Policy and Politics in State Budgeting

Kurt M. Thurmaier, Katherine G. Willoughby

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9780765602947
• eBook ISBN: 9781317462705
• Topic: History
• Subtopic: Asian History
• Index: History

States are the key to contemporary government reform efforts in the United States, but we know very little about their relative effectiveness at resource allocation and their actual capacity to absorb additional fiscal and managerial responsibilities. This path-breaking study examines state budget offices as institutional actors, with special attentio to the role of budget examiners. Drawing on empirical findings from field studies of eleven states in the American heartland, the authors demonstrate how budgeting at the state level has become more policy-oriented, requiring complex decision making by budget analysts. The incrementalist model of budgetary decision-making thus gives way to a multiple rationalities model. The authors illustrate the decision-making model with the story of two office examiners who have distinctly different orientations as they begin their work, and contrast the different decision nationalities that come into play for them at different points in a typical budget cycle. The book includes a comprehensive bibliography of historical and modern writings on state budgeting operations, activities, and decision-making; state budgeting cycles; and the state-level policy development process.

1

Introduction

The Purpose of This Research

The problems facing state government officials include old ones greatly magnified and new ones just surfacing. Dramatic demographic shifts, the volatile international market, modern fiscal federalism, and heightened public awareness regarding taxing and spending issues increasingly burden these decision-makers in state government. Recent federal devolution of programmatic responsibilities to the states has furthered interest in the fiscal capacity of states to implement a wide range of policies. For example, states have succeeded in changing the way welfare programs are provided, and they are moving forward on a number of innovations in areas like managed care for Medicaid recipients, immunization and other health-related registries and databases, sentencing of offenders, and voting by mail, to name a few. Thus, public officials and administrators are increasingly concerned with budgetary issues, as appropriations ultimately determine and support these public policies and programs.

Yet, we find that there is little information about state budgetary politics and processes that investigate decisionmakers below the level of elected official. Also, the emphasis in academic texts on budgeting is decidedly weighted toward the politics and economics of national budgeting, highlighting the tug of war between the president and Congress. While several texts discuss state and local budgeting, notably Axelrod (1995) and Gosling (1997), most scholastic literature on the topic is composed of ad hoc research on specific aspects of budgeting, often focusing on a single state or select states for analysis (Clynch and Lauth 1991). While there is much to learn from these studies, the field of public budgeting is lacking a full exposition of budgeting at the state level. We have written this book to fill in the details of budgetary politics and processes in state government.

This book is also designed to serve another purpose. There is a long list of academic laments about the lack of a budgetary theory of decision-making that explains on what basis budgeters decide to give one program X amount of dollars, while giving another program Y amount of dollars (Key 1940; Lewis 1952; Straussman 1979; Rubin 1990 and 1997). One obstacle has been the relatively easier task of creating normative or prescriptive models of budgetary behavior. There has not been a concomitant bounty of descriptive models of budgetary behavior. Another hurdle has been the traditional academic focus on budgeting at the macro level (a process-oriented approach with strong political and institutional explanations) versus budgeting at the micro level (an individual decision-making approach). Part of the problem of this focus on macro-level budgeting has involved the controversy over Wildavsky’s theory of budgetary incrementalism and whether it is valid as either a descriptive or prescriptive model of budgetary behavior (LeLoup 1978; Rubin 1990). Even then, there are arguments that the point is moot, because the era of incremental budgeting is past, and another model is needed to replace it (Schick 1983; Straussman 1985; Kiel and Elliott 1992).

In this study we are concerned about budgetary decisions on the micro level as understood by James Skok (1980). In a two-year study of the budget process in Pennsylvania, Skok analyzed the distributive and redistributive nature of budgetary decision-making. He found that below the macro-level stage, budgetary decision-making is distributive. “Each program subcategory is analyzed independently on its own merits according to a battery of routine criteria (past performance, indicators of need, evaluation studies, formula mandates, prior-year appropriations, salary projections, and the like)” (Skok 1980, 457–458). However, as budgeting progresses to the macro level, decisions begin to involve redistributive versus distributive issues. Skok (1980, 458) suggests that apolitical analysis is most influential at the micro-level stages of budgetary decision-making “where questions of funding source and/or tradeoffs among program subcategories is not of primary importance.”

Further, we believe it is not only possible but also desirable to develop a descriptive model of budgetary behavior. To do this, we intentionally focus our attention on budgeting in the states. Specifically, we develop a descriptive model of budgetary decision-making by a group of key budgetary actors, the examiners in the state budget offices. We focus on these budgeters deliberately. From an internal perspective, the “segmented” quality of the state government budget process involves a distinct cycle of decisions and defines the behavior of budget actors. Long considered an “executive-driven” process greatly influenced by the legal constraint of a balanced-budget requirement and limits on deficit financing, state government budgeting is actually composed of both macro- and micro-level activities. For example, micro-level budget development is comprised of three segments: the agency request, the chief executive’s recommendations (recommended total budget), and the legislative appropriation (Abney and Lauth 1986; Crecine 1967; Gray 1983). These are conditioned by the macro environment of political and fiscal factors.

Each component of the state budgetary process involves a distinct set of players characterized by specific role behaviors and particular routines and responses. In this case, role behavior is understood as the “recurring actions of an individual appropriately interrelated with repetitive activities of others so as to yield a predictable outcome” (Katz and Kahn 1978, 189). This book identifies multiple roles of budget examiners because they serve at the nexus of the macro and micro levels of the state budget process and also at the nexus between the policy process and the budget process.

We argue that focusing on this group of relatively unscrutinized budgeters will reveal that (1) they are central decisionmakers in state budgetary and policy processes, (2) they exercise considerable influence on budgetary outcomes through the exercise of delegated powers from governors, and (3) their critical gatekeeping roles produce decisions that substantially affect state budget outcomes and, consequently, the governments of which they are a part. This characterization is conditioned by the decision context for examiners—namely, whether the state budget office (SBO) has a control or policy orientation.

This is not to discount the involvement and influence of the other important actors, including governors and agency heads, legislative leadership, and even media and interest groups. Nor do we argue that these other actors follow the same calculus of decisions as examiners in the budget office, although they may. Also, we understand that elected officials have the final word in budgeting—they have the votes and the veto pens that formally ascribe to them absolute authority and accountability for state budgeting decisions. Instead, we argue that the structure of state budgeting and policy processes places the SBO at the vortex where these two processes meet, and that the governor very often delegates tremendous discretion to the budget office staff through the budget director. We assess the degree of influence that individual budget examiners have in this process and hope to persuade you that it is considerable. We explain the conditions under which we expect to find different degrees of budget office influence on budgetary outcomes. In addition, we discuss the historic, cultural, and political factors that seem to give budget offices in some states more discretionary powers than their counterparts in other states.

The central question of this book is, On what basis do budget examiners make recommendations to the governor? In this discussion we develop a model of budget rationality or decision-making “at the center” (Axelrod 1995). We note that the demands on a positivist, micro-level theory of budgeting are formidable. Does it truly describe activity in measurable ways? Can the model account for micro-level decisions, yet be predictive of macro-level ones? Is this model predictive of behavior only under prescribed conditions? Finally, does this theory tie policy and budgetary decisions together in a sensible and meaningful way?

We briefly explore the various notions of rationality to illustrate that there are multiple conceptions of rationality, even though the current climate of discussion in the fields of political science and public administration would lead one to believe that rationality is, de facto, defined as economic rationality. The development of our model of budget rationality begins by identifying its underlying conditions and assumptions. Here we return to the issues of gubernatorial delegation of discretion to budget offices, and to the link between the budget and policy processes. It is the intimate relationship between the policy decisions and the budgetary decisions that requires a budgeting rationality more complex than the incrementalism model or decision models based purely on economic rationality. Budgets are more than simply political or economic decisions. Especially at the state level, budget decisions are rarely divorced from an “air of management” concern for how policies will actually be implemented by agencies, and whether the budgetary and other resources are available and worth the benefits of the policy. As Kenneth Howard (1973) noted more than twenty-five years ago, examiners in state budget offices have stood apart from national budgeting staff in their concern for policy implementation, long before it was fashionable in national or scholastic circles. The “air of management” is subtly infused in the decision-making by state budget examiners, and manifests itself in terms of policy implementation issues rather than simply “agency management” and efficiency.

Understanding this context of budgetary decision-making at the center, in state budget offices, permits us to outline a model of decision-making rationality that can address the multiple facets of the policy and budget problems facing state budget examiners who must recommend some type of action to the governor. We then illustrate this model by dissecting the anatomy of a budget recommendation through a year in the life of two state budget examiners. Joining them on their first day of the new job, we follow the develop-ment and evolution of their thinking as they gather information, process it, gather more, identify and frame budgetary problems, analyze them based on available information, and develop recommendations for presentation to their section managers, deputies, budget directors, or governors. Crucial aspects of the recommendation process include: the kinds of information gathered by the examiner, the sequencing of information gathering, the framing of the problem—for themselves and for their superiors—and threshold decisions about how much they will invest in arguing in support of, or opposition to, various budgeting options or solutions that they may develop or that are presented by other budgetary actors, including agency officials and interest groups.

In the end, we hope to persuade you that budgetary politics is only one of five types of budgetary decisions, and that budgetary politics is distinct from budgetary policy in the minds of professional examiners. We explain that budgetary rationality is not synonymous with economic rationality, and that budgeting decisions by examiners based solely on economic rationality are in fact irrational.

We acknowledge that we have only mined the surface of the complexity involved in state budgeting practices. There are many avenues that need exploration. In addition, we invite validation of our model through replications in regions of the country not included in this study as well as other levels of government. For example, we suspect the model is relevant to budget decisions in local government budget offices, where they exist.

The State Government Setting: Factors Influencing Budgeters’ Decisions

Decisions Decision-making implies action within a specific task environment as well as evidence of a certain “willingness” on the part of the individual to make a choice (Bromiley 1981; Straussman 1979). As this study concerns the state government setting, the process of resource allocation, and the behavior of state government budgeters, it therefore considers individual action in a particular context. Thus, we consider current under...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Tables, Figures, and Boxes
• Preface
• Acknowledgments
• Acronyms
• Chapter 1. Introduction
• Chapter 2. The State Budget Office and the Budget Problem
• Chapter 3. Budget Rationalities: Effectiveness Decisions
• Chapter 4 Budget Rationalities: Efficiency Decisions
• Chapter 5. Budget Office Orientations and Decision Contexts
• Chapter 6. The Anatomy of a Policy-Oriented Budget Recommendation
• Chapter 7. The Anatomy of a Control-Oriented Budget Recommendation
• Chapter 8. Changing Roles: From Guarding the Purse to Guarding the Policy
• Chapter 9. Conclusion
• References
• Index
• About the Authors