Governmental structure in the United States is more complicated than in most countries. Which, in turn influences the complexities of public finance.
Financing the public’s business is an integral part of democratic governance. Too frequently, citizens and even career administrators consider public finance the obscure work of specialists. There are a wide variety of finance strategies that we rely upon to fund public projects and operations.
Taxpayers must have confidence in revenue collection an financial management systems of public agencies. For state and local governments, the available revenue limits spending for tax-supported governmental services.
Effective revenue and cost forecasts help to assure the structural solvency of the government organization. Ideally, a combination of several different sources of revenue will provide a balanced, stable flow of resources to support governmental operations.
The contribution of personal resources toward the common good represents a major element of citizenship, although most citizens do not regard the payment of their taxes in quite the same way as they view their duties as voters. Most state governments rely on a combination of income, sales taxes, and some property taxes to generate a diversified, consistent stream of revenues.
Clearly, borrowing opens up governments to debt liability, but long-term financing provides an effective means of funding capital projects and major purchases. The financial community has developed two primary forms of long-term debt financing for the public sector: guaranteed debt and nonguaranteed debt.
The development of a public budget with a capital investment schedule provides the forum for making conscious decisions on these trade-offs.
