Example pol 501601 budget and financial management and admini

1. Example
POL 501/601 Budget and Financial Management and
Administration
Spring 2017
Professor *
February 8 Study Questions – Budgeting for Revenues Part 2
Instructions
Read carefully each question and write an essay response. In
your response make sure to address all points raised by the
question. Use your own words to paraphrase reading material,
and use references, where you think the information is specific
enough that the authors have to be acknowledged.
The study questions are due before the start of class, printed
and stapled, with your name at the top of the first page. Please
bring an extra copy for your reference for the class discussion.
Question 1.
What is included in the current tax base of the sales tax? What
tax principles are involved when considering expanding the tax
base for the sales tax? (Remember that tax principles were
covered last week)
Question 2.
What are the advantages and disadvantages of user charges?
Question 3.
Why is revenue diversification important? What makes revenue
diversification difficult?
Question 4.
Note: This question combines readings from this week and last
week.
How has the property tax changed over time for local
governments? What are the advantages and disadvantages of the
property tax as a revenue source? In response to these
questions, make sure to refer to the main principles of taxation,
as well as the importance of revenue diversification for local

2. government.
Last Name 1
Name:
Instructor:
Course:
Date:
PPBS and ZBB Comparison
The process of budgeting offers a mechanism for a company to
establish objectives and goals, for identifying inadequacies or
weaknesses in the firm and in the process; it helps in integrating
and controlling the diverse activities that are conducted by
numerous agencies within extensive organizations including
both public and federal (Kelly, 45). Additionally, budgeting
needs a robust analysis and evaluation of the company’s
resources that have been employed in the previous tenures,
planning and evaluation of what has been accomplished and in
the process, programming future course of action by allocating
and distributing resources for the next budget period. Moreover,
the government always incur challenges when it comes to
evaluating the efficiency and effectiveness of its program since
it fall short of the readily definable net revenue measures
enjoyed by the industries. For instance, the reformers who
existed in the early sixties believed that the reason behind this
situation was down to poor decision making on the part of
policy makers coupled with the uncoordinated nature of the
manner in which decisions are made (Kelly, 46). In other words,
according to them, they were of the opinion that rational and
coordinated decision making was crucial to but believed that

3. greater employment of analysis tools will greatly improve the
current situation. In essence, they thought that categorizing the
budget will help facilitate the budget analysis. Therefore, such
analysis was emphasized in the planning, programming and
budgeting systems (PPBS) and after a later stage, it was also
stressed in the Zero-Based Budgeting (ZBB).
Programming, Planning and Budgeting System (PPBS) is a
budgeting process that is employed in determining the
requirements and allocation of resources when it comes to the
Department of Defense (Riccardo, et al 108). Additionally, this
system was created to offer support to the multiyear force as
well as the financial plan and in the process, help reconcile the
differences that existed between the funds and requirements
while at the same time offering due process for all defense force
services to distribute resources to the needed goal to support the
Military Strategy. On the other hand, Zero-based Budgeting was
introduced to the defense or rather federal process in the year
1977 (Riccardo, et al 101). In so doing, it has increased the
involvement level of the Secretary of Defense office in the
development and improvement of the service programs. In other
words, the principle goal of ZBB is to incorporate managers at
all budgeting process levels hence justifying the resource
requirements for new initiatives as well as existing activities.
Moreover, it also encourages the managers to focus the
budgeting process on matters to do with decision packages
coupled with alternative funding levels namely; current levels,
minimum levels, and enhanced levels.
PPBS are a budgeting instrument that is designed to alter
outcomes, processes and the implications of the government
budgeting in important ways. In other words, this system
purposed to improve the planning process as far as program
development is concerned in advance, before allocations of
budgetary are made. Moreover, it also helps to allow decisions
of the budget to be carried out based on the plans that are

4. previously made. In fact, its main objective was to make
programs and not agencies the primary focus when it comes to
budget making (Kelly, 49). In essence, PPBS was viewed as an
instrument of reducing overlapping and duplicative programs
but it was essential in studying programs in isolation from there
agency so as to choose the best optimum program. One clear
advantage of PPBs is the fact that it offers a formal and
systematic technique of improving decision-making as far as
resource allocation is concerned (Riccardo, et al 108).
Apparently, it also improves the chances of ensuring that there
is a rational tax allocation hence increasing the chances of
maximum impact.
Zero-based budgeting is a form of budgeting that ignores the
legal, political and social constraints but ends up arriving at
decisions of budgeting in amore artificial, and ideal
environment. In essence, this form of budgeting was viewed as
the most ideal way of arriving at how resources and activities
should be allocated to realize the goals that are agreed upon.
This process entails two major processes namely; developing
decision packages and ranking the decision packages (Riccardo,
et al 106). As a result, once the decision making packages have
been identified and ranked, the individuals in management can
now be able to distribute resources based on most important
activities irrespective of whether they are new or current. It is
from this step that the final budget is constructed based on the
decision packages that were approved by the budgetary
committee. In practice, based on the words of Allen Schick,
Zero-Based Budgeting can be classified as more of a marginal
analysis form than a requirement of the need to build the budget
from zero. In other words, it was an instrument used to shift the
attention to decrements below the base from increments above
the base. This tool was essentially an improvised form of
incremental budgeting despite the fact that it is considered a
rational –budgetary tool. In essence, ZBB continues and refines
the concepts and practice of incremental budgeting.

5. Therefore, when the two budgeting process are looked at
closely, it is clear that PPBS concentrates on the activities that
will be conducted and not basically how they should be done
whereas the ZBB concentrates on how to realize a particular
objective (Riccardo, et al 108). According to PPBS, budgeting
is basically the calculation of cost based on a number of
decisions in programming and planning despite the fact that in
reality there are many alternatives and policy decisions to be
taken into consideration during the budgetary process. ZBB on
the other hand provides a comprehensive and detailed
evaluation and analysis of policy coupled with a number of
alternatives on the many operations and activities within the
program from which the general policy and objective has
already been defined. Additionally, PPBS concentrates on new
programs or rather primary changes in current programs and in
the process, it does not force the continual evaluation of
ongoing operations and activities but, Zero-based Budgeting
forces the people in charge to review in detail the effectiveness
and efficiency of all budgets and plans (Kelly, 45).
In summary, PPBs and ZBB are both micro-economic tools
fused for centralized decision making. In other words, as far as
PPBS offers decision making on primary policies and objectives
as well as basic fund allocations, ZBB offers an opportunity to
transform this activities and objectives into an effective and
efficient operating budget and plan. In so doing it permits the
managers to analyze and evaluate the implication of various
levels of funding on program elements and programs so that
limited resources can be allocated effectively.
Work Cited
Kelly, Janet M. Performance budgeting for state and local
government. Me Sharpe, 2015.
Mussari, Riccardo, et al. "Design, Trajectories of Reform, and

6. Implementation of Performance Budgeting in Local
Governments: A Comparative Study of Germany, Italy,
Lithuania, and Norway." Local Public Sector Reforms in Times
of Crisis. Palgrave Macmillan UK, 2016. 101-119.
Example
Study Questions 2
Question 1
A tax base is defined as the aggregate value or amount that can
be subjected to taxes such as sales or VAT. In the process of
expanding the tax base for sales tax, several micro-economic
and macroeconomic factors must be considered. One, it is
necessary to evaluate the current amount of goods and services
that are tax exempt. This is because all goods and services are
imposed a certain tax unless they are exempted (Sjoquist and
Stoycheva 47). Having a large portfolio of exempted
merchandise reduces the overall amount collected as tax and
this places a strain on the existing public resources. The legal
considerations involved in making the expansion also have to be
considered. The approach towards making these changes also
has to be considered. Adopting a comprehensive approach in the
expansion process has the consequence of brining the majority
of products into the sales tax base in one move (Lee Jr,
Johnson, and Joyce 67). This can have a positive or negative
impact on economic stability. Equality is another aspect that
must be considered in the process of expanding the tax base for
sales tax. When the tax base is expanded, it implies that more
money will be taxed from every taxpayer. This has a far worse
effect on middle and low-income housing that are already
struggling to afford basic amenities (Lee Jr et al., 34). The
decision to expand the tax base will affect a group of people
within the country regardless of the way in which it is handled.

7. Question 2
User charges can be defined as the charges placed for using a
product or service. User charges are normally evoked with the
amount of goods or services used or for the duration of usage.
Common examples within the public context include deductibles
and extra billing (Lee Jr et al., 12). Most of the arguments
supporting the resurgence of user charges consider the concept
well suited with fundamental principles of accessing affordable
health, schooling, and other welfare services. Proponents of
user charges claim that public users are closely involved in the
funding of the services they enjoy, they acquire a greater sense
of accountability and duty that improves the longevity and
effectiveness of these services. Additionally, user charges are a
useful source of funding that can be used to improve the quality
of services being offered (Sjoquist and Stoycheva 88). Lastly,
placing user charges reduces public expenditure on goods and
services. Cost sharing with the public implies that the specific
agency can award their finances to other causes.
Conversely, the sides that oppose the imposition of user charges
argue that they interfere with the access of public amenities and
services. In such circumstances, introducing user charges can be
perceived as a violation of the ideology that guarantees fair
access to public goods and services without considering the
financial ability (Lee Jr et al., 79). The public can be exposed to
participant culpability in which they are intentionally exploited
financially. The user charges also have the possibility of
imposing unfair fees on undeserving citizens. Additionally, the
bureaucracy involved in collecting the funds can create more
problems for the government. Public restructuring, devolution
of welfare services to municipal governments and budget
decisions to lower the allocation for human services have
increased the emergence of user fees.
Question 3
The importance of revenue diversification cannot be

8. overstressed. Governments that rely on a few sources of funds
will find themselves struggling to offer even the basic amenities
to the public. It is practical to seek out all diverse methods of
funding programs. Eventually, a diversified revenue approach
reduces the risk of experiencing losses any single source of
income. In the event that one source dries up, it is easier to shift
their focus to another (Sjoquist and Stoycheva 87). This is
particularly true in societies where the private and public sector
are well developed. Healthy governments display a combination
of funding sources such as multinational corporations, earned
income, taxes, and individual investors (Lee Jr et al., 25).
Managing diversification in a different and parallel environment
is equally challenging mainly because as the government moves
from one agency to another, it is forced to reevaluate all the
existing income streams before making an informed decision.
Managing revenue growth in itself is a challenging task and for
governments having numerous agencies, employees and sources
of income, this job is far more complicated. Revenue
diversification in the public realm is characterized by massive
bureaucracy, inefficiency and other flaws that are related to the
country. Statistical workloads are another challenge that affects
proper revenue diversification. Financial decisions are made
using fundamental macroeconomic principles that require
experienced personnel. Most government employees are
overwhelmed and therefore, fail to deliver their services
appropriately (Lee Jr et al., 90). The result is poorly organized
revenue diversification. Traditional barriers such as extensive
research and location have a negligible but still recognizable
impact on revenue diversification. Difficulties also emerge in
the feedback process. In most corporate settings, the feedback
system is very fast. However, in the public sector, collecting
and relaying feedback is relatively slow. This is because of the
conventional challenges such as insufficient staffing and
bureaucracy.

9. Question 4
Property taxes are a significant factor that affects profitability
of property owners across the nation. Property taxes play a
major role because of their complications and the difficulty in
comprehension. The evolution of property tax for local
governments has been significant within the last decade.
Property taxes in the recent period are still a central source of
funds for local authorities. The realistic purpose of this
category of taxes, consequently, is very similar to its earlier
version in the colonial period (Sjoquist and Stoycheva 32).
Property taxes were central in supporting local government
programs where income and sales taxes were likely to
concentrate on the federal level of advantages. Many efforts at
restricting the growth of property taxes, nevertheless, have
occurred in the past, with a particular focus on ensuring that
these tax rates do not soar to uncontrollable levels with the
growth in property values. Property taxes have become a
fundamental aspect of the modern side of the United States,
forming a niche and maintaining its state as one of the biggest
income sources for local authorities for several centuries (Lee Jr
et al., 11). The transformation of property tax evaluation and
payment is closely attached to the ability of the tax to adjust to
the needs of different stakeholders including taxpayers and state
agencies benefiting from the money. Property tax on buildings
adjusts the motivations for developing land that consequently
affects land use trends (Sjoquist and Stoycheva 56). One of the
major worries is whether it promotes urban encroachment.
Property tax has also shown indicators of being regressive. In
other words, property tax affects the lower income group
disproportionately when implemented in a poor way. This is
because of the impact on specific low-income groups including
retirees and farmers.
Works Cited

10. Lee Jr, Robert D., Ronald W. Johnson, and Philip G. Joyce.
Public Budgeting Systems. Jones & Bartlett Publishers, 2012.
Sjoquist, David L., and Rayna Stoycheva. "Local revenue
Diversification: user charges, sales taxes, and income taxes."
The Oxford handbook of state and local government finance
(2012): 429-462.