AVILA, CHARIBELLE A.

BPA 3A

1. In what ways does budgeting in the public sector differ from budgeting in
business? Discuss the implications of these differences for the argument
that “government can’t be run like a business.”
Answer:
Budgets are utilized as a primary planning tool in both the public and
private sectors. Budgets in the public sector are balanced, whereas budgets
in the private sector are used to forecast operating results. The public
sector budget balances obligatory expenditure on assets and services with
earnings from public sources such as taxes and levies. If a government's
budget does not balance, you must cut services, raise taxes, or borrow to
make up the deficit. In the private sector, you forecast income and
expenses to determine how much profit your company will make. If your
profit is too low, you can cut expenses or increase your marketing budget
to anticipate higher sales. However, government cannot be run like a
business since the objective of a public-sector organization is to optimize
the provision of services to the client group while keeping expenses within
the authorized limit. Financial success is defined as spending the money
allotted in the budget to provide the desired services. The objective is to
stay to the budgeted amounts. The objective of a business is to maximize
profit through lowering expenditures and increasing revenue. As a result,
public budget planning is essential to the smooth operation of all levels of
government. Furthermore, the government budget is driven by tax
revenue, and budgeting involves planning, analyzing, and assessing.