the budget for the current year and at the same time engaged in budget accountability and review of the past year’s budget.