5.1 Budget Philosophy

Budgets serve as a mechanism to protect, allocate, and control public resources. One fundamental requirement is efficiency, meaning that allocating $1 to program A should provide the same level of benefit as allocating $1 to program B. However, it can be difficult to value government goods and services due to several challenges.

First, governments often have multiple objectives, some of which may conflict with each other. Additionally, there is no common mechanism to measure and compare the returns of different programs, making it hard to assess which investments are most beneficial. Another challenge is the variation in beneficiaries across programs, as well as differences between those who benefit from programs and those who pay for them. These factors complicate the process of evaluating budgetary allocations and ensuring that resources are distributed efficiently and fairly.