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Introduction
A budget refers to a financial plan of government expenditure that conforms to its revenue collection within a given period. Revenue denotes the money that the government raises from different sources. Expenditure refers to the manner in which the state uses the collected amount. The federal government is a republic of many states in which every state runs its own government. A local authority comprises a lower structure of administration that also employs its own regulations.
A local government is usually answerable to the state directorate. The main sources of revenue for federal regimes comprise taxes that various states collect within their jurisdiction. The taxes include individual and corporate, capital gains, and property.
A federal-state can also, through the Federal Reserve, print money to finance its expenditures. The federal authorities may also borrow money to run their projects through treasury bills and bonds (Wehinger, 2010). The state leadership raises its revenue through taxes like corporate, business licenses, individual and sales, and money that it borrows from the public like bonds, intergovernmental transfers, and grants. Local councils raise funds from taxes like property, sales, intergovernmental transfers and grants from the federal authorities, public borrowings like bonds and user charges.
Similarities of the various units of governance
Every hierarchy of government must match its revenue to its expenditure. The federal administration allocates its expenditure into three parts comprise of debts interest, discretionary, and must-spend amounts. The interesting segment refers to the money that the government pays on its outstanding debt. The discretionary aspect includes agriculture, housing, health issues, energy, unemployment, transport, military, and education (Romalis, 2011).
The must-spend component denotes earned-benefit programs like social security, health, and veterans benefits. The state and local regimes expenditures include education, public welfare, and roads. One of the major similarities of federal, state and local governments budgets is that all derive revenue from taxes. Taxes are usually crucial sources of revenue for all hierarchies of government (Philip & Marshall, 2010).
Taxes like property, corporate and individual are levied on the public in all forms of government. Money borrowing is also a source of revenue for all levels of administration. A federal governments borrowing is called a treasury bond. A state bond refers to borrowing by a national regime. A local administrations borrowing comprises a local bond. State and local authorities may receive money from the federal states in form of grants.
Differences among various hierarchies of government
This paper evaluates differences among federal, state, and local governments budgets. The federal council can receive funds from the Federal Reserve that legitimately prints money (Sapir, 2011). The states entities and local administrations cannot print money due to the existence of only one Federal Reserve. This entity is responsible for regulating the circulation of money in the states. In this way, it controls economic uncertainties like inflation through the regulation of interest rates. During economic crises, the US Federal Reserve can boost the economies of the states (Panagariya, 2011).
The state and local governments cannot control the economy because they lack regulatory bodies. A part of the federal authoritys expenditure goes to the national defense sector. The state authorities and the local governments do not play major financial responsibilities for the national defense forces. The national government does not disclose the amount of money it allocates to the national defense. The state governments and local entities must disclose their budgetary allocations to the public.
The federal government through the US Senate deals with issues like border security, declaration of war, foreign affairs, national defense, constitutional laws, and regulation of international trade (Magee, 2012). The states governments deal with issues like issuance of licenses, conduction of elections, the establishment of local governments, formulation of the constitution, and provision of public health and policy. The local government deals with road maintenance, library services, economic development, urban planning, and education.
The concepts of revenue and expenditure and how they relate to the functions of various systems of government
This research identifies a relationship among expenditures and revenues of the three hierarchies of government and their functions. The US national government spends funds on the training of the states forces. This aspect may be of benefit to all levels of government because the defense forces protect the US against acts of terrorism and external aggression. The US army waged war against Saddam Hussein of Iraq.
The national government of the US maintains healthcare facilities that help to protect the wellbeing of all citizens of the US. The ObamaCare is a program that helps in the maintenance of public health in the US. The federal government of the US also spends on social security payments and food assistance (Lloyd & Maclaren, 2010). The contributions maintain the well-being of the citizens of the US through financial aid and subsidies to businesses. The states authorities and local councils depend on grants and loans from the national government. Financial aid helps in the completion of development projects, health facilities, and education. The income tax from the state entities and local governments is usually utilized by the national government of the US to provide public services (Lapadre & Proietti, 2011).
The services comprise of provision of farm inputs and subsidies to farmers like in the case of the US Farm Subsidy Recipients Program. The output from agriculture is beneficial to users as it provides food security to the public and also increases the states GDP. The state entities and local regimes must provide quality education to the citizens. They also offer assistance to the needy by catering for their fees and hence secure their welfare.
This idea helps in the alleviation of poverty and unemployment, a goal of the national government. The income from the states administrations and local governments are used to subsidize the cost of commodities for low-income earners, children with poor physical conditions, persons with disabilities, and the needy people in the society (Heidari &Wu, 2011). This idea requires the formation of strong links between the local and state authorities particularly in the area of funding.
Legal procedures should guide the functions of all the hierarchies of government to avoid duplications of functions among them. The statutory provisions should also act as a guide to the borrowing mechanisms of the three systems of governance (Freund & Ornelas, 2010). The transportation sector in the US has experienced reduced progress due to the increase in the prices of fuel by the states and local governments. This aspect has continued to reduce the number of cars on the roads in the US. The decrease in the number of motor vehicles on the highways also reduces the repair and maintenance costs of the roads. The roads thus remain well maintained without traffic jams.
References
Freund, C., & Ornelas, E. (2010). Regional Trade Agreements. Washington, D.C: The World Bank.
Heidari, M., &Wu, L. (2011). Framework for Pricing Interest Rates and Interest Rate Tools. Financial and Quantitative Analysis Journal, 46(5), 519-554.
Lapadre, L., & Proietti, A. (2011). Statistical analysis of international trade and production: towards a scoreboard of indicators. Connecticut, CT: Cengage Learning.
Lloyd, P. J. & Maclaren, D. (2010). Gains and Losses from Regional Trading Agreements: A Survey, Economic Record, 80 (2), 445-467.
Magee, C. (2012). New Concepts of trade development and diversion. Journal of International Economics, 79 (8), 346-369.
Panagariya, A. (2011). EU preferential trade arrangements and developing countries.The World Economy, 28 (14), 1418-1439.
Philip, D., & Marshall, J. (2010). Pricing Long Bonds: Pitfalls and Opportunities. Journal of Financial Analysts, 1(1), 32-39.
Romalis, J. (2011). NAFTAs and CUSFTAs Effect on International Trade. Review of Economics and Statistics, 95 (16), 419-439.
Sapir, A. (2011). Domino effects in Western European Regional Trade, 19601992. European. Journal of Political Economy,19(4), 377-388.
Wehinger, G. (2010). Risks Ahead for the Financial Industry in a Changing Interest Rate Environment. Journal of Financial Markets Trends, 2012(3), 67-85.
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