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Public Budgets: Governance Structures, Norms, and Organizational Practices

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Intergovernmental Fiscal Relations

Part of the book series: SpringerBriefs in Environmental Science ((BRIEFSENVIRONMENTAL))

Abstract

This section focuses on public budgets and, subnational governments’ expenditure and revenue choices. It begins with a general picture of public budgeting and of global trends in budgeting, such as performance budgets, the adoption of medium-term expenditure frameworks, and the creation of independent fiscal institutions. It then addresses the subnational governments’ expenditure responsibilities. It explains the main drivers of subnational governments’ expenditure needs and costs, approaches to estimating costs, the concepts of zero-based budgeting and participatory budgeting, and the increase of private participation in service delivery. Finally, issues regarding subnational governments’ revenue options, such as taxes, user fees, and debt are discussed.

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Notes

  1. 1.

    See Shah (2007a) for a comprehensive book on local budgeting.

  2. 2.

    For a detailed description see the IMF’s Government Finance Statistics Manual 2001.

  3. 3.

    See Guess and Leloup (2010) for a comparison of public budget systems around the globe.

  4. 4.

    In the European Union new regulations require member states to have independent fiscal institutions. For discussions on the role of independent fiscal agencies see Hagemann (2011), Kopits (2011), and Hemming and Joyce (2013).

  5. 5.

    For another study on returns to scale, see Reingewertz (2012).

  6. 6.

    For example, regarding future salaries or wages, one possible assumption is that they will increase at the same rate as inflation. Expected values for the amount of labor to be employed should depend on the amount of output to be produced.

  7. 7.

    For an overview of the principles underlying participatory budgeting, regional surveys and country case studies, see Shah (2007b). For web information consult the site of the Participatory Budgeting Project (http://www.participatorybudgeting.org/), a non-profit organzation that helps communities decide how to spend public money, primarily in the US and Canada.

  8. 8.

    For an analysis of the Brazilian case, see the World Bank report available at http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/11/03/000333037_20091103015746/Rendered/PDF/514180WP0BR0Bu10Box342027B01PUBLIC1.pdf.

  9. 9.

    Foster (2005) analyzed water service reform in Latin America, during the 1990s, where most countries moved from unregulated centralised public provision of water to regulated decentralised public provision.

  10. 10.

    This topic will be developed further in the next section.

  11. 11.

    For a review of subnational taxation in Brazil, Russia, India, China and Nigeria see Bird (2012).

  12. 12.

    For an analysis of the property tax reform in Vietnam see McCluskey and Trinh (2013), for Kenya see Kelly (2002), and for Latin America see Sepulveda and Martinez-Vazquez (2011). McCluskey et al. (2012) provide a broader discussion on property tax.

  13. 13.

    A regressive tax imposes a burden that is a greater fraction of income for lower-income individuals than higher-income persons. Taxes can also be progressive or proportional.

  14. 14.

    For details see Alam (2010). See OECD (2012) for principles for public governance of public-private partnerships.

  15. 15.

    For an example of a simple local government debt policy that can be adapted as needed, see Kaganova (2011).

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Authors and Affiliations

  1. NIPE, University of Minho, Braga, Portugal

    Linda Gonçalves Veiga

  2. UNU-FLORES United Nations University, Dresden, Germany

    Mathew Kurian & Reza Ardakanian

Authors
  1. Linda Gonçalves Veiga
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  2. Mathew Kurian
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  3. Reza Ardakanian
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Correspondence to Linda Gonçalves Veiga .

Keywords and Definitions

Ability to pay principle

A principle of taxation stating that taxes should be levied according to the taxpayers’ ability to pay, those who have more wealth or earn more money should pay more taxes

Benefit principle

A principle of taxation stating that those who benefit the most from public goods/services should pay more to support those goods/services

Budget

Document or a collection of documents comprising a detailed description of the expected revenues and expenditures of a given institution, associated with the activities that are planned for achieving certain purposes or goals, within a given period

Participatory budgeting

A process of direct participation of citizens in deliberations and negotiations over public spending and resource allocation of a defined public budget

Performance budget

Budget that associates the input of resources with the service outcomes or results

Tax

A compulsory contribution to public revenue levied by the government on income, or property, or added to the cost of some goods, services and transactions

User charge

Sum of money demanded by a government for the use of a publicly provided good or service

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Veiga, L.G., Kurian, M., Ardakanian, R. (2015). Public Budgets: Governance Structures, Norms, and Organizational Practices. In: Intergovernmental Fiscal Relations. SpringerBriefs in Environmental Science. Springer, Cham. https://doi.org/10.1007/978-3-319-06296-9_2

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