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Financial Goal Setting

Practice Questions

  1. Pick three US states and compare their balanced budget requirements. How do those requirements define budget balance? Does the balance requirement apply to the enterprise funds? To the government as a whole?
  2. The following are proposals legislators are considering for balancing the 2016 budget. You've been asked to identify whether the proposed strategy is appropriate (yes or no). Briefly discuss the policy implication(s) of each strategy.
    • A proposal by a legislator to increase the revenue forecast provided by the staff in the comptroller office.
    • A proposal to issue $10 million in bonds. Proceeds from the debt issue will be used to close the gap in the operating budget. The treasurer projects the bonds will paid off in full in FY 2030.
    • A proposal to draw down on existing reserves and limit contributions to the reserve fund through FY 2020.
    • A proposal that projects savings in key initiatives that could materialize in the next three to five years. The savings are based on current estimates for demand for services and improvements in technology used to deliver the services and is contingent on the programs receiving funding for the initiatives.
    • A proposal to cut base funding for all programs by 5 percent.
    • A proposal to limit intergovernmental transfers to local governments (e.g., county, city, school districts etc.).
    • A proposal to lease out parking garages to a private vendor for a 10-year period (FY 2025). The one-time lump-sum payment from the private vendor will be used to close the current year budget gap.
    • A proposal to delay improvements on public buildings and local infrastructure as well as limit purchases of new equipment through FY 2018.
    • A proposal to provide competitive funding (e.g., $100,000 up to $1,000,000) to programs or department to develop projects that would streamline service, improve efficiency, and achieve cost savings.
    • A proposal to privately operate highway rest stop areas. While the vendors will be expected to make regular payments to the Department of Transportation (DOT), ownership of the properties will not transfer to the private operator.
  3. What are some of the potential advantages and disadvantages of a biennial budget compared to an annual budget?
  4. What are some of the most popular alternatives to traditional, line-item, incremental budgeting? What are the advantages and disadvantages of those models, compared to incremental budgeting?