Budget System

The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Budget System


the aggregate of budgets of the state and administrative-territorial units and the budgets (estimates) and accounts of institutions and funds that are autonomous in a budgetary sense; these budgets are based on economic relationships and legal norms. The nature of the budget system is determined by the socioeconomic and political system of the country, whereas its organizational structure depends on the form of the administrative and state arrangement.

The capitalist countries. In the unitary states (for example, Great Britain, France, and others), the budget system is composed of the state budget and the budgets of bodies of local self-administration, whereas in the federal states it is composed of the central federal budget, the budgets of members of the federation (states in the United States, cantons in Switzerland, Länder in West Germany, and so on), and local budgets. Individual budgets are opposed to each other, expressing class contradictions and the contradictions between various bourgeois groupings. With the process of increasing concentration of production, centralization of capital, and intensification of monopoly power, a bureaucratic centralization of the budget system takes place. An increasingly large part of the income sources is concentrated in the hands of the state, which also determines the main expenditure subheads; local budgets become more dependent on the center financially. This is especially characteristic of the 1950’s and 1960’s, when local budgets increased significantly faster than the central budget. In the United States, the share of state and local budgets in total budget expenditures increased from 29.0 percent in 1952-53 to 48.3 percent in 1968-69; in France the share of local budgets rose during these years from 16.0 percent to 29.0 percent, and the corresponding rise for Italy was from 20.0 percent to 29.0 percent. Local budgets are increasingly used to develop the infrastructure, to regulate the economy, and to provide the monopolies with a work force. A typical feature of the budget systems of the capitalist countries is the existence of numerous autonomous budgets of individual organizations and the existence of nonbudgetary estimates and funds that are not subject to ratification by members of parliament. This makes it possible for monopoly capital to use capital from the state treasury in their own interests without external checking. For example, in the United States, in addition to the general treasury and state budget, there are the following nonbudgetary funds: the Agency for International Development, the Civil Aeronautics Administration, the Veterans Administration, and other so-called credit funds. Also included among nonbudgetary funds are earnings from the sale of state property and securities. These earnings are used to pay back part of the state debt. In 1966-67, the volume of nonbudgetary resources was more than $45 billion, whereas the total federal budget was $121.2 billion.

The developing countries. In the developing countries, which have adopted a policy of struggling to strengthen their political and economic independence, the organization of the budgetary system is subordinated to the problems of eliminating the remnants of feudalism and the consequences of colonialism. In view of the weakness of the national bourgeoisie and the inadequacy of their capital, the most important measures in the areas of economics and culture in these countries (for example in Burma, the Arab Republic of Egypt, India, and others) are financed through the state budget. At the same time, in order to involve broad layers of the population in the accomplishment of national economic and political tasks, the governments of these countries follow a policy of developing the initiative and budget capital of local bodies.

The socialist countries. In the USSR the budget system includes the Union budget and the state budgets of the Union republics which, taken together, constitute the state budget of the USSR. This budget provides for financing of measures envisioned by the plan for development of the national economy of the USSR, participation by Union republics in carrying out plans of all-Union significance, comprehensive development of the economies and cultures of the Union republics, and mutual assistance among the republics. The state budget of the USSR also includes the state social insurance budget, which is drawn up by the All-Union Central Council of Trade Unions and executed by the trade unions. The state budgets of the Union republics amalgamate the republic budgets, the state budgets of autonomous republics, and local budgets. Each krai, oblast, autonomous oblast, national okrug, raion, city, settlement, and village soviet has its own local budget, which is ratified by the appropriate soviet of working people’s deputies. The total number of budgets amalgamated by the USSR budget system is almost 50,000.

The structure of the budget system of the USSR and the budgetary rights and duties of bodies of state power and administration are determined by the Constitution of the USSR, the constitutions of the Union and autonomous republics, the Law on the Budget Powers of the USSR and the Union Republics, and laws on the budget powers of the union republics and local soviets of working people’s deputies. Table 1 gives further data on the structure and nature of the development of the USSR budgetary system.

Table 1. Expenditures shifts of the state budget of the USSR (billions of rubles)
 19401950196019651971 (plan)
State budget of the USSR...............17.441.373.1101.6160.8
Union budget...............
State budgets of Union republics...............4.29.643.058.472.1
Republic budgets...............
Budgets of the autonomous republics and local budgets...............3.06.614.421.129.1

The growth in the budgets of the Union republics (which constituted 44.2 percent of the state budget of the USSR in 1970 as against 24.2 percent in 1940) testifies to the increased role of the Union republics in economic and cultural building.

The incomes of the Union budget are formed primarily from payments out of the profit of enterprises subordinate to Union bodies, incomes from foreign trade, contributions by state enterprises for social insurance, the turnover tax, and other all-Union incomes. The incomes of republic and local budgets consist of payments out of the profit of enterprises and from other property managed by the republic and local agencies, as well as deductions from all-Union incomes and taxes that are transferred to their budgets within the budget control system.

The applications and amount of expenditures of different budgets are determined by the tasks and functions of Union, republic, and local bodies of power as assigned by the constitutions of the USSR and the Union republics and other legislative documents. Economic and cultural sectors subordinate to Union bodies and having all-Union significance are financed from the USSR Union budget, as are expenditures for the country’s defense and for all-Union bodies of state power and administration. Sectors subordinate to republic bodies are financed from the state budgets of the Union republics, whereas local budgets primarily finance sectors of local industry and expenditures for sociocultural institutions that serve the population of particular locales.

In the other socialist countries, the budget system is constructed on the same principles as are used in the budget system in the USSR. In 1949-50 a majority of the socialist countries carried out budgetary reforms, in the course of which the budget system was restructured on the principles of democratic centralism and the Leninist nationalities policy. The numerous nonbudgetary estimates and funds that existed before the revolution in these countries were joined with the state budget, a very significant step in consolidating the entire system of national-economic and financial planning. In a majority of the socialist countries, the budget system consists of two primary elements—the central budget and the local budgets [in Bulgaria they are the okrug (city) budgets and the budgets of the communes, whereas in the Korean People’s Democratic Republic they are the budgets of the provinces and districts (cities), in the Mongolian People’s Republic they are the aimak and somon budgets, and so on]. In 1968-69, Czechoslovakia switched to a federal state and budget arrangement. The budget system in that country now consists of the central budget of the Czecho-slovakian Socialist Republic, the state budget of the Czech lands and the state budget of Slovakia, which, in their turn, consist of central and local budgets. In Yugoslavia the budget system consists of the budget of the federation, the budgets of the individual republics (members of the federation), and the budgets of local agencies. In the interests of strengthening the organizational uniformity of the budget systems, in a majority of the socialist states the local budgets are successively amalgamated into each other and into the central budget to form a single state budget. The leading role in the state budget belongs to the central budgets, which on the average have about three-fourths of all the expenditures of the state budget.

As a rule, the task of the central budgets is to finance national, economic, and sociocultural measures and the country’s defense. The local budgets ensure the development of the local economy and sociocultural and domestic service to the population. In recent years the rights of local bodies in the fields of economic and cultural building have been expanded, which leads to a rapid growth in their budgets and an increase in their share in the single state budget.


The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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