Bringing Out the Dead: Can Information Technology Resurrect Budget Reform?

Abandoned budget reforms dot the state and local government landscape. Program, performance, zero-based, and mission-driven budgeting--with isolated exceptions--are just some of the reforms in the scrap heap of public-sector fiscal history. The authors outline a case for why advances in information technology may lead governments to reconsider old budgeting approaches and motivate 21st century reformers to develop new and hybrid ones.

The one thing that has been conspicuously lacking in our governmental business, federal, state, and municipal, has been the element of careful, understandable, responsible planning.

Frederick Cleveland (1915)

Evolution of the Budget idea in the United States

Advances in information technology continue to change the face of planning and administration. Information technology has improved the efficiency of repetitive tasks such as payroll processing, accounting journal entries, and financial reporting. It also has eased the burden of document management and transaction processing in areas such as purchasing and human resources. The latest advances include enterprise resource planning (ERP) systems that allow organizations to reengineer processes and coordinate diverse staff and line functions. The most recent technology "craze"--e-Commerce and customer relationship management (CRM) systems--is pushing out the benefits of technology to parties outside organizations such as suppliers and customers. Indeed, by changing the access, flow, creation, and distribution of information, technology is making it difficult to identify or impose organizational boundaries.

But how has technological change influenced planning and budgeting--two mission critical tasks that all organizations undertake? This article examines this question in the context of state and local governments. In particular, is it possible to bring to life "dead" budget reforms? To provide an answer to these questions it is important to understand what is expected of the budgeting function and the traditions and reforms that shape and constrain it--the focus of the first section of this article. The second section examines the current budgeting systems used by state and local governments and the technology poised to shape them in the future. The concluding section makes observations regarding the role of information technology in easing the implementation of recommended practices of the National Advisory Council on State and Local Budgeting (NACSLB)--the most recent (1998) comprehensive budget reform effort.

Seven "Habits" of Budgeting