why does the budget change from year to year?
simple english plz
Needs, income, and politics change from year to year.
The budget changes from year to year because it represents the financial plan of a government or organization for a specific period, usually one year. There are several reasons why budgets change:
1. Economic Conditions: The budget is influenced by various economic factors such as inflation, economic growth, interest rates, and changes in tax revenue. These factors can impact the overall revenue and expenditure projections and may necessitate adjustments to the budget.
2. Policy Priorities: Governments often have different priorities and objectives from year to year. Changes in government officials, new legislation, or shifts in public opinion can lead to changes in funding allocations for various sectors like healthcare, education, defense, infrastructure, or social welfare.
3. External Factors: External events like natural disasters, economic crises, or global emergencies (e.g., COVID-19 pandemic) can significantly impact a government's budget. These unforeseen circumstances may require emergency funding or reallocation of funds to address immediate needs.
4. Revenue and Expenditure Forecasting: Budgets are based on revenue and expenditure forecasts, which are estimates of income sources like taxes, fees, grants, and projections of planned expenses. Updated economic data, changes in tax laws, or fluctuations in funding sources can lead to adjustments in the budget.
5. Long-term planning: Budgets are not just short-term plans; they also reflect long-term goals and strategies. Adjustments in the budget might be made to align with changing long-term plans, like infrastructure development, healthcare reforms, or sustainability initiatives.
Overall, the budget reflects the financial priorities and realities of the time, adapting to economic conditions, policy changes, external events, and long-term goals of the government or organization.