Two government budget practices that can have significant implications for lower levels of government are block grants and unfunded mandates.
Higher levels of government should provide adequate resources when mandating functions to lower levels of government.
Services should be implemented and operated by the level of government that can most appropriately and efficiently deliver them.
Efforts to reform entitlement spending should recognize the following factors:
Policymakers use the tax system to raise revenue and to promote social policy goals. For example, they may want to encourage desirable behaviors, such as home ownership.
When economic conditions permit, states should accumulate budget reserves adequate to maintain services during recessions.
Deficit-reduction efforts should avoid cuts in programs that serve low- and moderate-income populations.
The federal government must strive for long-term fiscal balance.
At the federal level, there are two categories of budgetary expenditures: entitlement and discretionary spending.
How to improve the tax code is the subject of much debate. Proponents of reform often call for increasing fairness and simplicity.