Estimate – Coursework Example
Review of North Carolina’s Budget North Carolina applies a biennium budget schedule. Budgeting estimates are normally done for two years each time. As the General Assembly draws a two year budget, the budget is then adjusted just before the budget’s second fiscal year. North Carolina Office of State Budget and Management, (2010) assess that the 2012 financial year budget was drawn on 5th June, 2011 budget. The bill was vetoed by Gov. The budget for North Carolina was allocated $19.7 billion by the house. The budget won majority vote’s because it cuts spending on education. However, the total debt of North Carolina is $ 43,742,516,373, when outstanding debt, unemployment trust funds, OPEBUAAL’s and pension are added (North Carolina Office of State Budget and Management, 2010).
The budget of North Carolina is prepared and published in the state auditor’s office as an independent evaluation of the public program performance and financial records of the state. Truth in Accounting Institute (IFTA), unfortunately, does not take into account CAFRs’ of North Carolina as well as those of other states, as accurate representations of the financial condition of the state because the basis of GAAP (Generally Accepted Accounting Principles) does not include liabilities that are significant for pension plans as well as post employment benefits like health care (North Carolina Office of State Budget and Management, 2010). CAFRs’ of North Carolina are prepared and published by the office of State Controller of North Carolina online. Therefore, it is important that the controller of state budget and state auditor prepare another budget that takes into account such shortcoming that occur as a result of applying GAAP.
To arrive to the estimates, baseline system is applied; this method has three major economic arguments from its critics (North Carolina Office of State Budget and Management, 2010): first, variables based on economic performance and inflation normally lead to incorrect future predictions. Additionally, adjusting the budget of the previous fiscal year automatically using the baseline system so as to match demographic and inflationary changes results into more spending than law makers would have. Finally, this approach over or under estimates the budget’s expected policy realities. Therefore, the congress has proposed dynamic baseline estimation method which is more accurate as it includes the macroeconomic effects that are predicted on expenditure and revenue collection.
North Carolina Office of State Budget and Management, (2010)."About the Budget”. Retrieved
August 20th, 2011 from, http://www.osbm.state.nc.us/ncosbm/budget/about_budget.shtm