Commentary: Is the Public Economics Toolbox Applicable to Budget Analysis?

Published date01 July 2014
Date01 July 2014
Abraham Lackman is senior off‌i cer
for civic affairs at the Simon Foundation
and scholar in residence in the Graduate
School of Education at Fordham University.
Previously, he was secretary of the New
York State Senate Finance Committee for
nearly a decade and budget director for the
City of New York for two years.
Is the Public Economics Toolbox Applicable to Budget Analysis? 527
Public Administration Review,
Vol. 74, Iss. 4, pp. 527–528. © 2014 by
The American Society for Public Administration.
DOI: 10.1111/puar.12242.
Abraham Lackman
Fordham University
“Creating Public Value with Tax and Spending
Policies:  e View from Public Economics” by Laura
Kalambokidis provides an excellent summary and
analysis of modern developments in public econom-
ics. While many of the proposed public f‌i nance tools
should be useful in evaluating discrete and digestible
pieces of proposed legislation, I remain skeptical of
the applicability of these tools in evaluating proposed
budgets either at the federal or state level.
e heart of Kalambokidis’s article is a series of ana-
lytical tools (from the public economics toolbox) that
“can help governments make tax and spending choices
that will maximize public value.” Many of the tools
revolve around “a cost–benef‌i t framework to identify
policies that can deliver the greatest return to the
state’s investment.
While I am sympathetic to the rigorous toolbox
described so well by the author, it is important to
recognize where the systematic application of these
public f‌i nance tools is feasible and where it is not. In
the f‌i rst instance, the proposed tools are appropriate
and helpful in evaluating new and discrete legisla-
tion involving tax and spending policies outside the
normal budget process.
e obvious question is, why exclude the budget
documents that are generally the major pieces of legis-
lation adopted by either the Congress or the respective
states in a given year? As one who has developed and
negotiated budgets for both New York City and New
York State for more than a decade, I question whether
the rigorous cost–benef‌i t framework espoused by the
author may be practical.
In the case of New York State, current budget docu-
ments total nearly 3,000 pages, include more than
20,000 discrete appropriations, and are currently
$138 billion in size.  e budget itself (actually a series
of budget bills) is required under the state constitu-
tion to be released by the executive during the third
week of each January.
e governor then has 30 days to of‌f er amendments
to the original budget. In some years, these amend-
ments are voluminous. By the middle of February, the
New York State Legislature has a complete proposed
budget to evaluate. Unfortunately, the state legislators
and their f‌i scal staf‌f have only six weeks to evaluate the
proposed budget and of‌f er amendments before a f‌i nal
vote is taken on March 31, the day before the start of
the new f‌i scal year.
Having supervised the budget process and analysis for
more than a dozen budgets at the state and city levels,
I believe that it is not realistic, let alone practical, to
expect a rigorous cost–benef‌i t analysis of each discrete
appropriation (a variant of zero-based budgeting)
given the limited timetable imposed by the state
At the very best, the current budget process in most
states allows “a rough justice,” as described by Joseph
Stiglitz. You try to evaluate the overall winners and
losers and hope to estimate their relative gains and
losses. In my view, this is a best-case scenario for most
large states, where the budget time frame is severely
Clearly, this is not the standard espoused by
Kalambokidis. In her view, “To benef‌i t from an eco-
nomics-based view of public value, government deci-
sion makers need help to identify market failures and
the range of options available to address those failures.
ey also need policy analysis that can forecast the
expected outcome from adopting a proposed policy.
While I think her standard is high, it can be achieved
for discrete and digestible legislation outside the “hot-
house” environment of budget making. In particular,
rigorous policy analysis should be applied to new and
discrete legislation in multiple areas ranging from
criminal justice to the environment to the evaluation
of individual tax expenditures. Kalambokidis of‌f ers
numerous instances in which such analysis is currently
being undertaken.
Is the Public Economics Toolbox Applicable to Budget

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT