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1.0.
The Capital Budget of the public sector or sometimes also known as Public Budget concerns
how the government plans its revenues and expenditures at the Federal level, State level, and
Local government level, to carter for the needs of its development programs and projects. In a
democratic society, the division of resources between the public and private sectors is roughly
determined by the desires of the electorate. But because its such a complex and time-consuming
task to acquire adequate political information, the electorate is chronically ignorant.
Since the Revolutionary War, democratic system of governance has forever been looking
for better ways to inform the public and to design more sophisticated techniques for deciding
how best to allocate scarce public resources. Despite the good sense it makes to budget to a
plan, public expenditures are frequently approved based on who supports what, rather than on a
clear understanding of what exactly the expenditures will accomplish.
Public Budgeting is not about numbers; it is about making Democratic governance work.
During the debates leading to the creation of the American Constitution, taxation and public
expenditures were one of the driving forces leading to the creation of our peculiar and complex
system of separation of powers and checks and balances. Our various state and local democratic
constitutions give the executive branch the power to propose a budget and collect taxes, but the
authority to authorize and appropriate funds is lodged in the legislative branch.
For other words, budgeting is focusing or pay attention to higher efforts to exist the
financial sources to fulfill the needs of society. Caused money is limited, budgeting is one part of
alternative to choose the sources and when the chosen are made by government to achieve one
goal, its call one planning.
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2.0.
The importance of government in the operation of the economy has been explicitly recognized
by the economists, politicians and the public at large. The public budget generally reflects the
policy of the government toward the economy in which, the public budget is a forecast of
governmental expenditures and revenues for the ensuing fiscal year, which may or may not
correspond to the calendar year. Thus, it leads to the public budgets to have wide implications for
the national economy.
The budget is the key instrument for the expression and execution of government
economic policy. This is due to the interrelated between the economy and the budget. Economic
conditions significantly affect the budget in various ways. Because of the complex
interrelationships between the budget and the economy, budget estimates depend to a very
significant extent upon assumptions about the economy. Furthermore, the budget as an
instrument of economical policy indicates the direction of the economy, expresses intentions
regarding the utilization of a communitys resources, and promotes economic growth, and
balance in the national economy.
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3.0.
Public budgeting systems are intended to serve several important functions. These include setting
of budget priorities consistent with the mandate of the government, planning expenditures to
pursue a long term vision for development; exercise of financial control over inputs to ensure
fiscal discipline; management of operations to ensure efficiency of government operations; and
as tools for performance accountability of government to citizens. The most fundamental
function of budget is to control public expenditure, which is commonly carried out by financial
control over inputs.
Typically, a budgeting system cannot achieve these purpose equally well at the same
time. The relative strength of each function depends on budgeting tool and technique, but most
critically depends on political decision on which issues are the government keen on, and try to
orient the budget around those issues, or develop hybrids that work to achieve multiple goals.
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iii. Have a performance measurement that frame and using to public benefits.
iv. Having a program evaluation that important to gain reaction from public about the
government programs.
v. Can help the other agencies to manage, organizing and control with better planning,
efficiency and effectively.
vi. Try to fits the lack of Traditional Budgeting System with assume to one basis for making
program decision in the operating agencies would be improved
Despite its benefits, the Program Performance Budgeting System has not been the great tool
in practice that its logic would imply. There several reasons for this are (Zaherawati Zakaria,
2004):
i. Difficulties to decide clearly goal because it must involve many research and
development to knowing the public needs and expertise to making research
ii. Difficulties to choose fits program that connecting with social values.
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The new ZBB team begins by redefining the functions mission and orienting the
function to up-to-date objectives, given current business challenges. For example, a
finance functions mission might shift from provide world class financial support to
management to provide efficient low-cost transactional support while providing topquartile decision support services. Having identified the mission, the team then designs
principles that support the new mission.
3. Aim high.
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Putting aside the existing state of the company, the team envisions each function in an
ideal state with a blank sheet of paper. This is the opportunity to explore which activities
can be removed or which service levels can be reduced to match evolving company
needs. This task allows the team to describe the activities that can become more efficient
and update the organizational structure to match those changes.
6. Compare the existing and ideal state.
Comparing the existing with the ideal state, the team can identify the savings
opportunities and associated risks and costs of moving from the existing to ideal state.
The team then assigns priorities to each initiative based on the size of the opportunity and
the difficulty of achieving it.
7. Build the future state from the bottom up.
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Company leadership then takes all the data and analysis collected by the various teams
and designs the organization needed to support the future state. At this point the
leadership must ensure that the design is consistent with organizational best practices for
spans, layers and effective decision making.
9. Create an implementation plan.
At this stage, the team begins a quarter-by-quarter implementation plan (including the
formation of an implementation team), and an internal and external communication plan.
Finally, there is a new program office to champion and communicate achievements,
monitor savings, embed new capabilities and sustain the cultural change.
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4.0.
Budgeting approach.
Budgeting process.
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The concept of local fiscal policy in Indonesia based on the implementation of regional
autonomy.
Decentralization in Indonesia are not only associated with the model rule alone, but also about
economic paradigm called economic decentralization. Decentralization economy includes
economic activities and responsibilities that are implemented at the level of regions in Indonesia.
In this regard, fiscal decentralization became a major component of the decentralization process
in Indonesia.
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5.0.
Conclusion
The government plays an important role in the economic life of the state through the revenue and
expenditure measures of its budget. The economy and the budget are interrelated. In addition, the
economic consideration indicates that the budget has some functions such as in allocation,
distribution and stabilization. Besides that, budget provides assessment of the economic
conditions of the country. If the productions of the economy are increases, the incomes of the
people will also increase.
As a concluding remark, it is not brisk to say that Public Budget is the backbone of every
governmental organizations and departments, without which the smooth operation of an
organization can be totally disrupted. Thus, proper and prudential planning on the Federal
government, State government, and Local government sides with regard to project feasibility and
urgency of projects are highly encouraged.
References:
Babunakis, M. ((1976). Budgets: An Analytical and Procedural Handbook of Government and
Non-Profit Organizations. London: Greenwood Press, Wesport, Connecticut.
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Public
Zakaria,
(2004).
Financial
Administration.
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from: