The state budget is also known as the government budget, which is a legal document of the government expenditure on the state. This budget is generally passed by the legislature and then it is sanctioned by the President or the chief executives concerned. In the state budget, few specific revenues are collected or for that matter can be imposed. The sales tax is one of the major revenue sources of the state budget and the sales tax rate is imposed by the state government on the goods sold according to its revenue requirement.
In case of every budget, the two basic components are revenues and expenses and for the state budget the revenues mainly come from different taxes that the government imposes. The government expenditures are mainly comprised of the government spending on the goods and services in forms of research and infrastructural development along with some of the transfer payments. There are also some government consumptions that are taken into account in this budget.
The state budget is made according to the cash requirement for the forthcoming fiscal year’s government proceedings and hence, the revenues generated and the taxes are imposed in line of those requirements. The transfer payments included in the state budget leads emphasis on the retirement benefits and the unemployment factors. The government budget has mainly three basic factors that lead to its formation namely, economic, political and technical.
The economic factors lead to the best possible allocation of the scarce resources to maximize their utilization. The political factors lead to obtain social benefits and hence, the budget focuses on the social requirements of the region and ways to uplift the socio-economic structure of the subject areas. The technical factor mainly deals with the future forecast of the revenues and expenditure levels of the state and how they can be enhanced.
The state budget thus considers all the above factors in its formation and is made according to the priority of each subject area and the cash allocation is made owing to the ranking of the higher prior subject area. The government proceedings for the forthcoming fiscal year are projected in the state budget hence, the budget is prepared with utmost sincerity and transparency so that all the projected cash inflows and outflows are clearly stated and predetermined.
(Budget of the US Government – Fiscal Year 2011, 2010; The New York Times, 2010) Local Budget The local government is referred to the group of administrative authorities of areas, which are not as big as a state. Hence, like the state budget, which is made for state government’s expenditure, the local government also prepares a local budget for its cash proceedings in the forthcoming fiscal year. The local government is generally the smallest forms of government and hence, their powers are also limited owing to that of the higher governments.
This reflects in their budget as their revenues and expenditures are also quite less compared to the state budget or for instance federal budget. The local government structure differs from country to country according to their sizes and regulations and hence, the local budget also differs owing to the size and responsibility of the local government. In the primitive era, the local government in its smallest form was the head of the village or any tribal group.
In case of federal state like United States, there are two upper levels of government over the local ones namely, the federal government and the government of the fifty states. The highest form of local government in the United States is at the county level. However, there are also city, town and special purpose local governments in the United States. The special purpose government includes mainly the local governments of the school districts.
Since, these local governments varies hugely in their size and regulations, their budgets also reflects the same and are only prepared as per specific purposes for the smooth running of the local governments. The difference between the local government and the state government is that, the state government possesses sovereignty under the federal union but the local government does not possess any sovereignty, nor under the federal union or their respective states. The local government budget is processed by the Department of Management’s Local Government division.
They prepare the local government budget according to the cash receipt of the revenues from the property taxes and other taxes and accordingly allocate the expenditure of the local government. The local government primarily focuses on the maintenance of the locality and its development which includes roadways, street lights, local schools, etc. The local government is chartered by the municipal corporations and hence, primarily focuses on the workings on the municipal corporation in the locality. (Budget of the US Government – Fiscal Year 2011, 2010)