Cutback budgeting

The process of cutback budgeting that occurs in an era of retrenchment differs significantly from budgeting in circumstances of revenue growth. Negotiating an agreement on a set of decrements is far more complicated than allocating increments: No one wants to be the first to propose a cut in another constituency's budget, and any coalition formed in support of a given package of cuts is inherently unstable. Still, several conditions appear to facilitate cutback budgeting: an overarching issue that elicits broad support for the total package of decrements; parliamentary procedures that limit voting to either for or against the entire package; and active, aggressive leadership. Whereas incremental budgeting may proceed in a routine and orderly fashion, the cutback process is always likely to involve conflict.     

Planning and budgeting in Pakistan

Twenty years ago a pioneering study of planning and budgeting in Pakistan pointed to significant weaknesses. This article reviews the changes made subsequently to the formal processes and assesses how these are currently working. The planning agency is now a permanent organization. Planning and budgeting have been combined and these processes have moved closer to the centre of political power. On the other hand there are difficulties over linking planning and budgeting to the management of economic and fiscal policy; planning is geared to securing foreign aid funds; the planning processes favour large expensive projects which emerge from the more developed areas of the country and discriminate against the smaller projects with a shorter time horizon needed in less developed provinces–thus accentuating economic imbalances. Finally, although the importance of evaluation is recognized, in practice reporting and evaluation are not adequately practised.     

Programme and performance budgeting in Malaysia

This paper reviews the evolution of programme and performance budgeting (PPB) in Malaysia from its beginning in 1969, through the in-depth implementation phase which began in 1972, to the present day. It outlines the system in the Ministry of Health, where PPB has been extensively developed and comments on the systems established in other in-depth ministries, in several of which little appears to have been achieved. In 1981 all other agencies were asked to adopt PPB in their budget submissions. Compliance has been superficial. The paper explores the constraints to the further development of PPB. These range from difficulties of securing appropriate staff, lack of top-level commitment and information problems, to the inherent difficulties of programming and performance measurement. In seeking to evaluate the success of PPB the paper adopts two approaches. The first, involving a small questionnaire survey amongst those involved in PPB, reveals rather guarded opinions concerning its usefulness and progress. The second, which explores the use made of PPB, reveals little use by legislators, budget officers or line managers, and no link between PPB and the planning process. However the audit department expresses considerable interest in relation to performance auditing. In summary the achievements of PPB have been modest.     

The contractual nature of budgeting: A transaction cost perspective on the design of budgeting institutions

Viewing budgets as contracts, transaction cost theory focuses on the costs of negotiating and enforcing the myriad political agreements by which policymakers allocate the government's resources. This essay provides an overview of transaction cost theory and its implications for the design of budgeting institutions. It contrasts the behavioral premises (bounded rationality and opportunism) of the transaction cost approach with those of more traditional budgetary theories, and examines whether commitment and agency costs have structured budget actors' institutional choices. Investigation of the usage of key budget instruments- entitlements, multi-year appropriations, and tax expenditures - suggests that Congress has been more discriminating in its institutional choices than is commonly supposed. Sensitivity to the importance of transaction costs would increase the effectiveness of budget reforms.     

Cutback budgeting: The long-term consequences

This study asks whether short-term cutbacks made during a fiscal crisis become permanent once fiscal conditions improve. Hypotheses are developed to establish a framework for analyzing a time-series data set. These hypotheses address trade-offs between less essential versus more essential services, salaries versus positions, and capital versus operating expenditures. Then long-term consequences are assessed with a longitudinal, comparative case study of the effects of New York City's mid-1970s fiscal crisis on education services in the city. Education services were cut dramatically in 1976 and 1977. The trends in those services, defined in various ways, are compared over time and in relationship to the rest of New York State. We find that less essential services, teacher positions, and capital and maintenance expenditures suffered, relative to more essential services, operating expenditures, and teacher salaries.     

Antitrust public choice(s)

Antitrust legislation and enforcement has over the last few decades been increasingly informed by ever more sophisticated analysis while—at the same time—evidence has continued to mount that the results of antitrust remedies fall far short of the promises held out under still prevalent ‘nirvana fallacy’ (Demsetz in Journal of Law and Economics 12(1):1–22, 1969) expectations. I draw upon a recent Supreme Court decision as well as the results of Young and Shughart’s (Public Choice, 2010. doi:10.1007/s11127_009-9531-y) novel approach to the analysis of antitrust enforcement activities to discuss the extent to which public choice theory is vital in solving the puzzle regarding the “unintended” effects of antitrust (public) choices.     

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.     

Formula budgeting: The economics and analytics of fiscal policy under rules

The dramatic change in aggregate fiscal policy in recent years has contributed to a shift from process rules to allocation rules in federal budgeting. Although the allocation rules inherent in formula budgeting seem to offer fairness in times of fiscal constraint, they actually impose arbitrary program-level budgets that reflect the peculiarities of baselines, accounting conventions, and time horizons. Formula budgeting also changes the analytical environment, forcing policy analysts to pay greater attention to institutional arrangements.     

Rational decremental budgeting: Elements of an expenditure policy for the 1980s

The dominant pattern of decision-making on public expenditures has been characterized as incremental budgeting. Wide-spread dissatisfaction with this approach has led to the emergence and testing of various techniques purporting to deal with expenditure decisions in a more rational, analytic and comprehensive fashion. Yet our experience with this brand of synoptic rationalism is at best mixed; few innovations in the field of budgeting have lived up to the expectations surrounding their introduction. A synthesis of the two models outlined in this paper is called rational decrementalism: an expenditure policy for an era of retarded growth or economic stagnation.This is a revised version of a paper presented at the Conference of the Scandinavian Association for Public Administration in Vedbaek, Denmark, May 13, 1980.