Local Budgeting

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Constitution have failed as of October A constitutionally mandated balanced budget would restrain the U. The federal government has a major role in the nation's economy, which carries significant budgetary implications. The U.

Constitution authorizes the federal government to coin money and issue currency, meaning the federal government could print more money in tight fiscal conditions, even though such an act could fuel inflation. Local and state governments do not have the authority to print money. Military spending represents one of the largest spending categories in the federal budget. The portion of the budget allocated to defense pays the salaries of military personnel, purchases military equipment and funds the operations of military installations around the world.

State governments' role in defense is far smaller, limited mainly to funding the state National Guard. Central governments over the world have made human and environmental development their primary objective and have therefore used decentralization as a method of sharing development responsibilities with Para-state agencies such as the local authorities.

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Rodinell defines decentralization as the transfer of authority to plan, make decisions and manage public funds and functions from a higher level of government to individuals, organizations or agencies at lower level. Aryee identifies four forms of decentralization. These are administrative, economic, political and fiscal. Local government in Ghana, especially Metropolitan, Municipal and District Assemblies MMDAs were established with the sole aim of generating good contacts with the citizens and to bring decision making to the level where development generally takes place.

MMDAs were also created to help strengthen the democratic process and lay the basis for the upsurge of autonomous institutions of governance within the structure of the nation-state.

Differences Between Federal Budgeting and State or Local Budgeting | Bizfluent

According to Aryee and Amponsah , the District Assemblies have added potential advantage such as spreading development skills throughout the society. To ensure development, the government of Ghana in promulgated a local government law, Provisional National Defense Council PNDC Law to establish one hundred and ten local authorities. Sections of the constitution and local Government Act have been the basis for the adoption of the current decentralization program in Ghana.

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There are massive responsibilities, spelt out in Act specifying the functions and responsibilities of the District Assemblies in Ghana. The Local Government Act Section 10, sub -section 3 states that the Districts Assemblies shall be responsible for the overall development of their district and preparation and submission of development plans. MMDAs are charged by the local government law with physical development responsibilities such as to:.

Ensure legal arbitration; 2. Register birth, death marriage and divorce; 3. Give building permits to ensure proper spatial development; 4. Build schools, provide books and furniture; 5. Maintain law and order; 6. Establish and maintain parks and gardens; 7. Provide street lights; 8. Provide health, sanitation and waste management service; 9.

Provide social services; Provide firefighting services; Provide markets;. MMDAs are charged by various enactments including the Constitution to ensure physical transformation of the various local areas and stimulate socio-economic activities and development so as to change civic inertia, poverty and illiteracy to enhance equity, efficiency, effectiveness and economy in their entrepreneurship.

These functions of the MMDAs cannot be achieved without adequate financial resources to support them. Inadequate financial resources can undermine the effective implementation of developmental projects in the districts. It is against this background that the new Local Government System has made provision for the financing of the districts.

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Fiscal decentralization is the transfer of responsibilities, power and resources to lower level public authority to mobilize funds for development that is autonomous and fully independent from the devolving authority when narrowed down to devolution. Local authorities are given responsibilities and financial means within the national level determining the scope and quality of services to be provided and amount of funds needed to deliver these services.

Kessey and Diaw called for vigorous revenue mobilization drive if the MMDAs are to perform better. They mention that the effectiveness of revenue mobilization depends on factors such as fiscal policy, revenue administration, monitoring operations and performance assessments. Unfortunately many MMDAs do not generate enough revenue. The reasons for their inability to mobilize enough revenue are numerous. To mention a few Kessey and Diaw ibid list corrupt practices, poor mobilization strategies, poor budget control and poor financial management as the major reasons.

Prudent financial management refers to how wisely resources are mobilized and managed effectively and efficiently. Financial management is therefore an important aspect of public administration of every nation and it is one of the elements that make government effective.

Operations Budgeting

It involves financial forecasting, financial planning and budgeting, financial reporting and auditing. Sound financial management is one of the important complements of effective management practices which seek to enhance the socio-economic development of local authorities in Ghana. Marshall and Synder stress that in order to ensure sound financial management there should be good planning, accounting and budgetary systems. Jackson states that without financial independence, local authorities must lead a very subdued life. Therefore funds should be mobilized from taxes levied on citizens and residents within the territories of the local authorities.


Officials must spend funds in a manner governed by rules and regulations. Currently good financial management is being used by donors as a precedent for debt relief such as HIPC, GSOP and other financial assistance to developing countries. MMDAs as development partners to the central government need to generate sufficient revenue locally to support the central government development agenda.

Understanding Public Budgeting

Budgets are necessary to prudently manage scarce financial resources and at the same time serve as means of expenditure authorization, control and evaluation base. Profit making organizations consider budget and budgetary controls as important elements in their policy making. The success of their organizations depends largely on good budget preparation and effective budgetary controls. In Ghana, MMDAs prepare budgets but the degree and extent to which budgets are prepared and formulated into performance budgets vary from each other.

Even where formal budgets are prepared their nature and purposes may vary.


Failure of many businesses nowadays erupt from the fact that budgets and budgetary controls which are the bedrock of any successful business organizations is weak or absent as reported by Ministry of Health, and Bradstreet, Such organizations or businesses are characterized by financial, administrative, production, managerial etc. Budgets should be prepared based on availability of resources. MMDAs should ensure that they generate enough resources to compliment central government grants which are always inadequate. They can also look elsewhere for resources to support their budgets.

Birth, Adoption, Death, Marriage & Divorce

It means some activities captured in the budget could not be undertaken or part touched. Ada East District Assembly prepares budget but most times the expenditure always exceeds the revenue resulting in budget deficits. This observation encourages numerous academicians to try to discover appropriate solutions for budget slacking, budget gamming, budget bias and other problems that managers had to deal with, Harper In line with this argument, the study looks at whether; MMDAs in Ghana can achieve their objectives with or without effective budget and budgetary control systems.

It is to find out reasons for budget failure and deficits at Ada East District Assembly where budgetary control is cited as a cause for poor performance in development process. The problem is that most MMDAs do not have effective financial control system due to poor budget formulation and implementation. They experience budget deficits which normally occur because:. There is poor data base for planning and budgeting; b. There is poor budgetary control resulting in embezzlements, misappropriations and misapplication of funds culminating in over expenditures; c.

There is lack of ownership and responsibility when it comes to budgetary control. Poor data base for planning and budgeting also have other consequences. The consequences are that:. Some other rate and property rate payers may fail to fulfill their legitimate obligations in rate payment. This may also result in situations where actual revenue may be lower than the estimated revenue. Revenue deficits may also occur as a result of dishonesty of revenue collectors. Share Give access Share full text access. Share full text access. Please review our Terms and Conditions of Use and check box below to share full-text version of article.

Abstract This article traces developments in budgeting and finance at the local government level over the past 25 years.

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