Chapter Twelve

Key Terms:

1.)    Asset management: An approach to government planning for the maintenance of public assets throughout their life cycle that (1) views the assets in terms of their return on investment and (2) establishes asset- disposal programs.

2.)    Backdoor Financing: Legislation authorizing a certain level of spending for an agency that can include language ordering the agency to spend the amount of money for specific uses.

3.)    Budget: Plan for projected income and expenditures; estimate of future costs and plan for the use of employees, supplies, and related resources.

4.)    Budget Cycle: Routine steps in the budget process involving the preparation, authorization, appropriation, implementation, and audit of the budget.

5.)    Budgeting: The formal mechanism to obtain, distribute, and monitor the revenues used by governmental administrative agencies.

6.)    Budget Obligation: Budget item that is separate from the actual outlay of funds and requires the future expenditure of funds.

7.)    Budget Process: Governmental decisions on spending needs and how to pay for them.

8.)    Capital Budget: Plans for large expenditures (such as bridges, buildings, fire engines) usually financed over extended periods of time (5 to 30 years).

9.)    Compliance Audit: An examination of the financial records of a government or an agency to assess whether it has financially complied with the law.

10.) Continuing Resolution: Authority Congress grants to agencies, in the absence of annual appropriation legislation, to continue spending funds based on the previous year’s budget.

11) Debt: Total amount of money owed by a government plus the accumulated interest owed on the total; accumulated unpaid yearly deficits plus interest.

12.) Decremental Budgeting: The opposite of incremental budgeting; budget makers seek to cut spending by concentrating on small reductions rather than on any agency’s program base.

13.) Deficit: The amount of money a government spends in a given fiscal year above what it collects from all revenue sources for that same period.

14.) Earmarked Funding: Legal requirement that revenues from a given source be expended for a given function or purpose--- such as gasoline taxes on highway construction or maintenance.

15.) Energy Audit: An assessment of how well an agency uses or wastes its energy resources.

16.) Entitlement: Legal obligation created through legislation that requires the payment of benefits to any person or unit of government that meets eligibility requirements set in the law.

17.) Excise Tax: Tax placed on the manufacture, sale, or consumption of various commodities.

18.) Executive Budget: Budget document prepared by the chief of the executive branch and submitted to the legislature for review, modification, and adoption.

19.) Fiscal Policy: Government actions designed to stabilize the private economy by manipulating taxing or spending policy and managing debt.

20.) Gross National Product (GNP): Total value (in constant dollars) of all goods and services produced by a nation in a given fiscal year.

21.) Incremental Budgeting: Method of budget preparation and review stressing small increments in existing budget allocations for current programs (referred to as the budget base).

22.) Indexed Costs: Policy or law ties awards or benefits to the cost of living; they go up automatically as the cost index increases.

23.) Legislative Budget: A type of budget in which the legislative body (state legislature, county board of supervisor, or city council) prepares the budget document after departments submit their budget requests directly to the body (usually to a specific committee).

24.) Line-Item Budget: Classification of budget accounts to narrow, detailed objects of expenditure used by an agency, typically without reference to the ultimate purpose or objective served by the expenditure.

25.) Monetary Policy: Efforts to control the supply of money available to an economy by regulating the supply of currency in circulation and manipulating (credit) interest rates.

26.) Operating Budget: A budget, or plan of revenues and expenditures, that concerns the annual expenditures for such expendable items as salaries, wages, pensions, employee benefits, supplies, contracts for equipment repair and maintenance, new-equipment purchases, and utilities.

27.) Performance Audit: An assessment of an agency’s efficiency and how well it has achieved its stated program goals.

28.) Performance Budget: Budget that focuses on an agency’s objectives and accomplishments; used to increase management responsibility and accountability.

29.) Priorities: The values of government expressed in its expenditure and revenue decisions.

30.) Privatization: When a service previously provided by a government agency is now produced by a nongovernment organization (also often referred to as contracting out).

31.) Program Budget: Budget focusing on an agency’s programs, as in Planning Programming Budget System (PPBS); a tool for defining priorities and evaluating accomplishments.

32.)  Progressive Tax: Any tax in which people with higher incomes pay a larger percentage in taxes than do people of lesser means; generally, graduated income taxesare progressive.

33.) Recisions: The actual cancellations of appropriated funding.

34.) Regressive Tax: Any tax in which people with lower incomes pay a higher overall percentage of their income in taxes than do people of greater income. Generally, sales taxes are regressive.

35.) Sequestration: Congressional mandates that defer spending of funds from one fiscal quarter to another to build cash reserves or to slow down the effects of spending on an economy.

36.) Social Audit: An assessment of how well an agency copes with social issues in an organizational context.

37.) Tax Expenditure: Practice of giving favorable tax breaks (loopholes) for certain kinds of spending by individuals as well as to nonprofit or for-profit organizations.

38.) Zero-Based Budgeting: Budget process that rejects incremental budgeting by demanding a justification of the entire budget (base and incremental increases).