Positive and Negative Externalities
Week 2 Discussion 2
Budget decisions will typically have
more than one impact. For example, if you select spend funds on a police
car, you'll gain a police car, but this will take away funds from some other
project, personnel expense, or piece of equipment. Negative externalities
are included in such impacts. This is why careful planning is needed in
all decision packages. Auburn University explains it a bit further here:
input would be helpful to budgets, law enforcement in order to avoid some of
these negative externalities as in the case of Madison Wisconsin? and where would they get the excess funds for
the city of Madison, Wisconsin found that out. The year 2005 they had over
expended their “operating budget by about one million dollars” (Stuart, n.d.,
p.1). This was explained as routine by the mayor’s spokes person. There are
those agencies that have to abide and live within an amount approved by the
controlling authority. A sound budget preparation would be necessary
government or budget staff. Interest groups can help build support for a budget
request. Surveys, the public can also help. . Budget limits are usually et by the
mayor, and or finance director, or even the governor,
In any given case of
externality, society may well be better off by simply leaving the externality
in place, unless the third-party effects of the externality are truly massive
A negative externality (likewise called
"outside expense"), and is a monetary action that forces a negative
impact on an irrelevant outsider. It can emerge either amid the creation or the
utilization of a decent or administration. According to Terri Genin Finance
Manager (2015) “ It is the police
department that has the largest City budget, In addition to management
of payroll and purchasing, the Finance Section develops the annual budget.
A budget decision is normally
a key factor when it comes to making a budget which will be most effective. In budget
decision there is budget planning which assists the government on controlling
its expenditures. When it comes to “gaining approval with their budget, either
there is a lack of sufficient justification, explanation for items in the
approved budget” (Stuart, n.d).
Not all items (or their expenses) can be
anticipated into a financial plan. Take as examples, extra minutes, fuel,
lawful charges, and payouts for resigned or resigned staff. The quantity and cost of
these type items must be anticipated as close as possible to derive a realistic
projection. A decent
starting point is former years budget.
However, this alone is normally not sufficient. Thought needs to be given to what circumstances
are a huge increase in salary for work force is going to imply that your extra
time plan must be expanded by a comparable amount. This will make sufficient
funding for an equivalent number of extra
time hours. More
precisely, government policy-makers need to devote their attention to the
problem of lowering total transaction costs, rather than simply focussing on
"fixing" this or that externality problem regardless of costs, if
their intention is to maximize social welfare.
The government in most cases usually majors on
law enforcement which is important when setting a good budget strategy which is
affected by the laws made by the government.
The constitution is part of the inputs which
are implemented by the government which place great effect when it comes to
budget decision making. It clearly states of the financial relations between
countries and other financial markets. Constitution also states that various
funds which are allocated for specific jobs are supposed to be deposited to
specific accounts. This will ensure that there will be no other project which
will be left out without funds. There is also the organic law which is
determined to usually guide on the matters pertaining the budget decisions (Khan,
2002). These include the preparation and approval of the budget.
There are also the financial regulations which are
usually implemented in the case of budget decisions. The government or other
authority bodies are mostly issued with the power to issue in details the
regulations and the rules inclusive in budget making. This usually gives out
the expenditure estimates and the revenue income. It will be of great
assistance when it comes to matters of allocating funds. This will help to
avoid most of the externalities involved with budget decision.
hen preparing budget requests,
administrators have to estimate expenditures 18 to 24 months in advance.
Because of this need for estimations, agencies commonly experience
unanticipated shortfalls in various areas of the budget. Usually, when
shortfalls happen, surpluses in other areas are used to cover the expenditures.
When fuel prices increased during the past year, most agencies were able to
adjust their operations to accommodate the shortfalls. Now, however, agencies
are forecasting continued increases in operational costs. With a limited amount
of funds available, leaders are being forced to seek alternative ways to cover
these costs. order to fund increased expenditures, one solution is for governing
authorities to find additional sources of revenue. Increasing the cost of
government operations in the form of fees and property taxes is seldom popular.
These increases usually have the most impact on those who are the least able to
afford them, the poor and those on fixed incomes. Still, it is important for
agencies to explore innovative funding sources. Earlier this year, the Holly
Springs, Georgia, Police Department received national attention when it
implemented a fuel surcharge of $12 to every traffic citation.1 Much like adding a tax to cigarettes,
this fee passes the cost of operations to those persons who are causing the
problem, traffic violators. Because this fee has generated so much attention
and support, many cities are starting to explore similar options. Critics, on
the other hand, argue that law enforcement agencies should not be part of the
revenue-generating process. Bike Patrols, and Foot patrol are two ways a
Khan, A. (2002). Budget
theory in the public sector . Westport, Conn.: Quorum Books.
Gain, T. (2015). Finance -
Administration - Police Department - City of ... Retrieved from https://www.cityofmadison.com/police/support/finance.cfm
Stuart, R. D.
(n.d.). PDF] Budgeting Basics for Law Enforcement - Institute ...
Retrieved from www.icje.org/articles/BudgetingBasics.pdf
i have the instructors question in bold, i started to answer but not sure how to finish with less references thanks