Nonpartisan Legislative Budget Offices: A Tentative Step toward Improving Legislative Oversight

Strengthening the budgetary powers of legislatures through nonpartisan budget offices adds to the capacity‐building repertoire of development donors. Budget offices are supposed to provide legislatures with information and analysis independent from the executive. The United States Agency for International Development believes that strengthening the legislature's power of the purse improves governance. We highlight USAID‐funded legislative strengthening projects implemented in Jordan, Kenya, Morocco, and Afghanistan to show how these budget offices function. There is a significant potential for these units to assist members of parliament in understanding the budget process, the broad fiscal challenges facing government, and expenditure control and budgetary trade‐offs that affect present and future spending. These cases demonstrate the challenges of creating and sustaining a parliamentary budget office. Finally, in an effort to make budget offices effective and sustainable, we outline several key steps that we believe are important both for donors and the legislative bodies.     

Statebuilding and the Politics of Budgeting in Afghanistan

Anchored in a framework drawn from the public finances literature and executive–legislative studies, the purpose of this article is to assess the impacts of Afghan budgetary institutions on the statebuilding project. Two main questions drive the analysis: what is the nature of the relationship between central government and subnational units concerning the allocation and distribution of resources, and – regarding budget preparation – what is the role played by the legislature? It is argued that beyond Afghanistan’s dependency on foreign aid to fund ordinary expenditures and development projects, the presence of a set of budgetary rules which not only centralizes the preparation and execution of budget decisions at the expense of provinces but also marginalizes the legislative involvement in the decision-making process are two important features that prevent further development in state capacity and the representative government.     

Executive budget proposal,executive veto,legislative override,and uncertainty: A comparative analysis of the budgetary process

This study examines the roles of the executive budgetary proposal, the executive veto, the legislative override, and legislative uncertainty about the executive's preferences in determining the outcome of a budgetary process. A sequential model of the budgetary process with three institutional agents — a legislature, an appropriations committee, and an executive — is presented. To focus attention on the executive proposal, the veto, the override provision, and uncertainty, simplifying assumptions are made: (1) the appropriations committee has monopoly agenda power, and (2) there is a closed amendment control rule. In order to characterize sequential equilibria of various combinations of veto rules and override provisions, we examine a particular arrangement of agents' preferences and a two item budget. The results demonstrate that the final budget depends critically on the executive proposal, the executive veto rule, the override provision, and the uncertainty. We achieve three striking results. First, the executive proposal may be effective in reducing the frequency of the exercised veto. Second, for a given override provision, a movement from the item veto to the item reduction veto leaves the executive worse off in some cases. Third, with the same change in institutions, the government budget may increase.     

From analyst to negotiator: The OMB's new role

Dramatic changes in the executive and legislative budget processes over the last ten years have elevated the Office of Management and Budget (OMB) to a new position of power and importance. Within the executive branch the budget process has become more highly centralized in the president's office; and within the Congress a similar centralization has occurred. In both branches the OMB has become the key institution for coordinating the actions of the budget-making powers. At the same time, the much-discussed “iron triangles” explored by analysts of the budgetary system have lost much of their power to control the process. Although the OMB's active involvement in the congressional budget process diminished in 1983, the institutional relationships necessary for a more centralized budget process remain and can be reactivated to deal with the predicted enormous deficits.     

Exploring Explanations of State Agency Budgets: Institutional Budget Actors or Exogenous Environment?

Budgetary incrementalism argues that three institutional actors—agencies, executive budget offices, and legislative committees—dominate budget outcomes. The complexity and interdependency of public programs expands this expectation to include the influence of exogenous budget factors. Findings from a survey of state agency heads reveal that budget environments do influence state agency budget outcomes. However, the institutional budgetary participants, especially governors and legislatures, envisioned in classical incrementalism retain their principal and primary influence on state agency budgets. A significant departure from classical incrementalism is that agencies are not as influential as previously depicted.     

The first word and the last word in the budgetary process: A comparative institutional analysis of proposal and veto authorities

This study examines the role of proposal authority and executive veto in the budgetary process. A five stage sequential model of the budgetary process with three institutional actors — a legislature, an appropriations committee, and an executive — is presented. We examine: (i) the factors that affect the executive's power in shaping the final budget when the executive is granted proposal authority; (ii) how increased veto authority, in combination with executive proposal authority, affects the executive's power in forming the final budget; and (iii) the effects of different types of proposal authority and veto rules on the efficiency of the budgetary process.     

Incrementalism in Appropriations: Small Aggregation,Big Changes

U.S. federal budget dynamics, as a major attribute of the legislative and bureaucratic decision‐making processes, increasingly calls into question the scholarly focus on incrementalism. What constitutes a “small” change is largely unspecified in previous research that has also been unable to assess incrementalism across multiple levels of aggregation. Using a unique budgetary database, this article analyzes whether budgetary changes are in fact “small” at different levels of aggregation. Surprisingly, a low proportion of changes are small by any logical standard. During most years, more than one‐fifth of budgetary changes are greater than 50 percent, and nearly half are more than 10 percent. The level of aggregation is also important for assessing whether political variables influence incrementalism. A salient finding: change in party control reflects greater influence within micro‐level budget decisions, while divided government manifests more impact on aggregate‐level budget decisions.     

Assessing the Power of the Purse: An Index of Legislative Budget Institutions

To compare parliamentary capacity for financial scrutiny, I construct an index using data for 36 countries from a 2003 survey of budgeting procedures. The index captures six institutional prerequisites for legislative control, relating to amendment powers, reversionary budgets, executive flexibility during implementation, the timing of the budget, legislative committees and budgetary information. Various methods of index construction are reviewed. The results reveal substantial variation in the level of financial scrutiny of government by the legislature among contemporary liberal democracies. The US Congress has an index score that is more than three times as great as those for the bottom nine cases, predominantly Westminster systems. Even allowing for US exceptionalism, the top quartile of legislatures score twice as high on this index as the bottom quartile. These findings suggest that the power of the purse is a discrete and non-fundamental element of liberal democratic governance. For some countries it is a key safeguard against executive overreach, while others maintain a constitutional myth.     

省会城市预算过程中党政首长的作用与影响——基于三个省会城市的研究

以我国三个省会城市为例来试图回答这样一个问题:在省会城市预算过程中,党政首长究竟发挥着怎样的作用,他们是如何影响着预算过程和预算改革的?研究发现,这三个省会城市预算改革后,预算权力结构并未从根本上改变.其核心仍然是市委书记和市长,他们仍然是地方预算过程中实际的财政资源申请的审批者或最终资源配置者.这主要体现在,预算改革后,市委领导下的"行政预算"体制的继续,市政府领导高层预算分配权力的相对集中,和市长对部门关系以及部门利益的决定性影响.研究还指出,要准确地表达地方党政首长在预算过程中的权力,需要将其放在一种"关系"的维度来具体化.此外,对预算环境的讨论也是必要的,尤其是政治环境,对于党政首长而言,预算过程中的不确定性通常都是和政治环境相联系的.     

PBB in American Local Governments: It's More than a Management Tool

Despite academic findings that performance information seldom is used in appropriations decisions, many professional organizations and governments continue to press for integrating performance information into local public management, planning, and budgeting processes. Is it possible to reconcile such inconsistencies? Looking beyond the executive–legislative relationship and departmental appropriations, the author examines the budget implications of applying performance information at the subdepartmental program level. Case analysis of Indianapolis’s IndyStat initiative underscores that performance measurement application is positively related to intradepartmental program budget changes. Hence, performance‐based budgeting (PBB) can improve local budgeting despite severe political constraints. Still, successful use of PBB requires strong executive leadership, and its effects remain less visible at the departmental level or within the wider political arena of legislative bargaining. The author concludes by recommending some rethinking of the current analytical focus of PBB both in future research as well as recommended practice.     

Do Legislatures Matter in Budgetary Reform?

A recurring problem in the implementation of budgetary reforms at the state level is whether and how to engage legislatures in the effort. This paper posits that legislatures are critical for effective implementation and that different legislative institutional arrangements may have differential effects on both legislative and agency implementation. Drawing on a multistate survey, the analysis shows that higher levels of legislative responsibility for budgeting as well as legislative engagement in oversight of performance information are significantly associated with increased use of performance measures in making budgetary decisions both at the legislative and agency levels.     

On the pricing and benefit structure of a private club or public utility

In this study the structure-induced equilibrium approach for modeling democratic institutions is extended to allow for the added structural features of executive veto and legislative override. A multidimensional model is presented for a budgetary process involving three actors — a legislature, an appropriations committee, and an executive. In order to focus attention on the role of the veto and override possibilities, simplifying assumptions are made with regard to other aspects of the agenda formation process. In particular, the committee has monopoly agenda power, a closed amendment control rule is operative, and perfect-foresight expectations are held by the committee and the executive. Given these assumptions, utility maximization by the several actors generates a budget outcome characterized as a structure-induced equilibrium. The general model is illustrated geometrically with a two-dimensional example, permitting budget outcomes to be analyzed for various combinations of veto rules and override provisions. The analysis demonstrates that budget outcomes are sensitive to alternative specifications of veto rules and override provisions. In the illustration, executive veto power is shown to vary directly with both the permissiveness of the veto rule and the stringency of the override provision. Similar relationships, however, are not found to exist for total budget expenditures.     

Implementing Performance-Based Program Budgeting: A System-Dynamics Perspective

The article proposes a model for evaluating budget reforms that combines insights from budgeting, policy implementation, and system-dynamics literatures. System-dynamics modeling combines both quantitative and qualitative research techniques to provide a new framework for applied research; its use is illustrated using performance budgeting as an example. Applied to the implementation of Florida's performance-based program budget, the model identifies actions in the short run that will increase the reform's likelihood of success: providing clear communications; facilitative budget and accounting routines; reliable performance information. The model also identifies critical legislative behaviors that influence executive implementation: how the legislature in the long-run uses performance information to inform resource allocation and how it applies incentives or sanctions to programs that achieve or fail to achieve their performance standards. The legislature has the opportunity to use program reviews prepared by legislative staff to invigorate the executive branch's resolve to continue implementing the reform.     

Budgetary constraints and municipal revenue forecasting

Conclusion The objective of this research has been to determine whether key budget participants see forecasting as making significant contributions to the budgetary process. The issue is important for at least two reasons. Budgetary tools will be used to the degree budget players perceive them as providing net budgettary benefits. Moreover, the continuing trend toward technological sophistication gives governments opportunities, red herrings or not, to incorporate the technology into the budget process. The issue is also very timely; with the demise of packaged budget reforms but not the values of budget reforms, there may be new opportunities for improving budgeting on a less grandiose, more piecemeal basis, such as using forecasts to analyze budgetary options. The findings here provide some insight into two questions concerning governmental forecasting. First, why do governments use complex methods? In support of previous research, since cities most dependent on intergovernmental aid tend to use complex forecasting, such methods may indeed be seen as a way to help cope with fiscal stress. Also, reflecting the ambiguity of current research, since cities tend to use relatively simple techniques regardless of the revenue source being forecasted, the source is at best a partial determinant of complexity. The most important predictor of complexity, however, was budget format; cities that emphasize reform methods, especially planning, tend to use the most complex forecast methods. The forecasting process was not as important as expected.Second, so what? Does forecasting influence budgetary choices? The evidence from the second part of the study suggest that it can, but within definable limits. Budget directors are more likely than councils to value outyear estimates, but both actors are much less likely to value long-term estimates. The survey results also indicate that revenue forecasts are not as useful for making political decisions as for making management decisions: the forecast is usually used as an internal document, is only sometimes intended to affect council decisions, and is not usually included in the budget. In short, the forecast may be most useful for making managerial decisions since that is what most cities want out of it. It also tends to be more useful if the budget format is less traditional. Finally, the findings indicate that forecasting may be more useful to management to the degree the council finds it politically useful. This is extremely important since it suggests that as powerful as technology may be, budgetary tools that do not meet political needs will be managerially confined.Clearly, more research is needed in this area. Does forecasting actually shape long-range plans? In the long run, will the forecasting effort change the ways cities budget? Can the availability of forecasting information strengthen one actor relative to another? These are important questions that need answering to clarify the impact of forecasting and other technologies on the budget process.     

Games presidents do and do not play: Presidential circumvention of the executive branch budget process

The federal executive budgetary process has been severely criticized in recent years for its apparent inability to curb budgetary growth and limit deficits. Much of this criticism ignores the essentially political, rather than administrative, causes of these trends. Budgetary growth and deficit spending may be viewed in part as the results of presidential circumvention of budgetary and fiscal policy processes. Circumvention consists of the movement of spending decisions out of the annual review and evaluation of current-year budgetary formulation, thus evading the constraints frequently imposed by budgetary and fiscal policies. The precise mechanisms of presidential circumvention have changed over time. However, the long-term impact of circumvention has been a reduction in the controllability and comprehensiveness of the annual federal budget, as well as higher rates of budgetary growth.An earlier version of this paper was presented at the meetings of the American Political Science Association, September 1–4, 1983. We would like to thank George Downs, William Lammers, Harold Seidman, and James Sundquist for useful comments and discussion.     

Policy errors in executive and legislative decision-making

Policy makers get information about the likely outcomes of policy options from experts before they make their decisions. In the executive branch, policy experts tend to reflect the views of the chief executive, whereas in the legislative branch members seek policy advisors whose views reflect their own. The result is a more diverse group of policy advisors in the legislative branch than in the executive branch, which under plausible conditions generates more accurate policy projections. Policy errors will tend to be smaller in legislative than in executive decision-making, providing an argument for making policy decisions in the legislative branch rather than the executive branch.     

Multi-Year Forecasting and Municipal Budgeting

The "black hole" of budget theory still is, after 50 years, budget preparation—much effort goes in but little seems to come out. This article examines municipal forecasting as a means of reforming this first stage of the budgetary process. Drawing on evidence from a cross-sectional study, we find that forecasting is likely to be within the cognitive limits of most municipal budget directors Moreover, budgetary forecasting can be structured to reflect previous and current political concerns.     

Examining Relationships Between Legislative and Presidential Influences and Organizational Probity: Evidence from South Korean Central Government Agencies

In public management, few empirical studies have been conducted on the effects of the most influential political authorities—the legislature and the president—on government organizations, despite the theoretical and practical significance of these effects. This study tests the relationships between legislative and presidential influences and organizational probity in South Korean central government agencies, on the basis of political transaction-cost and principal–agent theories. We use three measures of legislative influence—inspectional influence (total annual days of legislative inspection), statutory influence (rules-to-laws ratio), and budgetary influence (ratio of reprogramming budget to total budget), and one measure of presidential influence (annual number of substantive meetings with the president). Then, these independent variables are linked to the organizational probity measure from audited archival data. The two-time-point panel data analysis reveals a positive link between legislative inspectional influence and probity but a negative relationship between the presidential influence measure and probity; the results support theoretical arguments for control over administrative agencies. Thus, the evidence suggests that governments should be cautious of implementing reforms that increase organizational or managerial autonomy.     

The first decade of the Congressional Budget Act: Legislative imitation and adaptation in budgeting

The influence of institutions on budgetary behavior at the federal level is the subject of this article, which examines the Congressional Budget Act of 1974. While its impact on budgetary priorities and growth seems modest at best, the Act has had a substantial impact on the process of budgetary decisionmaking, the nature of budgetary debate, and the budgetary strategies employed within Congress. These new and generally dysfunctional forms of congessional budgetary behavior are consequences of a budgetary reform that attempted to transfer many of the resource allocation procedures of the Executive branch to a legislative context. The transfer of many Executive branch budgetary procedures has led to the appearance within Congress of budgetary behavior previously confined largely to the Executive branch. The article also discusses attempts to render the congressional budget process more compatible with the legislative environment, analyzing the modifications in the original budget process that have been effected and proposed in recent years.Earlier versions of this article were delivered at the Workshop on Budgetary Control in the Public Sector, Brussels, Belgium, October 13–14, 1983, the meetings of the Association for Public Policy Analysis and Management, October, 1983, and the meetings of the American Political Science Association, September, 1983. Allen Schick, Robert X. Browning, Alex Hicks, Robert Strauss, John R. Hibbings, Evelyn Brodkin, and Rod Kiewiet provided helpful comments, and Pamela Reyner provided secretarial assistance. All remaining deficiencies are the responsibilities of the authors.     

Surplus Expenditures: A Case Study of Colorado

In this study the concept of surplus expenditures is introduced, and a theory of surplus expenditures is explored. The study examines the disposition of surplus revenues that emerged from the imposition of a binding tax and spending limit in Colorado. The study concludes that the accumulation of surplus revenue requires a major overhaul of budgetary reporting and decision making to reflect the impact of binding tax and spending limits on the budgetary process. The reporting recommendations are designed to make the budget more transparent and provide both taxpayers and legislators the information they need to make more rational decisions. The policy recommendations explore options for a more efficient and equitable disposition of surplus revenue.