Off-budget enterprises (OBEs, or special districts) are a type of

government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...

in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

, the

United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...

and the

European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...

. OBEs use public funds to further public (as in education) or private (as in economic revitalization) interests. Regulated by various state and federal laws, they operate outside the regulations for general-purpose government and public scrutiny, although many states have created oversight authorities of one form or another. They achieve self-funding by usually having

tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...

ation authority or fund themselves through fees for services rendered. Some have the ability to raise revenue bonds. The fastest-growing OBE is the industrial development agency which issues

tax-exempt Tax exemption is the reduction or removal of a liability to make a compulsory payment that would otherwise be imposed by a ruling power upon persons, property, income, or transactions. Tax-exempt status may provide complete relief from taxes, redu ...

industrial revenue bond An industrial revenue bond (IRB), also formerly known as an Industrial Development Bond (IDB), is a unique type of revenue bond organized by a state or local government. The bond issue is sponsored by a government entity but the proceeds are directe ...

s to finance private business ventures mainly to revitalize economically depressed areas. Many are formed to deal with special local situations. The most common OBE is the

School district A school district is a special-purpose district that operates local public primary and secondary schools in various nations. North America United States In the U.S, most K–12 public schools function as units of local school districts, wh ...

. In 1962 there were 18,323 OBEs and in 1998 there were nearly 30,000. Some OBEs receive funding from the

federal government A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...

in the form of

block grant A block grant is a grant-in-aid of a specified amount from a larger government to a smaller regional government body. Block grants have less oversight from the larger government and provide flexibility to each subsidiary government body in terms ...

Examples

Amtrak The National Railroad Passenger Corporation, Trade name, doing business as Amtrak () , is the national Passenger train, passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous United Stat ...

Tennessee Valley Authority The Tennessee Valley Authority (TVA) is a federally owned electric utility corporation in the United States. TVA's service area covers all of Tennessee, portions of Alabama, Mississippi, and Kentucky, and small areas of Georgia, North Carolina ...

(TVA) *

US Postal Service The United States Postal Service (USPS), also known as the Post Office, U.S. Mail, or Postal Service, is an independent agency of the executive branch of the United States federal government responsible for providing postal service in the U ...

Port Authority In Canada and the United States, a port authority (less commonly a port district) is a governmental or quasi-governmental public authority for a special-purpose district usually formed by a legislative body (or bodies) to operate ports and other t ...

United Kingdom Atomic Energy Authority The United Kingdom Atomic Energy Authority is a UK government research organisation responsible for the development of fusion energy. It is an executive non-departmental public body of the Department for Business, Energy and Industrial Strategy ...

Sovkhoz A sovkhoz ( rus, совхо́з, p=sɐfˈxos, a=ru-sovkhoz.ogg, abbreviated from ''советское хозяйство'', "sovetskoye khozyaystvo (sovkhoz)"; ) was a form of state-owned farm in the Soviet Union. It is usually contrasted wit ...

Criticism

Political scientists Robert E. England and David R. Morgan state, "Through OBEs,

Detroit Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at th ...

is now dominated by business elites." Within the EU, accusations have been made that off-budget enterprises are sometimes used by national governments to circumvent the

Stability and Growth Pact The Stability and Growth Pact (SGP) is an agreement, among all of the 27 member states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126 of the Trea ...

, as public debt will no longer appear in the annual

budget deficit Within the budgetary process, deficit spending is the amount by which spending exceeds revenue over a particular period of time, also called simply deficit, or budget deficit; the opposite of budget surplus. The term may be applied to the budget ...

and in total

public debt A country's gross government debt (also called public debt, or sovereign debt) is the financial liabilities of the government sector. Changes in government debt over time reflect primarily borrowing due to past government deficits. A deficit oc ...

, which may not exceed certain percentages of

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

(3% and 60% respectively) under the

Maastricht criteria The euro convergence criteria (also known as the Maastricht criteria) are the criteria which European Union member states are required to meet to enter the third stage of the Economic and Monetary Union (EMU) and adopt the euro as their currenc ...

. During the past years, there have been various disputes between the

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...

and national governments on the classification of such enterprises.

References

Richard Allen and Dimitar Radev, "Managing and Controlling Extrabudgetary Funds", OECD Journal of Budgeting, Vol. 6, No. 4, 2006
Government budgets Types of business entity Government bodies

Examples

Criticism

See also

References