December 12, 2011
Public administrators across the United States of America strive to provide its’ citizens with programs and amenities for various purposes. Legislators create and enact programs such as the Community Development Block Grant Program that give a positive impact to individuals by creating jobs and rehabilitating poverty stricken neighborhoods that not only provide a community with hope but also stimulate economic growth of the economy. Local, state, and federal governments also provide its citizens with advantages of amenities such as recreational activities, upgrading of water systems, and the maintenance and construction of roads and highways that spark growth of communities and economy of the area. The creation of programs and amenities only exist because of the agency’s management accountability of budgetary finances.
When society experiences an economic downturn, agencies are under pressure to sustain programs and to continue amenities such as new roads. This financial slump creates a decrease in funding that can alter the management accountability of budgetary finances for all levels of government. The decrease in funding forces agencies to make tough decisions to reallocate funds from one program or project to another which causes the possible loss of one program to benefit another. Such is the case with the Maryland Department of Transportation (MDOT) when $100 million in federal funding was pulled from a local county highway project and given to a 5-year project to expand an interstate highway. Many were raising questions whether or not the correct management decisions were made in this situation and if there were any other resource avenues to fund the highway expansion.
The purpose of this report is to review the MDOT budgeting system to include management accountability and cost benefit analysis, various funding and revenue sources, forecasting and tracking of spending resource, differentiate between other alternative outcomes, and examination of expenditures in relation to budgeting procedures to determine if the correct budgeting action was taken.
Many stakeholders are asking their chosen officials whether the proper decision was made regarding pulling funding from the local county highway project to enhance and expand an interstate freeway. Maryland citizens vote for those that they trust to make the best financial decisions for their state. Displaying budgetary accountability is a responsibility of any level of government.
State and local governments (SLG) are held accountable to determine the amounts and types of taxes and other revenues resources to retrieve from citizens and how those resources are put to use (Freeman, Shoulders, Allison, Patton and Smith, 2009). This accountability of the budgeting process exists between SLG and citizens, other governments, and their own legislative bodies. The focus of the liability is towards financial and operational accountability. Financial accountability entails the responsibility of conforming to the public decisions on generating and spending of public monies. Operational accountability entails the government’s responsibility to meet its’ operating objectives and the ability to use forecasting to meet future objectives.
Questioning the budgeting process of how poorly or how well an action such as reallocating funds from one project to another, is made available by performing a cost-benefit analysis (Reh, 2011). The cost benefit analysis procedure defines the objective functions, benefits, and cost as well as calculating the current value (Smith and Lynch, 2004). Cost-benefit analysis works best regarding financial decisions but if there are biases decision making toward values projects concerning social values leads to...