Accounting practices and budgets may not be most people's cup of tea, but then again, most of us will agree that getting punished because you do something right is asinine. This seems to be the way our federal government is managing our money today.
Right now, as lawmakers in Washington continue to "stonewall" on a budget that would carry our government over to Dec. 15, federal agencies are rushing to spend the surplus of money left-over from the last budget allocations, and we are talking about hundreds, if not millions of dollars.
Haven't you ever wondered what it would feel like to try and spend $500,000 in one 24 hour period? The problem with this mentality is simple. If the money in the different agency budgets is not spent by September 30, it will disappear, and could also result in less money for the new agency budget for the following year.
The "Use it or lose it" budget principle seems to be real, an actual accounting method used by many large organizations. A budget is supposed to be a tool, if you will, a yardstick with which to measure actual operating costs, allocating funding, and as a plan for future operations.
So far, this makes sense, and is basically the way many families plan their budgets. With large businesses or organizations, management will develop a series of plans, and then put them all together into a master plan. This could include any number of individual agency, or department plans.
The individual budgets making up the master plan will end up with a budgeted income statement, balance sheet and cash flow forecast. That is how it should come out, according to basic accounting practices. As with any budget, problems can mess everything up. Such is the case with the "use it or lose it" mentality applied to our federal budget.
Department heads spend all the funds allocated to their departments because those expenditures form the basis for their budgets in the following year. Conversely, not spending all the allocated funds will mean the budget will likely be reduced in the following year.
All this past week, in offices all over Washington, federal agencies have been acting like it's Christmas, rushing to beat the Sept. 30 deadline for spending their budgets. Remember the Department of Veteran's Affairs? They snatched up $562,000 worth of artwork. It would be nice if that artwork appeared in VA hospitals around the country, but we may never see it.
Then there's the Department of Agriculture's purchase of $144,000 worth of toner cartridges. Let's hope the toner doesn't dry out before they get used. Add to that the Coast Guard's single purchase of $178,000 worth of “Cubicle Furniture Rehab,” whatever that is.