Incremental Thinking: "The Lack of a Budgetary Theory"

Editor's Note: More than 40 years ago. V.O. Key identified the basic budgeting question as: ”On what basis shall it be decided to allocate x dollars to activity A instead of activity B?“ Despite decades of budgetary research and innovation, the question remains unanswered and probably unanswerable. As Key recognized, a solution to this problem would constitute a full-blown theory of government. Although neither Key nor others have provided a firm answer to this basic question. Key's article is a valuable reminder that budgeting is much more than technique. This lesson is immediately forgotten when the latest reform comes to market promising a neat formula for dividing the budget pie. The lesson is relearned again when administrative and political pathologists seek cause and effect for the failure of the most recent promising innovation.     

The Influence of EU Membership on Methods and Processes of Budgeting in Britain and France, 1970–1995

This article explores the impact European Union (EU) integration has had on methods and processes of budgeting in France and Britain from 1970 to 1995. It assesses whether convergence of budgetary institutions occurs and, if so, whether it is promoted by an obligation of compliance or by an hybridization effect. Compliance refers to changes in national budgetary institutions made compulsory by membership in the EU. Hybridization emphasizes that national and EU budgetary processes are increasingly interwoven and indivisible. Public budgeting is no longer purely national because part of the decision-making on national expenditure is made at the EU level and because the national budget is closely linked to the EU budget in financial and policy terms. Based on an institutional analysis, combined with elite interviewing, the article suggests that hybridization is a significant factor contributing to a convergence of budgetary practices in Britain and France. Underlying the argument is the fact that an increasingly important function of departmental actors involves negotiating with their EU counterparts at the EU level, in addition to the conventional budgetary game at the domestic level. Regarding compliance, there is an influence as testified by significant formal institutional convergence. However, compliance seems a less effective factor in influencing convergence than hybridization because it conveys a "negative" approach to convergence, based on enforcement and sanctions. The article suggests that the convergence of administrative systems is promoted by the growing similarity of administrative practices more than by the harmonization of rules.     

Jesse Burkhead: An Appreciation

This article is an overview of the distinguished career of Jesse Burkhead, Professor Emeritus, Maxwell School, Syracuse University, and for eight years editor of Public Budgeting & Finance. For forty years he has influenced the field of budgeting through his teaching, articles and books. The article reflects on some of Burkhead's budgetary principles and observations which remain relevant to today's decision making.     

Past and Future Budget Classics: A Research Agenda

This article summarizes the content of four classic articles on budgeting that have appeared in Public Administration Review, outlines some of the major changes in budgeting that have occurred since those authors wrote, and, based on those changes, offers a research agenda for the next set of budget classics.     

Wildavsky on budget reform

A large part of the literature on budgeting in the United States is concerned with reform. The goals of proposed reforms are couched in similar language - economy, efficiency, improvement, or just better budgeting ... However, any effective change in budgetary relationships must necessarily alter the outcomes of the budgetary process. Otherwise, why bother? Far from being a neutral matter of better budgeting, proposed reforms inevitably contain important implications for the political system, that is, the who gets what of governmental decisions (Wildavsky, 1961: p. 186). ... budgeting is a subsystem of politics, not vise versa - because of the current tendency to overload budgeting. As much as I respect the importance of budgeting and the talents of budgeteers, to substitute budgeting for governing will not work (Wildavsky, 1992b: p. 439).     

Ideas, Inheritances, and the Dynamics of Budgetary Change

Long the lifeblood of public administration, budgeting in the United States acquired a new importance during the 1980s and 1990s because of the fiscalization of the policy debate. But how much has American national budgeting really changed? This article examines the evolution of federal budgeting over the past half-century, exploring such developments as the massive growth of entitlements, congressional budget reform, and the protracted battle over the budget deficit. It finds that year-to-year changes in budget results have been relatively small even while budgetary rules and procedures have experienced sweeping change. At the same time, the composition of federal spending has undergone a quiet revolution. The traditional concept of budgetary incrementalism offers an incomplete explanation for these dynamics. To make sense of them, the article focuses on two key factors: the impact of policy inheritances, and the role of actors' causal and normative beliefs. These factors shape the ideational and material context within which boundedly rational actors negotiate decisions. The tension between changes in ideas and entrenched budgetary commitments has often served to stimulate institutional reform.     

To PPB or Not PPB – Budgeting in Victorian Local Government

Budgeting is an important element in a public sector organisation's accounting control system. There are a number of budgetary methods that could be used, each with an explicitly different focus. This article investigates possible reasons for Victorian local government selecting line item budgeting, planning programming budgeting (PPB) or a combination of the two. While program budgeting arguably failed in the USA, research shows it was adopted by local government. Australian researchers report similar findings, yet the introduction of program budgeting into local government has not been explored. Four reasons are postulated: (1) PPB will be adopted because of the complexity of the organisation; (2) PPB will be adopted because it is perceived as an aid to planning; (3) line item budgeting will continue to be used because users are familiar with this type of budgeting; and (4) management's support for the adoption of PPB will be a significant factor in its introduction. A questionnaire was distributed to all the local governments in Victoria and 60 percent were returned. The findings reported in this article confirm the reasons postulated.     

Potemkin Villages: "The" Medium-Term Expenditure Framework in Developing Countries

By neglecting institutional and capacity considerations, medium-term expenditure framework (MTEF) introduction has produced in most developing countries elaborate facades of fiscal reform at high transaction costs without improving budgetary outcomes. There have been positive impacts: awareness of the need to look beyond the immediate urgencies; some encouragement of intragovernmental coordination; and initial orientation toward results. Negative impacts have been much heavier: little local ownership; distraction from basic budgeting problems; and severe strain on limited capacity. Unbundling "the" MTEF permits identifying the variant suitable to the specific country and the steps to gradually develop it: unlike a "programmatic MTEF," a simple "forecasting MTEF" is both feasible and useful.     

Testing Rival Decision–Making Theories on Budget Outputs: Theories and Comparative Evidence

This study demonstrates the link between the degree of economic rationality and budgetary decision–making outputs for Canada, the United Kingdom, and the United States. Three empirical models are derived with low, intermediate, and high degrees of economic rationality, namely, "garbage can," incrementalism, and rational choice budgeting, respectively. The methods used are time series analyses on real disaggregated national government budget outputs for the post–World War II period for Canada, the United States, and the United Kingdom. There was some support found for budgetary incrementalism, and the most consistent support for rational choice budgeting. There was no support for garbage can budgeting.     

Police Budgeting: Winning Strategies

Based on a national survey of police chiefs with a follow-up focus group, this article discusses budgetary strategies that police departments used to be successful in budgeting. The strategies include: using crime and workload data judiciously; capitalizing on sensational crime incidents; effectively getting the message out; carefully mobilizing interest groups; strategic planning; playing the federal grants game; working closely with the chief executive and elected officials; and involving all departmental staff levels in budgeting.     

Tribute to Richard E. Zody

Public budgeting is multifaceted. It draws from areas of study and practice ranging from management to administration to planning. Guided by analysis—enhanced by computational and technical advances—and political systems, it overlays the public sector at every level of government, including local, state, national, and international. It is also the domain of both academics and practitioners. This tribute honors Richard E. Zody by focusing on the multifaceted nature of public budgeting to reflect the career of a man committed to many of these dimensions. The central focus of his career was on improving public budgetary and management systems, and in doing so, he deftly drew from the many dimensions of budgeting. Dick demonstrated in his study, writing, teaching, and application an intellectual interest in two particular themes: the relationship between academics and practitioners; and budgeting and management, which includes the use of analytical skill and strategic planning. Through these interests, Dick impacted many lives.     

An Integrated Theory of Budgetary Politics and Some Empirical Tests: The U.S. National Budget, 1791–2010

We develop a general theory of budgetary politics and examine its implications on a new data set on U.S. government expenditures from 1791 to 2010. We draw on three major approaches to budgeting: decision‐making theories, primarily incrementalism and serial processing; policy process models; and path dependency. We show that the incrementalist budget model is recursive and that its solution is exponential growth, and isolate three periods in which it operates in pure form. The equilibrium periods are separated by critical junctures, associated with wars or economic collapse. We assess policy process dynamics by examining the deviations within equilibrium periods. We offer three takeaways: (1) exponential incrementalism is fundamental to a theory of budgeting; (2) disjoint shifts in the level of exponential incrementalism are caused only by critical moments; (3) temporally localized dynamics cause bends in the exponential path, longer returns to the path within budgetary eras, and annual punctuations in budget changes.     

Budgeting for Federal Capital

This article examines the issues involved in federal investment budgeting and planning for the acquisition of federally-owned assets. It describes the unique role of the federal government and examines the different issues and reforms prompted by differing types of capital and investment sponsored at the federal level. It suggests that meaningful changes can be instituted in our budgeting practices that can make a difference for our budgetary choices without adopting a full-scale capital budget. It also presents a framework for improving federal agency capital decision making based on a study of practices used by leading state and local and private sector organizations. The article is based on testimony delivered before the President's Commission to Study Capital Budgeting.     

Exploring the Budgetary Base in Georgia

This article is an exploratory study of the budgetary base in Georgia. Using agency, gubernatorial, and legislative estimates for all state agencies during the fiscal years 1980 to 1987, it examines the place of budgetary base decisions in the politics of state budgeting, and seeks to improve the theoretical understanding of that concept.     

State Court Strategies and Politics during the Appropriations Process

This article explores state court budgetary strategies and their effectiveness in the appropriations process as perceived by key budgeting actors. In general, we find evidence of state judiciaries that try to remain "above politics" when dealing with budget issues. The most important strategies to this effect include submitting realistic requests, providing documentation to support needs, and not using budget "weapons" at their disposal (e.g., writs of mandamus). However, the survey results do indicate that state judiciaries use certain strategies that have a more political tint, such as lobbying by court officials.     

UNDERSTANDING PUBLIC ADMINISTRATION: REFLECTIONS ON AN ACADEMIC OBITUARY —"ALAS, POOR YORICK"

It seemed that "Alas, Poor Yorick" was an appropriate subtitle for this attempt to respond to Understanding Public Administration. Yorick, you will remember, was the deceased royal jester, whose skull Hamlet inspected in the churchyard in Elsinore, causing him to meditate on the vanity of human life. "Now get you to my lady's chamber, and tell her, let her paint an inch thick, to this favour she must come." Though not a professional jester, I am keenly aware of the ephemeral character of the work of Professors of Government and Public Administration, or at least of this particular one; though Festsehriften may be said to "lay it on thick", they cannot altogether disguise the rather plain face beneath. I am glad to be fortified by having the more distinguished countenance of Robert Parker alongside me, and I mean that.     

How Weak Recognition and Measurement in the Federal Budget Encouraged Costly Policy: The Case of "Supervisory Goodwill"

The budget process is the primary means by which federal policymakers allocate resources. The failure of the budget to recognize and measure the full cost of federal programs encourages the Congress and president to skew resource allocation toward policies whose budgetary costs are underestimated. These "low-cost" policies often increase costs to taxpayers without providing taxpayers with benefits. Recent examples of this phenomenon are found in the "supervisory goodwill" cases. This article reviews these cases, the budgetary weaknesses they identify, the influence these weaknesses had on legislators, and the unnecessary costs for taxpayers that result from the supervisory goodwill policy. Specifically, the federal budget did not recognize the cost that would result from encouraging financial institutions to assume the assets and liabilities of insolvent savings and loans. The budget's recognition of costs failed a second time by not recording expenditures when the government abrogated its contracts with acquirers. Both actions raised costs to taxpayers unnecessarily. In addition to analyzing budgetary weaknesses and their potential costs, this article also reviews two proposed budgetary reforms that could address the budgetary failures highlighted by the supervisory goodwill cases.     

Priority-based budgeting: An honest broker among municipal functions?

Implemented in over 200 local governments, priority-based budgeting (PBB) reflects a contemporary attempt to systematically determine and implement desired budgetary reallocation. PBB proponents claim it is highly effective in prioritizing governmental programs and aligning budgetary allocation to priorities. However, core municipal functions such as public safety and public works are often impervious to budgetary shocks. Can PBB overcome this to better align budgetary allocations with organizational priorities? This study examines 32 municipal PBB implementers with difference-in-differences analysis; finding a varied effect upon municipal functions that casts doubt on its ability to fully reallocate budgetary resources from low- to high-priority programs.     

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.