major step towards decentralizing governmental decision making L a w

major step towards decentralizing governmental decision making L a w

Please respond to the following discussion post below. 

I. Analyze the practical pressures affecting public sector budgeting designed to delivering public goods and services.

          The defining characteristics of public budgeting is that it involves a continual struggle between the demands placed on government to respond to societal problems and the desires of citizens and the capacity of governments to finance those responses (Joyce & Pattison, 2020).  Implementing a budget that is required to meet the demands of many forces is an on-going complex struggle within all levels of government, especially when the budget in past and present years is strained. Pressure has increased overtime as public demands government transparency and accountability. Therefore, the federal government has been forced to take unprecedented and costly steps to shore up the economy and to respond to the difficulties faced by state and local governments and citizens, despite the influx of revenues, substantial deficits driven by the erosion of state and local tax bases (Joyce & Pattison, 2020). Even though the diversity of choices is complex, state and local governments have an important and independent role in providing and financing public goods and services, which includes the power to spend, as well as the responsibility to raise revenue adequate to support that spending (Mikesell, 2018, p.643). Most pressure on spending at all levels of government particularly lie in two areas: healthcare spending and education spending (Joyce & Pattison, 2020). Regardless of current financial and economic crisis, local governments must continue to offer a great volume of public-sector services (Alcaide Muñoz, Rodríguez Bolívar, & López Hernández, 2016, p.190).  Another practical burden affecting public sector budgeting are the struggles of state and local governments to meet both short and long term performance objectives. In fact, a higher level of debt may represent a burden of future interest costs and principal repayments that would reduce the administration’s ability to meet the future demand for goods and services and thus increase the fiscal pressure on future generations of taxpayers (Alcaide Muñoz et al., 2016, p.191).  Hence, the single challenge that all U.S. governments have in common is the continuation to control deficits and debt. This is where national government must lead and attempt to make changes to revenues and expenditures. Therefore, attention must be placed on performance consideration in making budget decisions that will place our country on a more fiscally sustainable path (Joyce & Pattison, 2020).  Mikesell (2018) contends that coupling performance information with budget numbers will enhance public decisions and force government entities to focus on the productive use of funds (Mikesell, 2018, p.268). Taking on these initiatives allows government to fulfill transparency and accountability (Alcaide Muñoz et al., 2016, p.190). As a follower of Christ, whatever government takes should be used for the common good, which means spending responsibly for a public purpose, therefore, it is wise for us to pray for government leaders as in 1 Timothy 2:2 states, “for kings and all who are in authority, that we may lead a quiet and peaceable life in all godliness and reverence (KJV, 2021).

II. Evaluate the consequences of two externalities and their impact on public sector budgeting.

           Externalities are a consequence of a governmental activity that affects other parties without this being reflected in the cost of the goods or services involved.  According to Mikesell (2018) the consequences of externalities may be negative or positive, but either way that value is unlikely to be fully recognized in the market transaction sector of budgeting (Mikesell, 2018, p.10). Toxic pollution is one example of negative externality, which is a major form of market failure. Toxic pollution includes the private costs of production incurred by the company and the external costs of pollution that are passed on to society (Lemieux, 2021). To solve this problem, Lemieux (2021) proposed to tax negative externalities (Pigovian tax), which would force a reduction in the originating activity, thereby reducing social cost. Inversely, this would subsidize activities generating positive externalities, thereby increasing their level and increasing social benefits (Lemieux, 2021).  For these goods and services, the private return from consumption will be substantial, so the market will not fail to provide (Mikesell, 2018, p.10).  As a major economic justification for government intervention and regulation, the mainstream concept of externality is plagued by several problems, the first one being its ubiquity. In reality, many externalities can be eliminated through private agreement (Jimenez, 2018). When externalities seem to persist, one should suspect that the costs of correcting them are higher than the benefits in the sense that there is no voluntary trade that is profitable for all the relevant parties. Externalities must be circumscribed, which is what the constitutional and institutional framework of a free society does (Lemieux, 2021).  Even though the government provides goods and services, it will not however, provide at a socially reasonable level (Mikesell, 2018, p.10). 

           A second externality is the pandemic that impacts the public sector budget. The negative externality is the fact that the government compensated vaccine makers to provide vaccine to the public. The government rewarded enormous amount of money to pharmaceuticals to generate COVID-19 vaccinations.  The social cost of infectious disease externalities is limited by the cheapest method of avoiding externalized infection risk. That cost is modest compared to the one usually imagined: the value of life (or health) lost to the disease if government does not intervene (Leeson & Rouanet, 2021). On the other hand, many businesses were temporarily or permanently closed due to the pandemic due to many consumers not going out to restaurants, stores, or malls. Many citizens were laid off from businesses, which affected the federal and state government budget.  Many unemployed relied on the government for financial aid to pay rent and food.  Alternately, the positive impact on externality is mass immunity. Providing vaccines to the public reduces the chance of spreading diseases to others.  Public health officials work to maintain immunization levels even when prevailing incidences of the disease is low because protection of “herd immunity” protects everyone and stops epidemics before they can start (Mikesell, 2018, p. 12).

III. Suggest the most practical way to study the fiscal impact of public sector budgeting.

Federal and local governments face tough decisions when adopting fiscal budgets that affect the economy and social services. That includes the power to spend, as well as the responsibility to raise revenue to support the spending to provide adequate services and goods (Mikesell, 2018, p. 643).  Financial ratio is another practical way to study fiscal impact of budgeting, which provides a financial outlook for future fiscal years. Many federal and local governments utilize financial ratios to determine whether money should be allocated to achieve certain goals and provide long-term and short-term relationships between revenue and expenditures (Rubin, 2015).  In addition to a practical way to public sector fiscal budgeting is the practice of accountability, which can affect the outcome of budgeting.  Such cooperation is not only attractive as it holds the promise to lower service costs and improve service, but local cooperative activities have been shown to overcome some of the challenges presented
by municipal fragmentation, externalities and common-pool resource problems (Spicer, 2017).  This contends with Rubin (2008) as she states, accountability is a major step towards decentralizing governmental decision making by making more states responsible for the ways in which money is spent (Rubin, 2008).  As the Bible tells us, true accountability leads to wise living, James 1:5, “If any of you lack wisdom, let him ask God, that giveth to all men liberally, and upbraidth not; and it shall be given him” (KJV, 2021).

References

Alcaide Muñoz, L., Rodríguez Bolívar, M. P., & López Hernández, A. M. (2016). Financial incentives and open government: A meta-analysis. Information Polity: The International Journal of Government & Democracy in the Information Age, 21(2), 189–209. https://doi.org/10.3233/IP-160383

Jimenez, B.S. (2018). Fiscal Institutional Externalities: The Negative Effects of Local Tax and Expenditure Limits on Municipal Budgetary Solvency. Public Budgeting & Finance, 38(3), 3-31. https://doi-org.ezproxy.liberty.edu/10.1111/pbaf.1…

Joyce, P. G. & Pattison, S. (2020). Public Budgeting in 2020: Return to Equilibrium, or Continued Mismatch between Demands and Resources? Public Administration Review, 70, S24–S32. Leeson, P.T. & Rouanet, L. (2021). Externality and COVID-19. Southern Economic Association.  https://onlinelibrary.wiley.com/doi/10.1002/soej.1…

Lemieux, P. (2021). The threat of externalities. Cato Institute. http://doi.org/10.1111/puar.12289

Spicer, Z. (2017). Bridging the accountability and transparency gap in inter-municipal collaboration. Local Government Studies, 43(3), 388-407. https://doi.org10.1080/03003930.2017.1288617