Authors Robert W. Smith and Thomas D. Lynch describe public budgeting through four perspectives: incrementalism, comprehensive planning, decision-making, and managerial.
Further, they develop an operational definition: A "budget" is a plan for the accomplishment of programs related to objectives and goals within a definite time period, including an estimate of resources required, together with an estimate of resources available, usually compared with one or more past periods and showing future requirements.
It involves setting priorities, estimating revenue, determining spending levels, and monitoring the use of funds.
Some key considerations in resource management of public budgeting include: prioritisation, efficiency, accountability, transparency, flexibility.
[2] Public budgets are of a greater size, however, the responsibility for them is assigned to relatively small number of executive representatives.
Jr. et al. argue that governments do not use all available resources, even though this has been violated in the United States during times of major crises such as World War II.
On the other hand, they suggests that during times unaffected by the crisis most of the Gross domestic product is managed by the private sector.
Governments have almost unlimited power to decide how much money will be used for public purposes, whereas private sector is reliable on their ability to sell their product on the market.
Although, there are some government activities that yield profit which cannot be always measured in terms of money, even though we realize there is an existing benefit to such programs.
It obviously yields great returns which cannot be directly measured in terms of money, although future earnings can be estimated according to the value of life.
Jr. et al. say that: "Some government services yield public or collective benefits that are of value to society as a whole"[5] They suggest that this is the main difference from corporate products that are mostly consumed by an individual.
[6][7] This idea was originally presented by economist Paul Samuelson in his seminal paper, "The Pure Theory of Public Expenditure," published in 1954.
Governments use public budgeting to allocate and manage financial resources in order to achieve social and economic objectives.
[13] There has been a huge shift towards mandatory spendings as countries around the world adopted various fiscal rules to enforce sustainability and to make public budgets more predictable over time .
Accountability focuses on the inputs going into the system or program in action and is best characterized by the line-item budgeting approach.
Efficiency focuses on the process of the system or program and its conversion of inputs (resources) into outputs (policy).
Its focus on the process makes this value appropriate for performance budgets and most in-line with management and steering functions.
See the associated points below: There are several types of public budgets that governments may use to allocate resources and plan for future spending.