Expenditures and revenues summary
Lynch and Smith, 2004 state that, “A “budget” is a plan for the accomplishment of programs related to objectives and goals within a definite time period, including an estimate of resources required, together with an estimate of the resources available, usually compared with one or more past periods and showing future requirements. ” State and local government is truly “big business. ” Allison, Freeman, Patton, Shoulders, and Smith, Jr. , 2011 state that, “The 50 states and 87,000 local governments within the United States employ more than 17 million persons-almost six times the federal government civilian employment—and spend more than trillion annually.
Although the federal government accounts for over half of all government expenditures, state and local government spend more for nondefense purposes than does the federal government. ” Revenues and Expenditures Business dictionary 2013, defines revenue as the income generated from sale of goods or services, or any other use of capital or assets, associated with the main operations of an organization before any costs or expenses are deducted. Revenue is shown usually as the top item in an income (profit and loss) statement from which all charges, costs, and expenses are subtracted to arrive at net income.
Expenditures and revenues summary Essay Example
Expenditures—recognized in governmental fund financial statements—are net financial assets expended during a period for current operations, capital outlay, long-term debt principal retirement, and interest. With the exception of long-term debt principal retirement, expenditures typically reflect the net financial assets expended to acquire goods or services, whereas expenses reflect the costs of goods or services used (Allison, Freeman, Patton, Shoulders, & Smith, Jr. , 2011, p. 41).
The role of the federal government is to monitor/regulate the economy through interest rates, to control inflation, and to boost economy during stagnation. Federal government is in charge of national defense and it can legally print money (Public Budgeting and Financial Management, 2013). Three main sources of federal revenue include individual income taxes, payroll taxes, and corporate income taxes. Almost half of all federal revenue (46 percent) comes from income taxes. The income tax is generally progressive: higher-income households pay a larger share than lower-income households do (Center on Budget and Policy Priorities, 2013).
Another 35 percent of revenue comes from payroll taxes, which are assessed on the wage or salary paychecks of almost all workers and used to fund Social Security, Medicare, Hospital Insurance, and unemployment insurance. Corporate income taxes make up about ten percent (10%) of federal revenue, with the remaining nine percent (9%) coming from excise taxes, estate taxes, and other taxes (Center on Budget and Policy Priorities, 2013). The sources of Federal revenue come from the General Fund. The General Fund is used “to account for and report all financial resources not accounted for and reported in another fund.
All governments with general government activities will have one General Fund. For most governments, the majority of their general government activities and the largest number and dollar amount of their transactions are reported in the General Fund (Allison, Freeman, Patton, Shoulders, & Smith, Jr. , 2011, p. 46). The role of the state government is to promote the state economy and to take operational control over most government programs for individuals, such as social programs and risk management (Public Budgeting and Financial Management, 2013).
Three sources of state revenue include: selective sales tax (gasoline, tobacco, and alcohol), general sales tax, and lottery. Many state governments charge a sales tax on gasoline that only can be used by the state to construct or maintain roads. The proceeds from this sales tax are recorded as revenues (increasing fund balance) in a Special Revenue Fund (Allison, Freeman, Patton, Shoulders, & Smith, Jr. , 2011, p. 47). Sales tax is imposed on the sale of goods and certain services in South Carolina. The statewide sales and use tax rate is six percent (6%).
Counties may impose an additional one percent (1%) local sales tax. Voters in Hampton County approved the one percent (1%) local sales tax which caused the taxes to increase to seven percent (7%). Generally all retail sales are subject to the sales tax (South Carolina Department of Revenue, 2013). The proceeds from the general sales tax are recorded in the General Fund. In November 2000, South Carolina voters approved a state lottery. Lottery proceeds are transferred to the Education Lottery Account.
Revenues are used to supplement existing resources for educational purposes and programs. The role of the local government is to look after parts of the local community that are public property such as local roads and parks. They decide where new local and buildings should go and all decisions have to be approved by the council (Public Budgeting and Financial Management, 2013). Three sources of revenue for local government include: property taxes, local taxes, and intergovernmental transfers. Property taxes are used to fund important programs such as public schools and infrastructure.
It remains a major cost for homeowners and they vary widely from one municipality to another. Property taxes are tracked in the county’s General Fund. Local taxes are assessed and levied by a local authority such as a county or municipality used to fund services such as garbage collection and sewer maintenance. Benefits from local taxes are apparent at the community level (Public Budgeting and Financial Management, 2013). Local taxes are generated from the county’s Municipal Fund. Intergovernmental transfers are transfers of funds from one level of government to another.
This may be to fund general government operations or for specific purposes (National League of Cities, 2013). They are tracked in the General Fund as well as other funds depending on level of government they are transferred from. Conclusion Government financial reporting must address numerous issues that differ from those in the business environment. South Carolina relies on the two major broad-based taxes for the bulk of state revenue, the individual income tax and the retail sales tax. Changes in the economy can have an effect on tax revenue and expenditures within the state’s public budget.