Budget expenditure of the local government
| Budget expenditure of the local government |
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The expenditure budget of the local government, is a category of public financial resources at the disposal of the local government unit.
Purpose
They are providing the resources for the implementation of public tasks of local government units, and other financial transactions, i.e.: management of resources, financing borrowing needs and debt management. The expenditure budget of the unit of local self-government can be seen as providing the means for performing public tasks, in accordance with the law.
Form of expenditures
The expenditure budget of the unit of local self-government take a different shape:
- current expenses
- capital expenses
Current expenses are:
- subsidies
- wages and costs derived from wages,
- other payments to individuals (i.e. allowances and subsidies),
- purchases of goods and services,
- expenses related to the operation of the local budgetary units and.
Capital expenses includes: investment costs, specific grants for financing or co-financing the cost of achieving specific investment and the cost of the acquisition and distribution of shares and the making of contributions in commercial companies.
The basis for the implementation of expenditure spending plan, which follows from the budget resolution, and which positions represent a hard limit. In case of adoption of the budget (not longer than until 31 March of the fiscal year), it is base for borrowing liabilities and transaction costs within limits set in project of budget.
The limits of the budget expenditures have, as a rule, the nature of the annual limits. The exception to the above, represents the adoption of limits on spending many years and the so-called non-expiring expenses.
Current expenses
Current expenses are the regular and ongoing expenses incurred by a local government unit in carrying out its day-to-day operations. These expenses are necessary to maintain the normal functioning of the local government and provide services to its citizens. Some examples of current expenses include:
- Subsidies: payments made by the local government to organizations or individuals to support specific activities or programs.
- Wages and costs derived from wages: this includes salaries, wages, and other benefits for employees of the local government, such as healthcare and retirement contributions.
- Other payments to individuals: this includes any other payments made to individuals such as allowances, stipends, and subsidies.
- Purchases of goods and services: this includes any expenses incurred by the local government for the purchase of goods and services necessary for its operations. This could include items such as office supplies, equipment, and professional services.
- Expenses related to the operation of local budgetary units: this includes any expenses incurred by local budgetary units of the local government such as community centers, libraries, and other public facilities.
All these expenses are considered as current expenses as they are incurred in the normal course of carrying out the regular activities of the local government. It's a regular expense for the function of the local government unit, and it does not generate any tangible assets or long-term benefits in contrast to Capital expenses which generate long-term benefits.
Capital expenses
Capital expenses are the expenses incurred by a local government unit for the purpose of investing in long-term assets or projects. These expenses are typically used to fund investments such as infrastructure projects, equipment purchases, and land acquisitions. Some examples of capital expenses include:
- Investment costs: this includes expenses incurred in the development, construction, or acquisition of long-term assets such as buildings, roads, bridges, and other infrastructure projects.
- Specific grants for financing or co-financing the cost of achieving specific investment: this includes any grants or other forms of financial assistance provided to the local government for the purpose of financing or co-financing specific investment projects.
- The cost of the acquisition and distribution of shares and the making of contributions in commercial companies: this includes any expenses incurred by the local government in the acquisition of shares in commercial companies or the making of contributions to those companies.
Capital expenses are different from current expenses as they are incurred for the purpose of acquiring long-term assets or funding investment projects, which will generate long-term benefits for the local government and its citizens. Capital expenses typically require large sums of money and they are spread over multiple years.
References
- Stoker, G. (1991). The politics of local government. Macmillan.
