The Governmental Budget: Do Politics Influence the Outcome of the Governmental Budgeting Process?

This paper will attempt to answer a common question that has been asked of me, in my elected official capacity, on more than one occasion, by undergrad interns from several local universities. Do politics influence the outcome of the governmental budgeting process? To answer this question, this article will explore a governmental budget, the budgeting process, its actors, the political environment of governmental budgeting, and some recommendations to reduce the level of politics.

There is no shortage of information on the governmental budgeting process, the politics involved, and the types and approaches to budgeting, yet; in this paper, I will focus only on the fundamental form of budgeting. Furthermore, this paper is not meant to be an end-all source. It is very general and should be viewed in the context of other sources.

Definition

In order to discover whether or not politics influence the governmental budgeting process, we need to understand what a governmental budget is.

The definition of a budget, according to Webster’s Dictionary online, is “a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them.” (Merriam-Webster’s Online Dictionary [MWOD], 2005), or simply put “a dollars and cents plan of operation for a specific period of time” (Freeman, R. J., Shoulders, C. D. (2003).

A governmental budget generally has a definite period, such as one year, although some budgets are biannual (two-year period). A governmental budget includes estimates of income, such as; tax revenues, fines, and fees, as well as estimated expenditures, such as; salaries, benefits, other routine operating expenses, debt service, and capital outlays.

While the MWOD definition of a budget is beneficial, others see a governmental budget as much more than just a document with income and expenditure estimates for a given time period; according to Marks & Bartle (2005), a governmental budget represents a statement of its priorities by showing what it intends to spend over a specified period of time and how it will allocate and finance those expenditures (p.260). Furthermore, The Texas Comptroller of Public Accounts (TCPA) (2001) stated that a governmental budget not only displays the financial condition of the governmental body, is also establishes accountability (Chapter 2, p.3). In contrast, Shim et al. (1997) noted that nonprofit organizations see monetary or nonmonetary budgets as tools and a means to an end.

My experience has shown that a budget, while full of numbers, is more a statement rather than just a financial document, and it is designed to provide information to decision-makers and indicates the decisions that the governmental body as a whole has made (Freeman et, al, 2003, p.74).

The Budgeting Process

Creating a governmental budget involves making choices and transparent decisions about income and expenditures. This process is commonly referred to as budgeting. TCPA (2001) stated budgeting is making choices about limited resources, and the more limited the resources, the more careful the choices (Chapter 2, p.5). According to Rubin (1990), budgeting is allocating scarce resources between objects of expenditure, which may imply choice (p.3). Reed et al. (1997) noted that public budgeting is making decisions about public revenues and expenditures (p.11). Furthermore, Freeman et al. (2003) stated that budgeting is the process of allocating or choosing between scarce resources and unlimited demands (p.70), again involving choice.

Creating a basic governmental budget, by and large, has four general phases (a) budget preparation, (b) consideration, © execution, and (d) audit and evaluation (Marks et al., 2005; Reed et al.).

In the first phase, budget preparation, the focus is on the executive branch, council manager, or budget officer who drafts and proposes a tentative budget (Freeman et al., 2003; Marks et al., 2005). Once the budget is prepared, it is revealed to the public and considered by the legislative body. At this point, public hearings are conducted, and changes are made soon after the budget is approved.

After budget approval, execution, or the third phase of the process, the governmental body puts the budget into operation (Marks et al., 2005; Reed et al.). The fourth phase, audit, and evaluation, focuses on the compliance of the governmental body to the executed budget.

Budgeting Actors

As we found earlier, budgeting involves choice, and “Actors,” as identified by (Birkland, 2001), must make those choices or decisions. Birkland (2001) also identified two main categories of actors in the policy decision-making process: official and unofficial (p.50). These official and unofficial actors play a substantial role in the budgeting process.

Official actors, such as Mayors, Governors, Federal and State Legislators, City Councilpersons, County Commissioners, and Judges, all have statutory authority over the budgeting process and make the decisions about the budget (Birkland, 2001).

Unofficial actors are those who play a role in the process without apparent legal authority, such as the media, political parties, think tanks, interest groups, and of course, individual citizens (Birkland, 2001).

Each of these actors has clear goals and outcomes they would like to see from the budgeting process. Rubin (1990) stated that the goals and motives of these actors frequently clash with one another (p.5), i.e., one actor may want funding for a social program that others may fiercely oppose.

The Political Environment of Budgeting

The dictionary definition of a governmental budget covered earlier in this paper is correct, yet, extremely technical. Clearly, given the fact that choice plays a significant role in the budgeting process, I too believe a budget is more than just a statement of financial position for a governmental body or document with numbers, incomprehensible by the average American because that choice, I believe, is subject to manipulation. According to Milakovich & Gordon (2001), the nature of budget decision-making has long been an issue of considerable importance with political influence, or manipulation as I like to call it, as a critical variable (p.378).

Also, according to Rubin (1990), a public budget ‘reflects the degree of importance legislators put on satisfying their constituents and the legislators’ willingness to listen to interest group demands’ (p.2). Officials often consider the long-term popular support of the citizens they represent in their budgeting decisions (Reed et al., 1997, p.5).

Furthermore, Milakovich et al. (2001) noted that ‘governmental budgets and budget process are at the core of both political and managerial controversies’ (p.338). Their (Milakovich et al., 2001; Rubin, 1990) findings demonstrate the political forces involved in the budgeting process described above.

We look at the City of San Francisco to further illustrate the politics involved in the governmental budgeting process. Suppose a governmental budget represents a statement of its priorities, according to Marks et al. (2005), and legislators’ willingness to listen to interest-groups demands, according to Rubin (1990). In that case, the City of San Francisco listens.

The City of San Francisco, known for its very liberal policies, gave in to an organized movement to influence its governmental body to incorporate a “gender perspective” into its budgeting process. The City of San Francisco became the only government to explicitly use gender-responsive budgeting as part of its budget decision-making (Marks & Bartle, 2005). Also, legal professionals and scholars of the courts have begun to suggest that the governmental budgeting process now threatens judicial independence (Douglas & Hartley, 2003). This may, in fact, be a genuine problem. My Commissioners Court, for the most part, has the authority to cut the county’s court budget at will. This could lead to or subject our judiciary to political jockeying and budgetary threats. According to Douglas et al. (2003), these budgetary threats could be used against the judiciary, by legislators, because of funding needed to carry out the courts’ operations (p.443).

While all see politics in the budgeting process, some see it in a different light. Some argue that politics and budgeting should be antithetical and that the budgeting process should be primarily and exclusively technical (Rubin et al., 1990). They further believe that actors should base their budget decisions on cost and efficiency and that the politics of elected officials and interest groups are an unwanted intrusion that further reduces efficiency and makes their decisions less rational (Rubin et al., 1990).

Others argue that the “unofficial actors”/interest groups are the dominant actors in the budgeting process, and the richer, the more influential the group, the more influence the group has in the budgeting process (Rubin et al., 1990). Politics and conflict are plainly more visible, raising questions as to whether or not the interest groups represent a much more narrow outlook on budgeting than the main base of constitutes (Rubin et al., 1990). They also believe it quickly leads to pork barrel politics, such as the ones identified in the annual Pig Book published by Citizens Against Government Waste. According to Atlantic (2004), the 2004 fiscal year saw a record 10,656 projects tacked on to Congress’s appropriations bills — up 13 percent from the previous year and 28 percent from 2002, for a total cost to federal taxpayers of $22.9 billion.

Choice slices of pork listed in the Pig Book include $50 million to build the world’s largest indoor rain forest in Coralville, Iowa; hundreds of thousands of dollars for “poultry litter composting” and “berry research”; and $5 million for the High-Frequency Active Aurora Research Program (HAARP) Atlantic (2004).

Recommendations and Conclusion

As we have seen in this paper, politics are clearly a part of the budgeting process. The next logical question would be, what, if anything, can be done to eliminate politics from the budgeting process? And the impressive answer I have for the reader of this paper asking that question is, Nothing! Since elected and appointed officials often consider long-term popular support of the citizens they represent in their budgeting decisions (Reed et al., 1997, p.5), politics will always exist in the process. One must reassess and ask what can be done to minimize the amount of politics in the governmental budgeting process.

In light of this new question, my recommendations for ways to achieve some level of positive social and political minimization related to the budgeting process are:

1. Sunset advisory committees and laws. Sunset committees and laws are often seen as anti-big government and pro-citizen, and in their various forms and applications, it is said to have produced more effective legislative oversight (Landon, C., 1990). Sunset committees and laws have now been standardized and systemized in the procedural interactions involved in the oversight process (Landon, C., 1990). Furthermore, Sunset committees and laws enjoy the support of liberals, conservatives, Democrats, and Republicans across the country (Landon, C., 1990).
2. Standardize the governmental budget period to biannual (two-year period). Budgetary decision-making changes over time, with “unofficial actors” and interest groups losing power and influence over time as issues fade, thereby reducing the political environment around the agencies’ budgeting process (Rubin, B. I., 1990). I believe standardizing the budget period to a biannual focus will reduce the level of politics and influence.
3. Use cost analysis techniques throughout the budgeting process. While making a decision based on simple cost analysis is not always easy (Reed et al., 1997, p.145), using even that simple cost analysis technique will allow the elected or appointed officials to base their budget decisions on cost and efficiency weeding out politics, interest groups and unwanted intrusions that further reduces efficiency that make their decisions less rational (Rubin, B. I., 1990).

In conclusion, we can clearly see that budgeting is about choice, and the actors making those choices are subject to political manipulation, creating a solid environment of politics within the budgeting process. Since elected and appointed officials often consider long-term popular support of the citizens they represent in their budgeting decisions (Reed et al., 1997, p.5), it can be expected that politics will always exist in this budgeting process. Furthermore, as a County Commissioner, I know firsthand that “public budgeting is highly political” (Reed et al., 1997, p.13), and there is no way around the political aspects of our budgeting choices; only small ways to minimize the level of politics and influence one group or actor has over the budgeting process.

References

Milakovich, M. & Gordon, G. (2001) “Public Administration in America,” Wadsworth Group. 7th(ed)

Rubin, B. I. (1990) “The Politics of Public Budgeting” Chatham House Publishers.

Shafritz, J & Russell, E. W (2001) “Introducing Public Administration,” Longman, 4th (ed).

Birkland, T. (2001) “An Introduction to the Policy Process,” M.E.Sharpe, Inc.

Merriam-Webster’s Online Dictionary, (2005). From: http://www.m-w.com/, Accessed 1/31/2006.

Marks, M. R. & Bartle, J. R. (2005) “Integrating Gender into Government Budgets: A New Perspective. Public Administration”, Review 65 (3), 259–272.

Douglas, James W. & Hartley, Roger E. (2003) The Politics of Court Budgeting in the States: Is Judicial Independence Threatened by the Budgetary Process? Public Administration Review 63 (4), 441–454. doi: 10.1111/ 1540–6210.00307

Cornia, Gary C., Nelson, Ray D. & Wilko, Andrea (2004) Fiscal Planning, Budgeting, and Rebudgeting Using Revenue Semaphores. Public Administration Review 64 (2), 164–179. doi: 10.1111/ j.1540–6210.2004.00358.x

Freeman, R. J., Shoulders, C. D. (2003). “Governmental and Nonprofit Accounting.” Prentice Hall. (7th ed.). ISBN#: 0–13–066191–0.

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Atlantic (2004), “Pigs at the Trough,” Vol. 294 (1), p60, 1p

Landon, C. (1990). “Politics of Sunset Review in Texas,” Public Administration Review; Jan/Feb90, Vol. 50(1)