Public Budgeting and Finance

Donald Kettl: Decision about how much of society’s resources we want to take from the private sector to use for problems of broader public interest PUBLIC BUDGETING: DEFINITION

political (political science) economic (economics) accountability/control (business) managerial/administrative (public administration) organizational (organization theory) FUNCTIONS/DISCIPLINES OF PUBLIC BUDGETING

line item -- emphasize control pushes policy into background minimizes conflict program budget -- emphasize policy what should government do requires more analysis performance budget -- emphasize management productivity of specific tasks, not overall goals administrative outcomes BUDGET FORMATS

Federal: economic and political perspectives expenditure driven entitlements defense State/Local: organizational and administrative perspectives revenue driven more unified executive control more issues concerning citizen input FEDERAL V STATE/LOCAL BUDGETING

Tensions: politics v administration in public administration theory role of citizens is unclear representation v direct participation low trust in government  call for participation public interest or special interests? bureaucratic expertise v access to government budgeting is technical and complex role of information and education ROLE OF CITIZENS IN PUBLIC BUDGETING

Theory: a framework for accumulating knowledge Normative, descriptive, positive normative -- what should be descriptive -- what is positive -- what will be (predictions) V. O. Key 1940 question in search of normative theory: “On what basis should it be decided to allocate X dollars to activity A instead of B” BUDGET THEORY

Wildavsky normative theory impossible -- utopian descriptive theory: incrementalism how decisions are made (process or outcome?) how strategies selected main theory today but partially discredited Rubin: field lacks good theory need to merge political and technical recognize importance of process complexity of disciplines BUDGET THEORY -- CONTINUED

how much can revenue estimates be politicized before other means are found? how much of the political can be treated technically without loss of political accountability? how does the political or technical become more dominant at one stage or another or in various circumstances? when does executive v legislative have upper hand? does citizen participation in resource allocation increase support for government? adaptation of Kingdon – microbudgeting theory (week 4) EXAMPLES OF BUDGET THEORY QUESTIONS

The New Public Management: Accountability for outcomes Flexibility Decentralization Deregulation Performance Measurement CONTEMPORARY CONTEXT OF PUBLIC BUDGETING

Traditional focus on control centralized private exercise of admin power line item format formulas minimal flexibility for managers accountability for inputs Contemporary Focus on policy/performance decentralized public sharing of information program format priorities maximum flexibility for managers accountability for outcomes TRADITIONAL V. CONTEMPORARY BUDGETING

Technical aspects of budgeting withhold or distort information Political aspects of budgeting political ethics issues—who benefits? who pays? Traditional budgetary ethics appropriate use of funds Contemporary budgetary ethics appropriate use of discretion ethical use of information for accountability ETHICAL ISSUES IN PUBLIC BUDGETING

Form tables graphs text: budget message; priorities Level of detail summary line items schedules Context prior year comparisons budgeted v expended SAMPLE BUDGETS