A Century of Public Budgeting Reform

DOI10.1177/0095399704268626
Date01 March 2005
AuthorJanet M. Kelly
Published date01 March 2005
Subject MatterArticles
10.1177/0095399704268626ADMINISTRATION & SOCIETY / March 2005Kelly / THE KEY QUESTION
A CENTURY OF PUBLIC
BUDGETING REFORM
The “Key” Question
JANET M. KELLY
Cleveland State University
A century of budget reformreflects a century of changing public support for the role of gov-
ernment in American society.When Americans trusted the private sector more than the pub-
lic sector,budget reform was centeredon cost control and improved efficiency.When Ameri-
cans turned to governmentto solve problemsthe private sector could not, budget reform was
centered on programmaticeffectiveness. We have an answer to V.O. Key’s question about a
theory of budgeting.History provides it. A theory of budgeting is a theory of political cycles
drivenby changing public opinion about the proper roleof government. There are two endur-
ing features of budgeting practicethat emerged in the past century. Incremental budgeting
reflects Americans’ preference for incremental policy change. The traditional or line-item
format promotes financial accountability.
Keywords: budget reform; budget history; political cycles
V. O. Key asked the budgeting question more than 60 years ago, “On
what basis shall it be decided to allocate X dollars to activity A instead of
activity B?” (Key, 1940, p. 1137). Economic theory was not determinate,
Keyasserted, nor was a pure political theory based on the relative powerof
competing interest groups. Yet governmentsassembled and enacted bud-
gets every year on some basis. Our discipline had not yet articulated that
basis. “The most advantageous utilization of public funds resolves itself
into matter of value preferences between ends lacking acommon denomi-
nator” (Key, 1940, p. 1144). We still have no denominator; however, we
have the benefit of 100 years of budget reform to help explain how value
preferences drive budget choices in the absence of a denominator.
Wildavsky(1961) said, in his response to Key’slament on our lack of a
budgetary theory, that to have such a thing would amount to a political
89
ADMINISTRATION & SOCIETY, Vol. 37 No. 1, March 2005 89-109
DOI: 10.1177/0095399704268626
© 2005 Sage Publications
theory, some way to reconcile the inherent tension between the public’s
desire for government action and their resistance to the revenue extrac-
tions that make it possible. In other words, a budgetary theory would tell
us the proper role of government in society. Key’s question and
Wildavsky’s answers are important for our constant consideration as a
profession. Using them both, I suggest that we can understand changes in
budgetary theory and practice over time by identifying values changes in
the political environment. As a consequence, we may gain a new under-
standing of why some reform ideas that dominated budgeting theory dur-
ing the past century emerged and why new reform ideas replaced them.
The two foundation assumptions of this exercise are (a) that budgeting
is an open system capable of changing to reflect public opinion and (b)
that the budget is primarily an instrument of control, either facilitatingor
limiting government intervention into public and privateaffairs. The arti-
cle begins with a pendulum theory of political history and then moves to
defend the permeability of the budget function to the political cycle. Next,
the progression of thinking and writing about the public budgeting func-
tion during the past 100 years is considered in the context of changing
public opinion on the proper role of government in society. Finally, the
article returns to the so-called conversation between Key and Wildavsky
and asks whether we were any better positioned to answer Key’squestion
at century’s end than we were at the beginning.
A POLITICAL CONTINUUM
AND AN OPEN SYSTEM
Historians and political scientists have noted shifts in American politi-
cal culture, though there is no consensus as to the length, the inevitability,
or even the meaning of those shifts. In general, they havebeen described
as a continuum, with one the concern for the public interest and social jus-
tice at one end and concern for privateinterest and economic prosperity at
the other. Hirschman (1982) described the ends as private happiness ver-
sus public happiness. McCloskey and Zaller (1984) characterized the end-
points as capitalistic values and democratic values. Schlesinger (1986)
summarized them as shifts in national involvement between public pur-
poses and privateinterests. What explains the change? From Schlesinger,
People can never be fulfilled for very long in either the public or private
sphere. We try one, then the other, and frustration compels a change in
90 ADMINISTRATION & SOCIETY / March 2005

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