¶ … Revenue Estimates: Underestimation of Revenues
Although the United States has an excellent budget policy, she is yet to reach maximum efficiency with regard to revenue estimation. When it comes to public budgeting, ours is a picture that is far from the ideal. There has been a consistent pattern of underestimation of revenues in federal, state, local, as well as agency budgets. This trend may not be desirable for a recovering economy since government decisions on new policy initiatives and sustainable policy settings depend significantly on these annual revenue forecasts. This text hypothesizes that the current methodology, resourcing, and governance of forecasting activity has, year after year, played a role in the inaccurate estimation of revenues. The U.S. Department of Homeland Security and several security agencies in Florida will be utilized in an attempt to demonstrate just how prevalent an issue this is proving to be in public budgeting. Morgan et al. (2008) express that even the smallest of revenue forecast errors could have a somewhat significant effect on budget surpluses, leading to either reduced or insufficient spending or "program cutbacks partway through the budget cycle" (p. 225). To this end, there is need to prioritize best practice forecasting methods that cater for risks over the traditional processes and forecasting techniques.
Hypothesis: the current methodology, resourcing, and governance in forecasting activity has consistently contributed to the inaccurate estimation of revenues in federal, state, local as well as agency budgets.
Context of Revenue Forecasts
Revenue forecasts are a crucial budget management tool, providing a logical basis for decision-making in regard to new policy initiatives and sustainable policy settings (Klay, 1992). Revenues, when compared to expenses, seem more variable, and can, hence, be controlled minimally by the government. Klay (1992) posits that this could be due to not only the resource and export orientation of the U.S. economy, but also the exposure it has to volatile product prices. The role of revenue forecasts can, however, not be underestimated because even the smallest error is capable of eroding budget surpluses, causing a rapid spiral in debt, and making it quite a challenge for fiscal organs to achieve their targets, while at the same time retaining their credit rating statuses (Morgan et al., 2008). A budget that underestimates revenues could lead to reduced spending and in its wake, leave unmet critical needs; whereas one that overestimates the same could result in cutbacks partway through the cycle (Morgan et al., 2008). Either event would result "in citizen and employee disenchantment with the organization" (Morgan et al., 2008). Accurate revenue forecasting is therefore crucial to maintaining the taxpaying public's confidence as well as the trust of public employees (Morgan et al., 2008).
It would be prudent at this point to give a brief description, outlining among other things, the major sources of revenue for the four budgets that are the subject of this analysis; the DHS' budget, the State of Florida's budget, the Dade County budget, and the City of Miami Police Department budget.
The Department of Homeland Security ICE (Federal Budget)
In 2012, "the President requested $68.9 billion to fund homeland security activities in 2013" (CBO, 2012). The Department of Homeland Security (DHS) was assigned/allotted a massive 52% of this request, which translates to $35.5 billion. This was part of an overall budget of $60 billion, which included trust funds, fees, subsidies, and other funding that is not appropriated (CBO, 2012).
The 2013 budget prioritizes six mission areas outlined in DHS' 2010 Bottom-up and Quadrennial Homeland Security Reviews, and builds on the department's progress with regard to each of these six areas.
Mission 1: Transportation and border security (29% of request) -- preventing illegal activity and at the same time facilitating lawful trade and travel across America's sea, land, and air borders. The budget supports 21, 186 CBP officers and 21, 370 border patrol agents, and invests in the recapitalization of Coast Guard assets (DHS, 2013).
Mission 2: enforcement of immigration laws (36% of request) -- the budget funds the USCIS business transformation scheme; allocating $20 million towards the SAVE program, and $11 million towards Immigrant Integration (DHS, 2013). Furthermore, $112 million is provided for the facilitation of the E-Verify program. The FY 2013 budget reduces by $17 million the allocation to the 287(g) program. This can be attributed to the introduction of the more efficient Secure Communities program (DHS, 2013; National Immigration Forum, 2012).
The other four missions, which include warning and intelligence, defense against catastrophic threats, domestic counter terrorism, and emergency response and preparedness, received significantly lower allocations of the President's request - 1%, 7%, 8% and 8% respectively (COB, 2012). Four...
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This could pose additional threats (Brimacombe, Antunes and McIntyre, 2001). There are also two arguments which reveal the overstatement of the estimations. The first refers to the fact that the tax structures are taken as constants, when in fact modifications could occur and result in the allocation of more funds to the health care sector. Then, the second argument is that the business, technology and administrative communities present the population
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