2011 BudgetingPoliticsandPower
- (Lewis & Hildreth, 2011) ⇒ Carol W. Lewis, and W. Bartley Hildreth. (2011). “Budgeting: Politics and Power.” OUP.
Subject Headings: Political Budgeting, Line-Item Budgeting, Program Budgeting, Performance Budgeting, Zero-based Budgeting.
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Book Overview
In budgetary politics, the true bottom line is a political judgment about political issues and outcomes. Making complex topics accessible and relevant, this book lays out the purposes and processes of budgeting in a democracy and identifies up-to-date problems and directions of change. Changes in budgeting often are political responses to political problems. All parts of the public sector face key challenges but change is difficult because high stakes and vested interests are threatened. Unfunded promises set the stage for political conflict and spending growth outstrips revenue policy in many public organizations. Some budget problems are cyclical; others are structural. Overly complex decision-making processes and systems of service delivery that citizens and taxpayers cannot understand thwart transparency and damage accountability. So does many political leaders’ preference for dodging the hard choices. The values of accountability and transparency in a democracy require public leaders to tell the public what they are doing and why, and for citizens to take an interest in budgetary politics. Organized around key questions about core issues, written in a conversational style, using many illustrations, applications, and cases, and with technical and advanced material on a supporting website, this book offers an engaging introduction to the path ahead.
- Distinctive Features
Succinct text with supporting website Readable and accessible style, conversational tone Organized around key questions about core issues Many graphics-charts, tables, photos, cartoons-and lists, review questions, glossary, visuals, links to videos and web resources Stresses political aspects of budgeting Emphasis on state and local when most books on public budgeting focus on federal budgeting Cases, exercises, and applications
Introduction
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Budget Formats
- Line-Item Budgeting
A line-item budget lists, in vertical columns, each of the city’s revenue sources and each of the types — or classes — of items the city will purchase during the fiscal year. Following is an example of how line-item budgeting would be used in a small town public works department.
The line-item budget, which is the most widely used of all budgeting systems, offers many advantages. It is comparatively easy to prepare and doesn’t require sophisticated financial skills. Also, the line-item budget is straightforward, simple to administer, and readily understood by the city council, city employees, and citizens. Moreover, the simplicity of the system makes it easier for the city council and administrator to monitor revenues and expenditures, which is important in this era of shrinking resources.
DEPARTMENT: Public Works Expenditure Classification Previous Fiscal Year 1996-97: Actual Current Fiscal Year 1997-98: Budgeted Next Fiscal Year 1998-99: Request Personal Services $ $ $ Supplies $ $ $ Contractual Services $ $ $ Capital Outlays $ $ $ TOTALS $ $ $
The major deficiency of line-item budgeting is that the laundry-list format of the system provides no method of determining the amount of a particular city service produced by a given level of spending. Also, the broad expenditure categories used in a line-item budget make it difficult to set service priorities because there is no way to calculate the quantity or quality of services that would result from various expenditure levels.
- Program Budgeting
Unlike the line-item budget, which lists total departmental appropriations by items for which the city will spend funds, a program budget displays a series of “mini-budgets,” which show the cost of each of the activities that city departments perform. In the case of the water department, for example, a separate mini-budget would be established for water production and distribution, water system repair and maintenance, and meter reading.
The sample below shows the budget for the street sweeping program of a public works department. Each of the other programs conducted by the department — street repair, solid waste collection, and inspection services — would have a similar, separate budget.
DEPARTMENT: Public Works PROGRAM: Street Sweeping Expenditure Classification Previous Fiscal Year 1996-97: Actual Current Fiscal Year 1997-98: Budgeted Next Fiscal Year 1998-99: Request Personal Services $ $ $ Supplies $ $ $ Contractual Services $ $ $ Capital Outlays $ $ $ TOTALS $ $ $
Program budgeting enables the city council and administrator to identify the total cost of each municipal service and set spending levels and priorities accordingly. The downside to the program budget approach is that considerable time is required to establish and maintain the system. Also, programs tend to overlap, both between departments and within the same departments, which can make collecting data difficult.
- Performance Budgeting
Performance budgeting is the same as program budgeting, except that one additional component — performance — is included to tie expenditures for each program to specific goals established for that program. For example, the amount budgeted for street sweeping would be tied to an expected level of performance, such as sweeping “X” number miles of streets during the fiscal year.
If the city council chooses to increase the level of street sweeping to sweeping residential streets once every two weeks rather than once each month, the council can easily relate the cost of sweeping per mile and then multiply this figure by the additional miles that are to be added to the street sweeping program to determine the new budget figure.
Performance budgeting provides spending data that the city council and administrator can examine at the end of the fiscal year to identify the amount of service that each city department has actually produced. Additionally, by knowing the exact cost of each service, the council can determine its relative usefulness compared to the other spending priorities.
The negative aspect of performance budgeting is that it is difficult to develop measurable performance goals for simple programs, such as street sweeping. It is hard to set measurable goals for emergency medical services and other less-quantitative programs. Also, data collection can be difficult.
- Zero-Based Budgeting
Zero-based budgeting is a system that requires all departments to defend their programs and justify their continuation each year. Instead of simply penciling in the amounts of the additional funds that are needed in each account, the department head must prepare a series of “decision packages” that describe — and justify — each of the department’s programs in detail.
For each program, the department must show: the various levels of service that could be provided with different levels of funding — including zero funding; alternative courses of action; and the consequences of funding the service at different levels, or not funding it at all.
In the decision package below, the head of the public works department is required to show what would happen if the amount budgeted next fiscal year for street sweeping were reduced by 25 percent. Similar decision packages would have to be prepared to show the effects of maintaining the funding at the current level, of increasing and of reducing expenditures by various percentages, or abolishing the program altogether.
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References
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| Author | volume | Date Value | title | type | journal | titleUrl | doi | note | year | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2011 BudgetingPoliticsandPower | Carol W. Lewis W. Bartley Hildreth | Budgeting: Politics and Power |