Lecture-6-Theories+of+Public+Budgeting

65 65 performancebudgeting originatedin1940s

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Unformatted text preview: blic Choice Movement of people and businesses between communities is not as frictionless as public choice adherents suggest and high tax jurisdictions that offer commensurately high quality of life may attract people and businesses Unfortunately, stagnation of real earnings since the oil shocks of the seventies has placed government at a relative disadvantage —people are unwilling to contribute to collective consumption when keeping roofs over their own heads becomes more difficult (Peterson 1994). 59 59 Public Choice This stagnation, coupled with what Aaron Wildavsky (1988, 753) terms the “ubiquitous anomie” of the American bureaucracy (i.e., the fundamental mistrust that Americans feel about government), suggests that from an operational perspective, government will be under constant pressure to deliver more with less and to prove that its services meet the needs of its customer taxpayers. 60 60 Public Choice This has created a double­barreled impetus to provision by private or non­profit providers. Within this context, public choice must be seen as a driving, if not dominant, budget theory as the new millennium is entered. 61 61 Public Choice History cannot be ignored; hence incrementalism will always have at least some validity in explaining budget behavior. Contrariwise, the fact that many federal, state, and local agencies have research, planning, and development division, suggests that the notion of getting the biggest bang for your buck with its associated benefit­cost mindset carries on even if PPBS is essentially dead. A strong reaction to the public choice critique of mainstream public administration is the driving force for much of the contemporary reengineering movement. The upshot is that incrementalist and economic approaches to budgeting provide much of the intellectual underpinning for the study of public budgeting despite the controversies surrounding their explanatory power and normative assumptions. 62 62 The Performance Measurement in Budgeting The heightened emphasis on performance and outcome­ related budgeting and management represents a break with the past in the study of budget theory. The intellectual warfare between incrementalists and non­ incrementalists has been supplanted with the following question: Can governments begin to assess their provision of goods and services in a manneranalogous to that of private entities (Kelly 2002)? The publication of Service Efforts and Accomplishments Reporting: Its Time Has Come (Hatry et al. 1990) by the Governmental Accounting Standards Board of the Financial Accounting Foundation will probably be remembered as a seminal event in budget theory history. 63 63 The Performance Measurement in Budgeting This work established the need for state and local governments to systematically report on the quantity and effectiveness of their service delivery. Its publication was roughly contemporaneous with similar efforts made by the Government Performance and Results Act at the federal level as well as those by other organizations (e.g., the University of North Carolina­ Chapel Hill, the International City and County Managers Association) devoted to systematic interjurisdictional comparison of performance. Osborne and Gaebler’s Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector (1993) and, more broadly, the movement towards more responsive, customer­oriented public service 64 64 delivery are also a product of the early 1990s. The Performance Measurement in Budgeting Twenty­five years of cutback management and reengineering efforts have led to a public sector with wage gains and salary fringes on par with private sector standards. Since 1993, public sector job growth outside of education and criminal justice has been around 8%. By contrast, the private sector has seen a 19% gain (Mandel 2003, 16). On the other hand, to the extent that they can be measured, productivity gains in the public sector lag behind those of the private sector. This suggests that while the public sector does not suffer from the bloat imputed to it by public choice economists, its underlying processes and organizational design are problematic. 65 65 Performance Budgeting Originated in 1940s Based on the assumption that presenting performance information alongside budget amounts will improve budget decision­ making by focusing funding choices on program results 66 Performance Based Budgeting Performance based budgeting cannot begin until a system of performance measurement has been instituted A functional performance based budgeting system cannot be expected...
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