The Current Practice of Performance-Based Budgeting in The Largest U.S. Cities: An Innovation Theory Perspective

ABSTRACT

This article provides new insights into our understanding of the adoption and implementation of performance-based budgeting (PBB) in the largest U.S. cities. Addressing PBB from an innovation theory perspective, the article conceives of PBB as an innovative budgetary tool that was initially proposed in the late 1950s as an attempt to rationalize the government’s budgetary decision-making process. While interest in PBB waned in the 1970s and 1980s, it gained renewed interest under the New Public Management reforms in the past few decades. Scholars have observed that although performance measures have been widely developed and introduced into budget presentations, budget allocations are still not made on the basis of performance information. The article examines the extent to which this observation holds true for states with performance budgeting laws, assuming that large cities located in states with performance laws, such as Texas, are more likely than others to fully implement PBB by basing their budget allocation decisions on performance information. The article takes Texas as a leading example of such states, and empirically tests this assumption using a mixed-methods approach of survey and content analysis data.

KEYWORDS:

• budget and finance
• budgetary innovations
• local government
• organization behavior
• performance measurement

Notes

The study examined 100 city operating budgets for the year 2014.

Not all survey items are used in the study.

The Distinguished Budget Presentation Award is an award that recognizes state and local governments whose budget documents show the highest quality of budget presentation and best practices as determined by the National Advisory Council on State and Local Budgeting and by the Government Financial Officers Association.

One third of the cities participating in the survey are located nationwide, namely in the states of Tennessee, Florida, Kentucky, Ohio, Oklahoma, Massachusetts, Missouri, California, Wisconsin, North Carolina, and Louisiana.

Most of the participants are city CFOs. Those who are not reported holding budget or finance-related positions, such as associate budget director, deputy finance director, budget officer, director of finance, budget and management services director, assistant administrative officer, and financial business coordinator.

Additional information

Notes on contributors

Imane Hijal-Moghrabi

Imane Hijal-Moghrabi is an Assistant Professor at The University of Texas of the Permian Basin. Her research interests are in the area of public management–specifically, innovation and change, public budgeting, and issues related to human resources management. Her work appears in Administration and Society, Public Administration Quarterly, and Review of Public Personnel Administration (ROPPA).