CHAPTER XXXVIII THE PREPARATION OF THE BUDGET 1. THE SCOPE OF THE BUDGET An important branch of the science of public finance-financial administration-has received considerable attention during the present century. The study may be conveniently divided into three parts: (1) the preparation of the Budget; (2) its legalisation or, as it is usually called, the voting of the Budget; and (3) its execution or the carrying out of what has been passed by the legislature. The Budget is undoubtedly the pivot of the administration, and without a Budget based on sound principles, financial disorder, with all its attendant consequences, takes place as surely as night follows day. The word "budget" is derived from the French word "bougette", a case or despatch box in which the Chancellor of the Exchequer kept his papers. The expression was adopted in England in 1763, when the annual statement of the plan of supplies or expenditure and ways and means or income was first called "opening the Budget". In 1803 the expression was adopted in French financial nomenclature as a substitute for estimates of receipts and expenditure. Financial administration includes not merely the study of the principles which govern the Budget, but also the study of the underlying laws and conventions. The Budget is an annual statement of expenditure and revenue to meet that expenditure prepared by public authorities, and it usually covers at least two fiscal periods the closing period and the period to come. A Budget, in short, includes a statement of the receipts and expenditure of the preceding year, an estimate 1 Journal of the Royal Statistical Society, vol. xxix. (1866), p. 325. of the receipts and expenditure of the ensuing financial year, and proposals as to the ways and means for meeting a deficit or distributing a surplus if any. It is always so framed as to show at least a small surplus of revenue over outlay, a Finance Minister being, as Low, a former Chancellor of the British Exchequer, said, an animal who ought to have a surplus". The best description of the scope of a Budget in any language is that given in the " American Budget and Accounting Act, 1921 ".1 Section 201 of the Act prescribes that "the President of the United States shall transmit to Congress on the first day of each regular session, the Budget which shall set forth in summary and detail : "(a) Estimates of the expenditures and appropriations necessary in his judgment for the support of the Government for the ensuing fiscal year; except that the estimates for such year for the Legislative Branch of the Government and the Supreme Court of the United States shall be transmitted to the President on or before October 15th of each year, and shall be included by him in the Budget without revision; 66 (b) His estimates of the receipts of the Government during the ensuing fiscal year, under (1) laws existing at the time the Budget is transmitted and also (2) under the revenue proposals, if any, contained in the Budget; "(c) The expenditures and receipts of the Government during the last completed fiscal year; "(d) Estimates of the expenditures and receipts of the Government during the fiscal year in progress; "(e) The amount of annual, permanent, or other appropriations, including balances of appropriations for prior fiscal years, available for expenditure during the fiscal year in progress, as on November 1 of such year; "(f) Balanced statements of (1) the condition of the Treasury at the end of the last completed fiscal year, (2) the estimated condition of the Treasury at the end of the fiscal year in progress, and (3) the estimated condition of the Treasury at the end of the ensuing fiscal year if the financial proposals contained in the Budget are adopted; "(g) All essential facts regarding the bonded and other indebtedness of the Government; and "(h) Such other financial statements and data as in his opinion 1 Act, June 10, 1921, C. 18 § 1, 42 Stat. 20. |