Question

16.5% of our U.S. workforce is employed by government entities. That means there is probability that three people in our class will be employed in government at any one point in time and over the span of your careers in their entirety that number will be closer 10. Most government entities use what is called a “line-item budget”. What is a line-item budget? Non-governmental companies are not required to budget; it is just good practice. Are any governmental entities required to implement budgets?

Answer 1

A line item budget is a form of budget presentation that clusters proposed expenses by department or cost center. This method of aggregation more easily shows which departments and cost centers are absorbing the bulk of the entity's funds. The presentation typically shows the actual expenditure or budget from the prior period for comparison purposes, so that one can quickly see if there are significant changes budgeted from the prior period.

Yes, Government entities are required to implement budgets. Moreover, Local governments in the U.S. are required to have balanced budgets. A “balanced” budget is one where the revenue budget is the same amount as the expenditure budget.

They may incur debt, but the annual debt repayments must be funded with current annual revenues.

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