THE LACK OF A BUDGETARY THEORY (by: V.O. Key, Jr., 1940)

Presented by J. B. Nangpuhan II (MPA Student) to Dr. C. G. Song, Professor of Public Administration at Chonnam National University, South Korea under 'Introduction to Public Administration'. Date presented: 24Nov2010.

SUMMARY

 

Key Terms:
·         Budget – 예산
·         Economy – 경제
·         Public interest – 공공의 이익 

INTRODUCTION

On the most significant aspect of public budgeting, i.e., the allocation of public expenditures among different purposes so as to achieve the greatest return, American budgetary literature is singularly arid. Nevertheless, the absorption of energies in the establishment of the mechanical foundations for budgeting has diverted attention from the basic budgeting problem (on the expenditure side), namely: On what basis shall it be decided to allocate x dollars to activity A instead of activity B?

Writers of budgeting say little or nothing about the purely economic aspects of public expenditure. According to Professor Robbins, “economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” Whether budgetary behavior is economic or political is open to fruitless debate.

This chapter focuses on some problems in public budgeting and the reasons why such problems arise in the public organization. This is an eye-opener to some employees and even students of public administration to realize the importance of budget in every organization most especially those organizations involving the public.

The central points of interests in this chapter would be summarized into two questions: (1) What are the problems involved in public budgeting? (2) What are some illustrated solutions in the problems of public budgeting?

What are the problems involved in public budgeting?

1.       Budget authorities rarely go beyond the question of how to judge the estimates for particular functions, i.e., ends; and the approach to the review of the estimate of the individual agency is generally directed toward the efficiency with which the particular end is to be achieved. Whether a particular agency is utilizing, and plans to utilize, its resources with maximum efficiency is of great importance, but this approach leaves untouched a more fundamental problem: whether the function is worth carrying out at all, or whether it should be carried out on a reduced or enlarged scale, with resulting transfers of funds to or from other activities of greater or lesser social utility.

2.       On the expenditure side, budget authorities differentiate between productive and unproductive expenditures; they consider the classification of public expenditures; they demonstrate that public expenditures have been increasing; and they discuss the determination of the optimum aggregate of public expenditure; but they do not generally come to grips with the question of the allocation of public revenues among different objects of expenditure. The problem here is of balancing public expenditures in all agencies involved.

3.       Another problem is on the development of criteria for selecting the objects of public expenditure. This constitutes the central problem on the productive state. Planning agencies have not succeeded in formulating any convincing principles, either descriptive or normative, concerning the allocation of public funds.

4.       There is also a problem into the factors that govern decisions of budgetary officials. As such, the question is a problem in political philosophy.

What are some illustrated solutions in the problems of public budgeting?

1.       In the second problem, Mabel Walker (American writer) in her Municipal Expenditures, reviews the theories of public expenditure and devises a method for ascertaining the tendencies in distribution of expenditures on the assumption that the way would be pointed to “a norm of expenditures consistent with the state of progress at present achieved by society.” But her study is only applicable to the municipal level and not of the federal state.

2.       In the third problem, if planning is to be ‘over-all’ planning, it must devise techniques for the balancing of values within a framework that gives due regard both to the diverse interests of the present and to the interest of the future. As a testament, planning agencies have created governmental machinery facilitating the consideration of related alternative expenditures. An example is the Water Resources Committee (of the National Resources Planning Board) and its subsidiary drainage-basin committees.

3.       In the fourth problem, we need to look carefully at the training and working assumptions of these officials (their “values”), to the end that the budget may most truly reflect the public interest or the “general will.” Keen analyses in these terms would be of the utmost importance in creating an awareness of the problems of the budgetary implementation of programs of political action of whatever shade.

Reference: Korean Association for Public Administration (1980). Selected Readings in Public Administration. South Korea: Da San Publishing Company. 231-237