What Is a Budget Cut?

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Government entities, businesses and individuals create budgets to manage their daily financial affairs. While all thrive on having a balanced budget, the term "budget cut" is largely associated with governments, which are charged with making sure their spending does not outpace their revenues. If that happens, budget cuts may be in order.

Time For A Budget Cut

State and local governments provide a wide variety of services to citizens, including those for education, health care and transportation, using collections from income, property and sales and use taxes. If any or all of these taxes decline, services end up on the chopping block as a means to reign in costs.

Most budget cuts occur during economic slowdowns or recessions, which is usually when tax revenues decline. They are rare during booming times when the economy is strong, because there are usually enough revenues going into government coffers to take care of spending needs.

Who Makes the Cut?

Government officials, including lawmakers, are responsible for making sure budgets are balanced. They do this through a series of financial planning meetings where they gather information about the spending needs of government departments.

Health Care

Health care services include the operation of hospitals and clinics. Budget cuts could lead to a reduction of their staffs, including doctors and services. Cuts can also lead to the closing of some clinics, and in worst-case scenarios, hospitals could be closed.

Patients receiving prescriptions at discounted rates may lose that benefit. Programs that offer free check-ups, dental and vision screenings and other services could be scaled back or eliminated because of budget cuts.

Transportation

Roads and highways are in constant need of either being built or repaired. While citizens may see projects for them as being desperately needed, officials often have to turn to transportation projects as a way to make budget cuts. They do this by delaying projects, scaling them back or canceling them all together.

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