Budget Process and the Characteristics of Public Budgeting
Adaptation
Competition
Separation of Payer and Decider
Minicase: Harrisburg Whose Priorities Dominate?
Constraints
Designing Process to Achieve Policy and Political Goals
Budget Process and Policy
Macro- and Micropolitics
Budget Process and Power
Minicase: Republican Macrolevel Reform Proposals
Minicase: Micropolitics Bending the Rules to Win
Individual Decisions
Minicase: How the Governor’s Veto Is Used
Variation Between and Among Federal, State, and Local Governments
Variation Between Levels of Government
Executive and Legislative Budget Powers
Minicase: Maine The Governor Versus the Legislature
Minicase: Limits of Governor’s Vetoes in New Mexico Dispersion of Power
Minicase: San Diego Fiscal Problems, Strong Mayor, and Veto Powers
Entitlements, Grants, Loans, and Operating and Capital Budgets
Variation in Budget Processes Among States and Among Cities
Summary and Conclusions
Useful Websites
CHAPTER 4 • The Dynamics of Changing Budget Processes
Overview
Minicase: New York State Powerful Governor, Weak Legislature, Informal Budgeting
Minicase: The Governor Versus the Courts
Federal Budget Process Changes
The Creation of the Executive Budget at the National Level Entitlements and Congressional Fragmentation, From the 1930s to the 1970s
Congress Takes Back Some Budget Control, 1974
Deficit Controls 1986, 1990
Budgeting After 1998: Ad Hoc Decision-Making
Minicase: Deeming Resolutions and Ad Hoc Budgeting
Minicase: Ad Hoc Scoring Rules
Recent Changes in Congressional Budget Process
Minicase: Overseas Contingency Operations
Minicase: Budget Process Reform 2018?
Changes in Budget Process at the State Level
History of State Budget Process
Minicase: Maryland’s Legislative Budget Power
Minicase: South Carolina’s Legislatively Dominated Budget Process Begins to Budge
Minicase: The Executive and the Legislature in Florida’s Budgeting
Changes in Budget Process at the Local Level
State Control Over Local Budget Process Persistence
Lack of Neutrality Democratic Controls
Minicase: Florida and Unfunded Mandates Forms of Government
Summary and Conclusions
Useful Websites
CHAPTER 5 • Expenditures: Strategies, Structures, and the Environment Strategies
Minicase: A $17,000 Drip Pan
Minicase: Homeland Security A Program Tied to a Goal of Unlimited Worth
Minicase: Amtrak Train Wreck
Minicase: Congressional Budget Office and Scoring Structure
Minicase: Budgetary Implications of Direct College Loans
CHAPTER 8 • Controlling Waste, Fraud, and Abuse
Minicase: Congressional Oversight and the Zombie Apocalypse Inspectors General
The Politics of Finding Waste, Fraud, and Abuse
Minicase: Louisiana Inspector General
Federal Inspectors General
Staffing Out of Balance With Work Load
Growing Independence
Minicase: President Obama Fires an IG
Minicase: Who Guards the Guards? Not the Guards Themselves
Failure to Appoint Permanent Inspectors General
Minicase: Acting IG for Homeland Security Too Close to the Department
Inspectors General Under President Trump
State and Local Inspectors General
Minicase: The Massachusetts Inspector General Versus the Governor
Minicase: New York State and Medicaid
Inspectors General in Cities and Counties
Minicase: Baltimore’s Departing IG
Auditors General
State-Level Auditors General
Summary and Conclusions
Useful Websites
CHAPTER 9 • Budgetary Decision-Making and Politics
Real-Time Budgeting
A Comparison of the Decision-Making Streams
Common Themes
Openness Versus Secrecy
Increased Polarization
Action and Reaction
Federalism
Reconceptualizing Reform
Avenues for Research
Summary and Conclusions
Useful Websites
Notes
Author Index
Subject Index About the Author
Tables, Figures, and Minicases
Tables
2.1 Hedge Funds: Long-Term Contribution Trends 58
3.1 Mayoral Veto Power in Large U.S. Cities 101
3.2 Mayoral Veto Power in California Cities 102
6.1 Average Annual Increase/Decrease in State Aid to Local Governments: 2002–2008 Versus 2008–2018, Maryland 226
Figures
1.1 Pork-Barrel Spending, 1991 to 2016 13
1.2 Number of Pork Projects, 1991 to 2016 14
1.3 Decision-Making: Environment, Process, and Strategies 33
2.1 Minnesota’s Tax System Fairer 48
2.2 Reduction in Income Inequality From Government Transfers and Federal Taxes, 1979 to 2011 70
4.1 Emergency Supplemental Appropriations, Defense, and Nondefense, 2000–2012 131
5.1 Federal Homeland Security Spending (in billions) 164
5.2 Relationship Between Health Care Spending and Life Expectancy in OECD Countries 193
6.1 Summary of Receipts, Outlays, and Surpluses or Deficits, 1789–2023 214
6.2 Minnesota’s History of Funding Local Governments, in Constant Dollars per Capita, 1972–2014 225
7.1 Supplemental Spending as a Percentage of the Deficit and Budget Authority, 2000–2010 246
Minicases
City Manager Replies to Scathing Budget Critique 9
Missouri Constitutional Amendment Reduces Governor’s Powers 12 Young Protesters in Court 17
Foreword
Budgetary politics, never dull, has become even more exciting in recent years, with dramatic partisan standoffs and hostage taking, with sworn unbreakable oaths, with magical offsets from imaginary balances, with symbolic stands, black (secret) budgets, and off-budget spending.
While some spending seems to disappear, some persists for years, defying reason, such as a white elephant of a military blimp that eventually escaped and floated free across the countryside. Equally odd in its way, those tasked with overseeing the budget, the so-called junkyard dogs, sometimes find themselves chained up, limited in what they can investigate or to whom they can report their results.
Votes and quotes may be symbolic, meant to appeal to supporters and demonstrate support for a given policy, but without intent of actually doing anything other than claiming the politicians are on the “right” side. Supporters and opponents of given spending or taxing options may exaggerate, quoting from biased sources to back up their arguments; alternatively, they may press professional budget staff to come up with the numbers they want to use and threaten to cut staff budgets if they resist.
Constitutions, laws, and rules frame the action, but they do not completely determine what happens. If laws or rules are considered too restrictive, politicians sometimes find ways around them. As a result of symbolic stances, exaggerations, omissions, and evasions, what is written and shown to the press and the public is not always a literal rendition of what is going on.
The purpose of this book is not to argue that public budgeting is some kind of disaster area or to show where the bodies are buried. Most of the time, public budgeting works well, just not all the time. Rather, the aim of the book is to explain what lies behind the surface, what produces the sometimes odd results, like a homeland security training about an invasion of zombies or a tax reform that doesn’t reform taxes and results in hundreds of billions of dollars of increased annual deficits. Students, practitioners, the public, and
send troops to the border—the National Guard—to be funded out of the defense budget. Presumably the guard would stay until his wall was finally funded and built.
The National Guard is an example of a joint federal–state program. National Guard troops may be funded by the national government, but they are controlled by the state governors. Arizona, New Mexico, and Texas, all with Republican governors, agreed to deploy National Guard units to the border to help with surveillance and road building, backing up federal employees, rather than stopping or arresting immigrants. California, a state with a Democratic governor trying to protect the state’s immigrant population, agreed to send only a small number of troops and tasked them only to deal with drug smugglers and other criminals, not as backup to the federal immigration function. Although the president threatened not to pay for such a limited deployment, the Defense Department assured California that it would indeed pay for the use of California’s National Guard.
The story is understandable only if one examines the powers of the president with respect to Congress when it comes to the budget; presidents cannot add items to the congressionally approved budget, they can only accept or reject each bill presented to them. One also needs to understand something about the structure of federalism, of shared programs between the states and the national government, in which the national government often pays, but the states determine the program details. In this case, the governors decided whether their National Guard units would cooperate with the federal immigration officials, how many troops they would commit, and what they would be tasked with doing.
In this case (and in others) the president tried to weaponize the budget, to force states to carry out his policies, despite the formal and legal independence of the states built into our federal system. States may voluntarily comply with federal government requests, but need not if they disagree. The president has threatened to deny federal funding to any states that do not cooperate with his immigration policies, and he considered California’s minimal compliance with his request for the National Guard as noncooperation.
Such threats have been challenged in court, and so far the courts have
Congress and with respect to the states. In the second case, the context included the process of bargaining to agreement between political parties when both exert power, as when supermajorities are required to pass legislation; the case further illustrated symbolic politics and the politics of blame shifting and spin.
For students, elected officials and professional staff, and reformers, this book offers more than an ability to penetrate the murk of budget politics; it provides real-world advice. How can one successfully raise taxes in an antitax climate, where many elected officials have taken a vow to never raise taxes and where a number of states require supermajorities to pass any tax increase? What differentiates successful and unsuccessful tax reform efforts?
What features should a budget process have to ensure transparency, to deal with conflicting priorities, to provide a budget on time, and come in at the end of the year with at least a small surplus? What features of budget processes address what kinds of problems? What happens when budget processes remain focused on prior problems and no longer match or address current ones? What is an effective balance between executive and legislative budget power, and how can it be achieved? How and why should the public be involved in budgeting?
What kinds of arguments are likely to be successful in making a budget request, and what is less likely to work? If you want to eliminate earmarks relatively small projects sought by individual members of congress to win their support for legislation—what are you going to put in its place, how are you going to build coalitions large enough to pass legislation, and will those alternatives be more or less expensive or wasteful?
What are the options for controlling waste, fraud, and abuse; how well do they work; how do they differ; and what are the best structures and legal foundations for such efforts? What happens when the budget overseers are overly aggressive or too close to the agencies they oversee?
In budget implementation, how flexible should the budget be during the budget year or biennium? What are the consequences of changing the budget substantially after it has been passed? What kinds of constraints on changes during the year exist, which ones are appropriate, which ones have been
Publisher’s Acknowledgments
SAGE wishes to acknowledge the valuable contributions of the following reviewers.
Jaclyn Bunch, University of South Alabama
Joseph Martin, University of Missouri
Shannon Vaughan, Western Kentucky University
What Is Budgeting?
The essence of budgeting is that it allocates scarce resources, implying choices among potential expenditures. Budgeting implies balance between revenues and expenditures, and it requires some kind of decision-making process.
Making Budgetary Choices
All budgeting, whether public or private, individual or organizational, involves choices between possible expenditures. Since no one has unlimited resources, people budget all the time. A child makes a budget (a plan for spending, balancing revenues and expenditures) when she decides to spend money on a marshmallow rather than a chocolate rabbit, assuming she has money for only one. The air force may choose between two different airplanes to replace current bombers. These examples illustrate the simplest form of budgeting, because they involve only one actor, one resource, one time, and two straightforward and comparable choices.
Budgeting is usually more complicated, with many possible options that are not always easily comparable. To simplify this complexity, budgeters usually group together similar things that can be reasonably compared. When I go to the supermarket, I compare main dishes with main dishes, beverages with beverages, desserts with desserts. This gives me a common denominator for comparison. For example, I may look at the main course and ask about the amount of protein for the dollar. I may compare the desserts in terms of the amount of cholesterol or the calories. Governmental budgeters also try to make comparisons within categories of similar things. For example, weapons are compared with weapons and computers with computers. They could be compared in terms of speed, reliability, and operating costs, and the one that did the most of what you wanted it to do at the least cost would be the best choice. If there is agreement on the goals to be achieved, the choice should be straightforward.
Sometimes, however, budgeting requires comparison of different, seemingly
incomparable things. How do I compare the benefits of providing shelters for the homeless with buying more helicopters for the navy? I may move to more general comparisons, such as how clearly the need was described or who received the benefits last time and whose turn it is this time. Are there any specific contingencies that make one choice more likely than the other? For example, will the country be embarrassed to show our treatment of the homeless in front of a visiting dignitary? Or are disarmament negotiations coming up, in which we need to display strength or make a symbolic gesture of restraint? Comparing dissimilar items may require agreement on priorities. Such priorities may be highly controversial.
Not only does budgeting have to deal with many sometimes incomparable possible expenditures, it also involves multiple resources, resulting in multiple and sometimes unrelated budgets. Budgeting often allocates money, but it can allocate any scarce resource for example, time. A student may choose between studying for an exam or playing softball and drinking beer afterward. In this example, it is time that is at a premium, not money. It could be medical skills that are in short supply, or expensive equipment, or apartment space, or water.
Government programs often involve a choice of resources and sometimes involve combinations of resources, each of which has different characteristics. For example, some federal farm programs involve direct cash payments while others include direct loans and still others provide loan guarantees for loans from commercial lenders. Federal budgets often assign agencies money, personnel, and sometimes borrowing authority, three different kinds of resources. Some programs offer tax breaks, while others offer direct payments and still others offer insurance that is unavailable or extraordinarily expensive in the private sector.
Balancing and Borrowing
Budgets have to balance. A plan for expenditures that pays no attention to ensuring that revenues cover expenditures is not a budget. That may sound odd in view of huge federal deficits, but a budget may technically be balanced by borrowing. Balance means only that outgo is matched or exceeded by income. Borrowing means spending more now and paying more
