What is a Government Budget?

A government budget is a document that both records and anticipates all public revenues and expenditures for the next fiscal year. A government budget lists all projected sources of revenue for the coming year. It then lists all anticipated expenditures based upon the revenue projections in the coming year, going into considerable detail as to how the funds will be apportioned for each budget item. The process of passing a government budget varies from one government entity to the next. Almost all existing governments, no matter their size or structure, operate on some form of a budget process.

In the United States, the federal budget is required by the Constitution to be introduced by the House of Representatives. It is spearheaded by the Budget Committee. All 435 representatives have a say in adding or subtracting budgetary items, but the bulk of the federal budget is directed by the Speaker of the House, the House majority leader, and the chair of the Budget Committee. Once the budget is created, it then must pass through committee review. Then it must be passed by a floor vote in the House. From there, the Senate must pass the budget and reconcile any discrepancies in conference with the House. Once passed by both houses of Congress, it heads to the desk of the President for signature or veto.

National governments are not the only ones that use the budget process to project revenues and expenditures. Regional and local governments in countries around the world also utilize some form of budget. In countries with parliamentary systems, the party in power usually crafts the budget. It must be voted on and ratified by the full parliament. Countries with autocratic governments generally require no formal vote on the budget, yet they still operate with one.

While a government budget is a document that apportions anticipated revenues for anticipated public spending projects and other expenditures, emergencies can arise in the course of a fiscal year. War, disasters, new initiatives created by legislation — all of these may require amendments to an existing budget or require additional funding resolutions to secure public money.

Some contend that a government budget should work no different than a household budget. The problem with this analogy, though, is that governments are able to operate with a budget deficit while a household generally cannot. A government budget can, and often does, require the government to spend more money than it takes in.