Huge Government Budgeting Problem

Posted November 12, 2014  |  Filed under Fixing The Government

This has to be one of my biggest pet peeves of all time. And this government budget policy not only exists at the federal government level, but exists at the state and local government levels as well. I have worked at both the federal and state government levels and have personally experienced this first hand.

If this policy is changed, this could save governments at all levels so much money that would help create a surplus and lower our taxes without affecting any other aspect of the government. Unfortunately, this policy is not known by many people outside of the government. If a majority of the people outside the government knew this, there would be a public outcry to change it.

So let's talk about the problem. Most governments work on a 12 month budget cycle. For example, the budget year for the federal government is from October to September. Others run from January to December. Each government agency submits their budget every year and an amount is approved for the budget year. At the beginning of the budget year the approved amount is provided to the various government agencies in which the agencies use the funds throughout the year to operate.

Now here is the kicker: If an agency does not spend all of the money it was allocated at the beginning of the budget year, the money is taken away from the agency and spent elsewhere, AND, the agency risks a budget reduction of that amount the next budget year. So what do these agencies do to keep from losing this money? They spend every penny they have, whether they need to or not! And sometime they spend more because they were given money that was taken away from another agency. When I worked for the government, I have personally been given hundreds of thousands of dollars above and beyond my budgeted amount that came from other agencies because they could not spend it all. This budgeting policy is often referred to as the "Use or Lose" policy. In other words, if they don't "use" it, they "lose" it. Hundreds of millions of dollars are spent haphazardly each year by the government at all levels because of the fear of losing the money and risking a budget reduction for the following year. It is unbelievable how much money is spent this way.

Suggestion to Fix the Problem

The sad thing is this could be a very easy fix. All it would take is a change in government budgeting to allow government agencies to bank their leftover funds at the end of each budget year to use in the following year and eliminate the risk of a budget reduction that an agency might face if they don't spend all their money. I personally believe that after a couple of years of this policy with agencies banking their money, they would probably reduce their budget on their own. As I mentioned earlier, this simple change of policy would save hundreds of millions of dollars, if not billions of dollars, each and every year. I believe this not only would help solve the government debt and yearly deficit, but would allow the government to even lower taxes. So - if this pisses you off as it does me, please contact your government representatives and tell them to change this policy. Remember, they work for you!

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