Speaking Notes

PADM 5301

February 23, 2010

Dr. Neubauer

WE ARE IN CHAPTER 7 ON BUDGET PREPARATION

This chapter is primarily about the BUDGET PREPARATION phase of the budget cycle. Toward the end it includes a fairly long part regarding the complexities of BUDGET PRESENTATIONS (documents, Web sites) and the limitations of preparing such a document so as to be of use to people who want to gain from it DIFFERENT KINDS OF INSIGHTS.

There are lots of "actors" in the budgetary process, as suggested in the figure above.

The variety of possible "dance sequences" is fairly well defined. Let's work with several simple "three step" sequences, realizing that the sequences themselves can become additive to one another. In other words, there are likely to be common patterns involving sequences of sequences.

Internal budget specialist in an agency helps the agency executive prepare to meet with a budget analyst in the external budget office.

An agency executive works through a lobbyist to try to get the elected executive to influence the work being done by the external budget analyst in preparing what will become the executive's budget proposal.

A program head asks a citizen to ask a legislator to add some money to the amount in the proposed budget prepared by the elected representative.

I left out the MEDIA by accident. Obviously members of the media (newspapers, etc.) can become important members of the "dance."

Attempt to Represent Roles and Relationships

in Common Budgetary Processes

Proposition 1: no one can get elected without making impossible or unrealistic promises. Just ask President Mondale.

• The only two "players" who must take a "big picture" approach are the elected executive and the director of the budget office that supports the executive.

• The people want Santa Claus. It is not possible for everyone to get more out of the system than they put into it.

Proposition 2: the optimization of the parts does not add up to the optimization of the whole. The "invisible hand" is not kind, gentle or wise.

The challenge of preparing a large budget is very complex. There are limited resources and unlimited potential needs. Kindly accommodation between and among groups breaks down quickly. It becomes a game (or a dance) and the underlying dynamic is power.

The election is suppose to insure that the executive's values and priorities are the values and priorities of the people.

The budget office has the expertise to actually craft the proposal. Ideally, the people who work at the budget office have NEUTRAL COMPETENCE. (page 203)

The budget office people have to work with the agency heads but they are accountable to the executive.

The revenue projection dictates how hot the water is. Budget office people have relatively few opportunities to make political friends. What political power they have is likely to be derived from the executive.

However, budget professionals usually work with the same agency people year after year after year. Political executives come and go. Budget experts are likely to have IMFORMATION EXPERTISE. They may exercise some "power" by not sharing with the executive what they know.

In a WEAK MAYOR situation, it is the members of the legislative body who have power in budget preparation. The mayor may in fact have very little political power.

DISCRETIONARY AND NON-DISCRETIONARY SPENDING

ENTITLEMENTS

MANDATES

EMERGENCIES

LEGAL OBLIGATIONS (pensions, for example)

FAITH IS NOT A SUBSTITUTE FOR A BANKER -- OUR NATION'S BANKER NOW IS CHINA

GRANTS -- SOFT MONEY -- MATCHING FUNDS -- "THE HOOK"

It is difficult to DISPLAY budgetary information because there is so much of it. It is like a GOOGLE MAP. People need to be able to ZOOM OUT to see the BIG PICTURE without detail. They need to be able to NAVIGATE to the area of special interest and then they need to be about to ZOOM IN (DRILL DOWN) into the DETAILS of their choice.

CITIZENS; GUIDE TO THE METRO BUDGET

http://www.nashville.gov/Citizens_Budget/2008/howto.asp

GLOSSARY OF BUDGETARY TERMS

http://www.nashville.gov/Citizens_Budget/glossary/a.asp

PROGRAMS are usually within one agency. However, the goals of public policies overlap among levels of government and there is a need for COORDINATION among what various agencies are doing in attempting to address the same problems. Otherwise, there is likely to be DUPLICATION of effort and it is even possible for similar programs being run by different agencies to INTERFERE with one another.

The big problems we face are COMPLEX AND INTERDEPENDENT BY NATURE.

The design of government is COMPLEX AND HIGHLY FRAGMENTED as a consequence of "political evolution."

ECONOMISTS AND THEIR "PIES"

• If the "pie" is becoming larger, it is somewhat easier to prepare the budget proposal and to make subsequent decisions.
• If the "pie" is stable, every addition in some part of the budget will require a cut somewhere else.
• When the "pie" is shrinking, it is harder to pursue new political priorities and there is general pain throughout the system.

CUTBACK MANAGEMENT

• Personnel costs are likely to have to decrease, although it is unusual to actually fire government employees.
• Agencies with programs that serve "powerful" constituents are likely to depend upon those constituents for political help.
• Regulated industries may come help the agencies that regulate them.
• DEFERRED MAINTENCE is likely to be a FALSE ECONOMY.
• Canceling the carry-over of funds between years is likely to encourage IRRATIONAL BUYING in the last quarter.

OTHER TERMS AND CONCEPTS

• Debt and Deficit
• Discretionary and nondiscretionary spending
• Surplus
• "Rainy day" funds
• Revolving funds (off budget items)
• Current services budget
• Continuing resolution

FINALLY, THE PRESENTATION DOCUMENT ITSELF

• Begins with a statement (and picture of) the chief executive.
• Goals and priorities are usually stated by the chief executive.
• There may be some pie charts and similar graphics regarding REVENUE SOURCES.
• Then usually a department-by-department presentation including descriptions and some selected tables. In printed form, the numbers are static and it is impossible to either DRILL DOWN or to view the budget from custom perspectives.