Budgeting is the art and science of dividing available money between competing needs. Government spending supports programs that provide a wide range of services to many different segments of the population. Not surprisingly, the demands for more and better services usually exceed government's ability to pay for them. It is impossible to compare these needs in any fully objective way; nobody can prove that a wider highway is more important or useful to society than better paid teachers, or the other way around. The best budget is the one that meets the requirements of a budget process that is defined by law and politics.

Laws and politics create the budget process. Each year the Legislature and Governor must consider competing agencies, programs, and needs and create a balanced budget--one that spends no more than the available resources. This task, which takes about nine months for each fiscal year, is done within a network of constitutional and legal requirements described in later sections.

While the Constitution and laws specify what must be done and when to complete a budget, politics determines how it gets done. There are four major political conflicts involved in most budgeting processes.

• The executive branch (Governor and state agencies) competes with the state Legislature for the power to set and control budgets.
• Within the legislative branch, budgeting is marked by political conflict. The Senate and House of Representatives both want to set the budget agenda, help favored agencies, and have more say in how the money is divided.
• The Republican and Democratic parties use positions in both branches to create budgets that reflect their policy priorities.
• Interest groups play an important role by advocating for services and revenue decisions that help their members.

Budget outcomes reflect the relative power and skill used by each branch of government, both major political parties, and interest groups in identifying their needs and in making the needs known and compelling to the other participants in the process. The remainder of this section describes how the law and politics of budgeting interact through the budget process.

• Limits on the Budget
• Rainy Day Fund
• Revenue Certification

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