Forum Discussion
dave54
Jun 09, 2020Nomad
There is a general lack of knowledge among lay people of how government budgets work. It is not like your household budget.
Suppose you budget $300 this month for fuel for your family car. In most months that comes pretty close. About the middle of the month you realize you are driving a lot less, and the price of fuel is way down. So you are halfway through the month and you have only spent $75. You think to yourself “This is great! I can use the savings to buy a new grill for my RV.” That is reasonable, and most people would congratulate you on your financial savvy.
The government cannot do that. If you ran your finances the way the government is mandated, you cannot spend the fuel savings on anything else. That money is for fuel and can only be spent on fuel. That you have money left over in your fuel budget while your grill has died and no longer usable is irrelevant. You are forbidden by law to spend the surplus in your fuel account on a new grill. You cannot even go to the gas station on the last day of the month and top off your tanks in anticipation of a fuel price increase and a big trip next month. That is not allowed either.
This is an oversimplification, but it illustrates the point. Funds allocated for one purpose cannot be used for other purposes (thank you Al Gore…).
There is very little wiggle room to reallocate funds. Sometimes the regulations allow, say, 10% of program A funds may be spent on program B, and 15% of program B may be spent with an equal amount from program C on a joint project, if it can be completed within this fiscal year. A good agency budget analyst is a valuable person in these cases, knowing how to move funding around to where needed while staying within the law. There is still a very limited amount of creative accounting you can get away with, though.
Suppose you budget $300 this month for fuel for your family car. In most months that comes pretty close. About the middle of the month you realize you are driving a lot less, and the price of fuel is way down. So you are halfway through the month and you have only spent $75. You think to yourself “This is great! I can use the savings to buy a new grill for my RV.” That is reasonable, and most people would congratulate you on your financial savvy.
The government cannot do that. If you ran your finances the way the government is mandated, you cannot spend the fuel savings on anything else. That money is for fuel and can only be spent on fuel. That you have money left over in your fuel budget while your grill has died and no longer usable is irrelevant. You are forbidden by law to spend the surplus in your fuel account on a new grill. You cannot even go to the gas station on the last day of the month and top off your tanks in anticipation of a fuel price increase and a big trip next month. That is not allowed either.
This is an oversimplification, but it illustrates the point. Funds allocated for one purpose cannot be used for other purposes (thank you Al Gore…).
There is very little wiggle room to reallocate funds. Sometimes the regulations allow, say, 10% of program A funds may be spent on program B, and 15% of program B may be spent with an equal amount from program C on a joint project, if it can be completed within this fiscal year. A good agency budget analyst is a valuable person in these cases, knowing how to move funding around to where needed while staying within the law. There is still a very limited amount of creative accounting you can get away with, though.
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