In the budget of local government entities comparing the streams of income and expenditure shall be performed at the end of budgetary period. Balance in the budget is determined as surplus or deficit.
Budget surplus is one of the basic structural concepts related to the issue of the budget and public finances. Planned (or actual) budgetary surplus is a positive financial result that appears when the budget revenues are higher than the expenditure budget. In turn in case budget revenue are lower than expenditure, there is a deficit.
The planned budget surplus is not always good for state or local government entities. Sometimes, in fact it is the result of planning irregularities and therefore the law oblige the authorities of government entities to determine the destination of the planned surplus. The permanent collection of financial surpluses causes excessive burden of taxes on society.
The budgetary surplus of local government entities may appear as a result of:
- delayed execution of planned infrastructure investments
- raise of additional revenue
- savings in expenditure (while performing all planned tasks)
- Artis, M. J., & Buti, M. (2000). Close‐to‐Balance or in Surplus: A Policy‐Maker's Guide to the Implementation of the Stability and Growth Pact. JCMS: Journal of Common Market Studies, 38(4), 563-591.