Budget Reserves

Budget Reserves

 

funds that have been organized in the state budget in order to finance foreseen measures without interruption and to ensure financing of newly originating expenditures that cannot be postponed.

In capitalist countries budget reserves are utilized primarily as a source of further expenditures for militarizing the economy and for implementing measures for the state’s interference in the economy in the interests of the monopolies. The size of planned budget reserves in the approval of a budget depends on the relation between its revenues and expenditures. In his article entitled “Concerning the State Budget” (1902), V. I. Lenin exposed the “official financial juggling” to which bourgeois governments frequently resort in order to utilize the state treasury’s “free cash on hand” to create the appearance of financial prosperity and to conceal the deficit nature of a capitalist budget.

In the USSR and other socialist countries budget reserves are intended to be used for the following expenditures: (1) compensating for damage caused to state property as a result of natural disasters, as well as financing other expenses brought about by unforeseen circumstances (in this sector budget reserves represent one form of insurance fund); (2) covering additional, nondeferrable expenditures that show up during the course of fulfilling the national economic plan and budget; and (3) eliminating temporary cash shortages caused by lack of synchronization between incoming budget revenues and outgoing funds.

In socialist states, budget reserves play a large role in supporting the proportionality of social reproduction and in providing guarantees that it is not interrupted. Budget reserves are also utilized to overcome partial disproportions that arise during the course of carrying out the national economic plan and budget.

In a decree dated October 1927 of the United Plenum of the Central Committee and the Central Control Commission of the ACP (Bolshevik), it was noted that with the continual growth in the budget “it is necessary to organize considerable budget reserves that would ensure sufficient flexibility of maneuver within the country as well as in the foreign market” (CPSU in Resolutions …, 7th ed., part 2, 1954, p. 407). Under present-day conditions, when the magnitude of the income of the state budget has reached 144.9 billion rubles (1970 plan) and constitutes more than half of the national income, the importance of budget reserves has grown. In the USSR budget reserves take three basic forms: reserve funds of the USSR Council of Ministers and the councils of ministers of the Union republics; excess of income over budgetary expenditures; and operating cash on hand in republic and local budgets. In a number of Union republics (RSFSR, Ukrainian SSR, Byelorussian SSR, Georgian SSR, and Azerbaijan SSR) provision has been made, furthermore, for the establishment of reserve funds for the councils of ministers of the autonomous republics as well as funds for unforeseen expenditures to be made available to the executive committees of the krai, oblast, and city (in cities of republic significance) soviets (councils) of working people’s deputies. The amounts of the reserve funds are determined by the councils of ministers when the budgets are approved, and the disbursement of funds is carried out on the basis of special government decrees.

The excess of incoming revenues over budgetary expenditures is caused by the solid income basis of the budget (relying upon the continuously growing accumulations of the socialist economy) as well as by the productive nature of its expenditures. The excess sums are earmarked primarily for strengthening the credit reserves of Gosbank (State Bank) and Stroibank (Construction Investment Bank), and also for financing part of the budgetary expenditures. Operating cash on hand consists of monetary funds reserved in republic and local budgets in order to cover temporary cash shortages that arise in the course of implementing the budget. The total of the operating cash on hand is determined at the time when the budget is approved, taking into consideration the unallocated accumulated funds at the beginning of the plan year. The average surpluses of operating cash on hand at the end of the 1960’s constituted 2.5 percent of the total amount of the Union republic budgets.

In order to ensure the on-schedule payment of salaries to schoolteachers of rural schools, medical workers, and agricultural specialists, resolutions of the councils of ministers of several Union republics have established specific reserves in raion budgets. Amounts equal to a month’s salary for teachers at rural schools (including those schools that are located in raion rural centers) and amounts equal to two weeks salary of medical workers and agricultural specialists were set aside at the expense of operating cash on hand. Funds borrowed during the course of a year from the operating cash on hand and the specific budgetary reserves must be fully restored up to the approved amount at the expense of incoming receipts of the budget involved. As the income base of the local budgets, and in particular the raion budgets, are being strengthened, the specific budget reserves are losing their importance.

REFERENCES

Zakon o biudzhetnykh pravakh Soiuza SSR i soiuznykh respublik. Moscow, 1960.
Finansirovanie prosveshcheniia, nauki i kul’tury. Moscow, 1965. Pages 101-03.

R. D. VINOKUR

Mentioned in ?
References in periodicals archive ?
He added that North Barrington's budget reserves have grown to about $3 million.
"Unpredictable disaster costs require large budget reserves and threaten cuts to critical programs," Dodd said in a statement.
"But we've seen some states take more formal steps to segregate budget reserves. Making changes like that could change things, if they show discipline through the cycle to build and maintain reserves."
The Council of Ministers of Bosnia and Herzegovina has approved the allocation of 300,000 KM from the current budget reserves to the Ministry of Foreign Trade and Economic Relations for financing the organization of the annual meeting of the European Bank for Reconstruction and Development (EBRD).
" The school argued that as of September 2018, their balance is down to circa PS45,000, which is 7% of the budget reserves and said as things stand, it would be unlikely to be enough to fund the current staffing structure.
The school argued that as of September 2018, its balance is down to circa PS45,000, which is 7% of the budget reserves, and said as things stand it would be unlikely to be enough to fund the current staffing structure.
The Republican from Illinois could have well been talking about the budget reserves stashed away by Long Island's school districts that have now reached a reported $2.44 billion, nearly 28 percent of the $8.76 billion in school taxes paid by Long Islanders for the 2018-2019 school year.
A December report by Moody's cited low budget reserves and structural imbalances in maintaining its A3 rating.
The reserve target is sized to provide a 95% level of confidence that a biennial deficit generated by revenue volatility will not exceed budget reserves. Each November, 33% of a positive forecast balance is transferred to the state budget reserve until the reserve reaches its target level ($2.2 billion for the current biennium).
Currently, the centers run with an annual deficit, which the county has helped bridge through its budget reserves. Senate Bill 240 allows Napa County grapegrowers to increase their annual assessment from $10 to $15 per acre.
Overall, states had enough money in general fund budget reserves in fiscal year 2007--just before the economic downturn--to run government operations for a median of 41.3 days.