U.S. government budget deficits and multi-level government spending analysis

Public Budgeting

Over the last several years, the issue of public budgeting has been increasingly brought to the forefront for all levels of government. The main reason is because of the large budget deficits that are being realized by: local, state and federal governments from the stagnant economy. This is causing these entities to experience a shortfall in revenues. Evidence of this can be seen by looking at the debt levels for the federal government between 2000 and 2010 (which is illustrated in the below table).

National Debt Levels of the U.S. Government from 2000 to 2010

Total Amount of Debt

$5.674 trillion

$5.807 trillion

$6.228 trillion

$6.783 trillion

$7.379 trillion

2005

$8.507 trillion

2006

$9.008 trillion

2007

$9.008 trillion

2008

$10.025 trillion

2009

$11.910 trillion

2010

$13.562 trillion

2011

$15.355 trillion

("Historical Outstanding Debt," 2011) ("U.S. National Debt," 2012)

These figures are important, in showing how the rising debt levels are becoming a major challenge for all governments. To fully understand what is taking place requires looking at the federal, state, city and a local agency budget. During this process is when there will be a focus on: providing a description for each budget, identifying the similarities / differences, studying what are the major sources of revenues, how income levels are expected to change, the way that this fits the mission of each domain and how the process can be improved. The combination of these elements will provide us with a basic background of the challenges facing all levels of government. This is when we can understand the way the budgetary process works and how these problems can be addressed in the future.

A Basic Description of each Budget

The different budgets that we will be examining include: the U.S. government, the State of Florida, the City of Miami, the Miami Dade Police Department and portion the U.S. Department of Agriculture (which will be discussed later on). The way that this will be achieved is by carefully examining each budget. This will offer specific insights that will help in comparing the budgets from the different levels of government with each other.

The U.S. Government

The budget of the U.S. government is focused on addressing issues that are affecting the nation domestically or internationally. Some of the different agencies that are used to address these objectives included: the Department of Defense, Homeland Security, Health & Human Services, Education and Energy. At the same time, the government also has large endowment programs to include: Medicare, Social Security and Medicaid. These different areas are important, because they allow the federal government to address the needs of citizens and the states through these programs. In most cases, they will spend the money directly by providing specific services to everyone (such as: national defense). While in other situations, the federal government will offer any assistance through various grants and direct funding. ("Fiscal Year 2013 Budget," 2012) ("Fiscal Year 2013 Historical Tables," 2012)

The State of Florida

The state of Florida is receiving large amounts of assistance for a host of programs from the federal government. A few of the most notable include: education, Medicaid / Medicare, agriculture the state will take the money that is received from various forms of tax revenues and funding from the federal government to deliver different services. In some cases, this is provided with the state playing a direct role (such as: corrections or education). While at other times, the state will offer direct financial assistance to local communities in addressing these issues. ("Governors 2012 Budget," 2012)

The City of Miami

The City of Miami receives their funding through different tax revenues and fines. A few of the most notable include: sales taxes, property taxes, grants from the state / federal government and fines. These funds are used to provide specific services to the community. ("City of Miami Annual Budget," 2012)

The U.S. Government

The major sources of revenues for the federal government include: individual / corporate income taxes, social insurance / retirement receipts and excise taxes. The below table is highlighting the total amounts of revenues for the U.S. Government between 2007 and 2011

Revenues for the U.S. Government from 2007 to 2011

Year

Individual Income Tax

Corporate Income Tax

Social Insurance and Retirement Receipts

Excise Taxes

2007

$1.16 trillion

$370.24 billion

$869.60 billion

$65.06 billion

2008

$1.145 trillion

$304.46 billion

$900.15 billion

$1.34 trillion

2009

$915.30 billion

$138.29 billion

$890.91 billion

$62.43 billion

2010

$858.54 billion

$191.43 billion

$864.81 billion

$66.90 billion

2011

$1.09 trillion

$181.08 billion

$818.79 billion

$72.28 billion

("Fiscal Year 2013 Budget," 2012) ("Fiscal Year 2013 Historical Tables," 2012)

These figures are showing how the primary sources of revenues for the federal government have become volatile during the last several years.

The State of Florida

The State of Florida is receiving their funds from several different sources to include: general revenues (income / sales taxes), lottery receipts, the tobacco settlement and other areas (i.e. grants / funding from the federal government). The below table is illustrating the overall amounts of revenues for 2010 and 2011.

Revenues for the State of Florida from 2010 to 2011

Year

Revenues

Lottery Receipts

Tobacco Settlement

Other Areas

2010

$30.61 billion

$1.09 billion

$370.60 million

$23.16 billion

2011

$30.12 billion

$1.02 billion

$370.60 million

$21.82 billion

("Governors 2012 Budget," 2012)

These figures are showing how the State of Florida has been realizing declining revenues over the last two years.

The City of Miami

The various sources of revenues for the City of Miami include: property taxes, franchise fees, interest, fines, intergovernmental revenues, licenses / permits and charges for services. The below table is illustrating the income between 2010 and 2011.

Revenues for the City of Miami from 2010 to 2011

Year

Property Taxes

Franchise Fees

Interest

Fines

Intergovernmental Revenues

Licenses / Permits

Charges for Services

2010

$252.53 million

$105.70 million

$1.50 million

$5.0 million

$88.75 million

$30.79 million

$86.20 million

2011

$242.26 million

$96.20 million

$1.52 million

$14.13 million

$80.96 million

$36.17 million

$92.91 million

("City of Miami Annual Budget," 2012)

These numbers are illustrating how the City of Miami has been realizing declining revenues over the last two years.

The Miami Dade Police Department

The Miami Dade Police Department has a number revenue sources. The most notable include: contract services, the general funds, grants, surcharges and fees. The below table is illustrating the total amount of revenues from 2011 to 2012.

Revenues for the Miami Dade Police Department 2011 to 2012

Revenue Source

Amount (in thousands of dollars)

General Funds

$488,535

911 Fees

$13,249

Parking / Traffic Surcharges

$4,190

Federal Grants

$9,204

Carryover

$15,738

Contract Services

$63,262

Miscellaneous

$4,172

("FY 2011-2012 Budget," 2011)

These numbers are showing how the Miami Dade Police Department receives additional forms of income from various fees, contract services, grants and other programs. The combination of these elements is used to provide the community with protective services.

How are the revenue amounts expected to change in the future?

The U.S. Government

In the future, revenues for the U.S. government are expected to increase. Evidence of this can be seen by looking that the below table (which is showing income projections from 2012 to 2014).

Revenues Projections for the U.S. Government from 2012 to 2015

Year

Individual Income Tax

Corporate Income Tax

Social Insurance and Retirement Receipts

Excise Taxes

2012

$1.16 trillion

$370.24 billion

$869.60 billion

$65.06 billion

2013

$1.35 trillion

$347.74 billion

$959.07 billion

$88.05 billion

2014

$1.47 trillion

$429.59 billion

$1.38 trillion

$98.57 billion

("Fiscal Year 2013 Budget," 2012) ("Fiscal Year 2013 Historical Tables," 2012)

These figures are indicating that revenues for the federal government are expected to increase between 2012 and 2014.

The State of Florida

The State of Florida is expected to see a different trend with a slow increase in the total amounts of revenues. A good example of this can be seen by looking at the below table (which is highlighting how these figures are expected to change between 2012 and 2013).

Revenues for the State of Florida from 2012 to 2013

Year

Revenues

Lottery Receipts

Tobacco Settlement

Other Areas

2012

$31.62 billion

$1.09 billion

$370.60 million

$24.19 billion

2013

$31.12 billion

$1.02 billion

$370.60 million

$22.85 billion

("Governors 2012 Budget," 2012)

These figures are showing how the state will continue to face pressure from lower than expected revenues.

The City of Miami

In the case of the City of Miami, the government is expected to see lower than expected revenues. Evidence of this can be seen by looking at the below chart (which is looking at future income growth for 2012 and 2013).

Revenue Projections for the City of Miami from 2012 to 2013

Year

Total Amount of Revenues

2012

$699.70 billion

2013

$693.83 billion

("City of Miami Annual Budget," 2012)

The figures are showing how revenues are expected to decline for the city during this time. Part of the reason for this, is from the lingering effects of the real estate market and its impact on the local economy.

The Miami Dade Police Department

The revenues are expected to decline for the Miami Dade Police Department in the future. This is because the city is continuing to face budgetary challenges. In the next year, these amounts are expected to be about 10% lower. This has forced the department to seek additional layoffs and they want the higher benefits costs passed on to employees. These issues are important, in showing the challenges facing the department from lower fees, grants and other sources of revenues. ("In Miami Dade Union Fight," 2012) ("FY 2011-2012 Budget," 2011)

How does the budget fit with the mission of each domain?

The way that the budget fits for each domain is to address specific issues that are affecting a certain level of government. From the federal perspective, it is designed to deal with issues that are impacting events on a national basis. For example, one agency that is helping to support farmers is the Department of Agriculture. They provide a number of programs to ensure that they have access to resources that will help them to be successful over the long-term. The way that this occurs is through having a series of loans from private and government programs. In the last two years, the federal government has been increasing the amounts of funding for this area. The below table is highlighting the different programs and the kinds of assistance that are provided by the federal government.

The Programs that are provided by the Department of Agriculture from 2011 to 2012

Program

Federal Direct 2011

Federal Direct 2012

Private Lender Supported 2011

Private Lenders Supported 2012

Farm Loans

$1.93 billion

$2.02 billion

$3.06 billion

$3.09 billion

Commodity Credit Corporation

$7.10 billion

$7.33 billion

$4.76 billion

$5.05 billion

Rural Utilities / Business Service

$7.02 billion

$9.59 billion

$1.82 billion

$1.38 billion

Rural Housing Service

$2.14 billion

$2.25 billion

$15.29 billion

$24./33 billion

("Fiscal Year 2013 Budget," 2012)

These figures are showing how the focus of the federal government's budget is to address issues that are impacting the nation as a whole.

The way that the state's budget is in line with its domain is to address areas that are impacting the citizens of Florida. For example, the estimated budget projections for funding education are expected to be $142.50 billion. This is an increase of $137.29 billion for 2011. These numbers are important, in highlighting how the state government is concentrating on addressing those issues that are impacting the citizens of Florida. ("Governors 2012 Budget," 2012)

As far as the City of Miami is concerned, they are focused on addressing those issues that of most significance on the local level. For example, in 2011 there were a number of different services that were provided to the general public. The below table is illustrating the areas where these funds were spent during this time.

Areas that Received Major Amounts of Funding from the City of Miami in 2011

Service

Amount Spent

Code Enforcement

$3.09 million

Solid Waste

$18.93 million

Public Works

$14.05 million

Fire

$68.04 million

Police

$117.61 billion

Parks and Recreation

$21.56 million

("City of Miami Annual Budget," 2012)

These numbers are showing how the local government is focused on delivering those services that are in the most demand.

The Miami Dade Police Department budget is designed to provide additional financial assistance in dealing with possible threats to the community. Evidence of this can be seen by with the following areas that are receiving considerable amounts of funding to include: facility projects, information technology, fuel / courts costs and expenses associated with contract services just to name a few. ("FY 2011-2012 Budget," 2011) This is showing how all resources of the department are focused on achieving these objectives at all times.

How can the budget be improved and revenue estimation be accurately accessed at each level?

The best way that the budgetary process can be improved at each level is to take into account the worst case scenario. This will ensure that all projections are based upon conservative estimates. In the event that there are sudden shocks, is when these numbers will reflect more realistic projections. This is different from the current approach that is taking place at all levels of government. What is happening is there is more of a focus on how to make these numbers look good (based on political considerations).

At the same time the state, city and police department need to work together to create standards for addressing potential shortfalls. The way that this can occur, is to have various target caps in place that will require automatic spending cuts when the state and the city's or state's budget reaches a certain amount. This will prevent lawmakers from making draconian cuts at the very last minute. If this approach can be taken, it will ensure that these entities are able to deal with these issues over the long-term.