What is the difference between budgets and spending?

Budget Data – Political Details

Budget data is defined as data relating to the broad funding priorities set forth by a government, often highly aggregated or grouped by goals at a particular agency or ministry. For instance, a government may pass a budget which contains elements such as “Allocate $20 million in funding for clean energy grants” or “Allocate $5 billion for space exploration on Mars”. These data are often produced by a parliament or legislature, on an annual or semi-annual basis.

Spending Data – Execution Details

Spending data is defined as data relating to the specific expenditure of funds from the government. This may take the form of a contract, loan, refundable tax credit, pension fund payments, or payments from other retirement assistance programs and government medical insurance programs. In the context of our previous examples, spending data examples might be a $5,000 grant to Johnson’s Wind Farm for providing renewable wind energy, or a contract for $750,000 to Boeing to build Mars rover component parts. Spending data is often transactional in nature, specifying a recipient, amount, and funding agency or ministry. Sometimes, when the payments are to individuals or there are privacy concerns, the data are aggregated by geographic location or fiscal year.

The fiscal data of some governments may blur the lines of these definitions, but the aim is to separate the political documents from the raw output of government activity. It will always be an ultimate goal to link these two datasets, and to allow the public to see if the funding priorities set by one part of the government are being carried out by another part, but this is often impractical in larger governments since definitions of programs and goals can be “fuzzy” and vary from year to year.

Budgets as datasets

A growing number of governments make their budget expenditure data available as machine-readable spreadsheets. This is the preferred method for many users, as it is accessible and requires few software skills to get started. Other countries release longer reports that discuss budget priorities as a narrative. Some countries do something in between where they release reports that contain tables, but that are published in PDF and other formats from which the data is difficult to extract.

On the revenue side, the picture is considerably bleaker, as many governments are still entrenched in the mindset of releasing revenue estimates as large reports that are mostly narrative with little easily extractable data. Tax expenditure reports often suffer from these same problems.

Still, some areas that relate to government revenue are beginning to be much better documented and databases are beginning to be established. This includes budget support through development aid, for which data is published under the IATI (http://www.aidtransparency.net/) and OECD DAC CRS (http://stats.oecd.org/Index.aspx?DatasetCode=CRSNEW) schemes. Data about revenues from extractive industries is starting to be covered under the EITI (http://eiti.org/) with the US and various other regions introducing new rules for mandatory and granular disclosure of extractives revenue. Data regarding loans and debt is fairly scattered, with the World Bank providing a positive example (https://finances.worldbank.org/), while other major lenders (such as the IMF) only report highly aggregated figures. An overview of related data sources can be found at the Public Debt Management Network (http://www.publicdebtnet.org/public/Statistics/).

Connecting revenues and spending

It is highly desirable to be able to determine the flow of money from revenues to spending. For the most part, many taxes go into a general fund and many expenditures come out of that general fund, making this comparison moot. But in some cases, in many countries, there are taxes on certain behaviours that are used to fund specific items.

For example, a car registration fee might be used to fund the construction of roads and highways. This would be an example of a user fee, where the main users of the government service are funding it directly. Or you might have a tax on cigarettes and alcohol that funds healthcare grants. In this case, the tax is being used to offset the added healthcare expense of individuals taking part in at-risk activities. Allowing citizens to view what activities are taxed in order to pay for other expenditures makes it possible to see when a particular activity is being cross-subsidized or heavily funded by non-beneficiaries. It can also allow them to see when funds are being diverted or misused. This may not always be practical at the country level, as federal governments tend to make much larger use of the general fund than other local governments. Typically, local governments are more comprehensive with regards to releasing budget data by fund. Having granular, fund-level data is what makes this kind of comparison and oversight possible.

What questions can be answered using budget data?

Budget expenditure data has an array of different applications, but it’s prime role is to communicate to it’s user broad trends and priorities in government spending. While it can help to have a prose accompaniment, the data itself promotes a more clear-cut interpretation of proposed government spending over political rhetoric. Additionally, it is much easier to communicate budget priorities by economic sector or category than it is at the spending data level. These data also help citizens and CSOs track government spending year over year, provided that the classification of the budget expenditure data stays relatively consistent.

Opening the checkbook

In the past five years, there have been a spate of countries and local governments that have opened up spending data, often referred to as “checkbook level” data. These countries include, but are not limited to, the US (including various state governments), UK, Brazil, India (including some state governments) and many funds of the European Union.

What questions can be answered using spending data?

Spending data can be used in several different areas: oversight and accountability, strategic resource deployment by local governments and charities, and economic research. However, it is first and foremost a primary right of citizens to view detailed information about how their tax dollars are spent. Tracking who gets the money and how it’s used is how citizens can detect preferential treatment to certain recipients that may be illegal, or if certain political districts might be getting more than their fair share.

It can also help local governments and charities respond to areas of social need without duplicating federal spending that is already occurring in a certain district or going to a particular organization. Lastly, businesses can see where the government is making infrastructure improvements and investments and use that criteria when selecting future sites of business locations. These are only a few examples of the potential uses of spending data. It’s no coincidence that it has ended up in a variety of commercial and non-commercial software products – it has a real, economic value as well as an intangible value as a societal good and anti-corruption measure.