Monday, June 25, 2007
Local Government Finance – Question 3
Question for Julie Kate K and Warren K. What struck me the most in reading the section of the chapter about the local government budget process was the incredible variation in how local governments prepare their budgets. Beyond having to prepare a budget and the requirement that the budget be balanced, few generalizations apply. One that does seem to apply, mentioned at the end of the section, is that all seem to operate in a “revenue centered process” rather than a “demand” or need centered process. Rather than start with what is needed and then tax at levels required to meet those needs, they start with available monies and then figure out what they can provide. That particular generalization also applies to the state as a whole. Some local governments prepare detailed budgets and some prepare bare-boned budgets. This usually depends on size of the government, with larger units having more detail. The least is known about budgets of special purpose district governments, because they do not even have to report their budgets to any other part of state government. Ok, after all this comment and summary, let me give you a question. Explain the following statement: despite the variation in how cities and counties and special purpose districts engage in budgeting and finance, the most variation in budgeting and finance occurs in the budgets of school districts.
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3 comments:
Well, you said that special purpose governments do not have to give great detail in their budget because it is not a large form of government; therefore, since school districts are special purpose districts then a lot of room for variation is allowed. School districts are not covered by the home rule in South Carolina; therefore, they display less uniformity in their budget process. Thus, cities and counties are most affected by home rule in terms of their budgetary process. Every form of local government is unique; therefore, they have different fiscal responsibilities. Home rule did not work for school districts; therefore, they are more able to differentiate items in their budget.
Julie Kate
Within Spacial peurpose there is a lot of room for variation. The ome rukle has excluded school distircts. And school districts fall under the special pupose category they don't have to put a whole lot into there budget.Also with the home rule and the school districs there is not an alignment.In local government counties and cities are placed under the home rule and the they are effected by the budget.
Both have the essential point, that no home rule bill ever being written for school districts means that each one was created separately and so they have many different kinds of structures for budgeting and finance. Warren, you need to proof read your answers more carefully!
Some school boards have the power to set budgets and raise taxes to pay for whatever they deem necessary. Others require county council approval, and others require that county legislative delegations approve, and some only require approval if the increase in property tax is over some set amount. So 85 different school districts have 85 different sets of rules -- real chaos!
Since the text was written things have become more complex -- we now have replaced the operating portion of local school finance with state money that will come from the new one cent sales tax that went into effect this June. How the money will be distributed was tied to current expenditures, which will perpetuate existing problems of inequity. But the building of new schools is still tied to local property taxes. It is entirely unclear as to how the legislature will distribute money in the future, especially if the sales taxes do not generate enough money. It is also unclear as to how much pressure districts will feel from local citizens who want to spend more money on improving their schools. They probably will be limited to whatever the state gives them.
Bob B
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