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1 BUDGETCYCLESC hapter 353 Public budgeting systems, which are devices for selecting societal ends andmeans, consist of numerous participants and various processes that bring the par-ticipants into interaction. As described in preceding chapters, the purpose ofbudgeting is to allocate scarce resources among competing public demands so asto attain societal goals and objectives. Those societal ends are expressed not byphilosopher kings but by mortals who must operate within the context of someprescribed allocation process namely, the budgetary Chapter provides an overview of the participants and processes involved inbudgetary decision making. First, the phases of the budget cycle are reviewed. Anysystem has some structure or form, and budgetary systems are no exception.

2 As willbe seen, the decision-making process has several steps. Detailed discussions of thesesteps are presented in subsequent chapters. The second topic is the extent to whichbudget cycles are intermingled within government and among budget CycleTo provide for responsible government, budgeting is geared to a cycle. The cycleallows the system to absorb and respond to new information and, therefore, allowsgovernment to be held accountable for its actions. Although existing budget sys-tems may be less than perfect in guaranteeing adherence to this principle of respon-sibility, the argument stands that periodicity contributes to achieving and main-taining limited government. The budget cycle consists of four phases: (1) prepara-tion and submission, (2) approval, (3) execution, and (4) audit and 4/22/07 8:46 AM Page 53 Jones and Bartlett Publishers.

3 NOT FOR SALE OR DISTRIBUTION54 Chapter 3: budget CyclesPreparation and SubmissionThe preparation and submission phase is the most difficult to describe because ithas been subjected to the most reform efforts. Experiments in reformulating thepreparation process abound. Although institutional units may exist over time,both procedures and substantive content vary from year to Executive responsibility for budget preparation variesgreatly among jurisdictions. budget reform efforts in the United States havepressed for executive budgeting, in which the chief executive has exclusiveresponsibility for preparing a proposed budget and submitting it to the legislativebody. At the federal level, the president has such exclusive responsibility, althoughmany factors curtail the extent to which the president can make major changes inthe budget .

4 In parliamentary systems, the prime minister (chief executive) typi-cally has responsibility for budget preparation and submits what is usually calledthe government budget to the authority, however, is not always assigned to state governors andlocal chief executives. While a majority of governors has responsibility for prepa-ration and submission, some share budget -making authority with other electedadministrative officers, civil service appointees, legislative leaders, or some com-bination of these parties. In parliamentary systems, if a coalition of several partiesis necessary to form a government, and the coalition is held together by each ofthe main parties in the coalition controlling one or more ministries, the prime min-ister may have very little control over budget preparation.

5 Such was the case withthe first government under the Iraq constitution adopted in the municipal level, the mayor may or may not have budget preparationpowers. In cities where the mayor is strong has administrative control over theexecutive branch the mayor normally does have budget -making power. This isnot necessarily the case in weak-mayor systems and in cities operating under thecommission plan where each councilor or commissioner administers a givendepartment. Usually, city managers in council-manager systems have responsibil-ity for budget preparation, although their ability to make budgetary recommenda-tions may be tempered by their lack of independence. City managers are appoint-ed by councils and commonly lack tenure. Even in a city in which the mayor orchief executive does not have budget preparation responsibility, this duty is stilllikely to be in the hands of an executive official such as a city finance director.

6 Thus,a majority of cities follows the principle of executive budget of budget preparation at the federal level is primarily afunction of a budget office that was established by the budget and Accounting 4/22/07 8:46 AM Page 54 Jones and Bartlett Publishers. NOT FOR SALE OR DISTRIBUTIONThe budget Cycle55 Table 3 1 Education of Personnel in State budget Offices, 2005 PercentLevel of EducationHigh school2 Two years1 Baccalaureate38 Master s54 Doctorate4 Total (n = 41 states)100 University Degree MajorPublic administration 31 Business administration 24 Accounting 13 Economics 8 Other social sciences 8 Other professional majors 6 Mathematics/sciences 3 Liberal arts 3 Humanities 2 Other2 Total (n = 35 states) 100 Source: Compiled from Burns, (2006).

7 Unpublished data from Survey of State budget Offices, 2005. Morgantown, WV: Recreation, Parks,and Tourism Program,University of West legislation established the Bureau of the budget (BOB), whichbecame a unit of the Treasury Department. With the passage of time, the role ofthe BOB increased in importance. In 1939, it became part of the newly formedExecutive Office of the President. Given that the BOB was thought to be the rightarm of the president a common phrase in early budget literature the moveout of the Treasury, a line department, into the Executive Office of the Presidentplaced the BOB under direct presidential supervision. In 1970, President Nixonreorganized the BOB, giving it a new title, the Office of Management and budget (OMB). The intent of the reorganization was to bring real business managementinto Government at the very highest level.

8 2 Information about professional personnel in state budget offices is presentedin Table 3 1. As of 2005, most professional staff at least had a baccalaureate 4/22/07 8:46 AM Page 55 Jones and Bartlett Publishers. NOT FOR SALE OR DISTRIBUTION56 Chapter 3: budget Cyclesand over half had a master s degree or higher. The largest degree field was publicadministration (31%) followed by business administration and accounting. Theprofessional staff size varied from 5 to 278 employees, with the mean being 30 andthe median in the Preparation the federal government, budget preparationstarts in the spring, or even earlier for large agencies. Agencies begin by assess-ing their programs and considering which programs require revision andwhether new programs should be recommended.

9 At approximately the sametime, the president s staff makes estimates of anticipated economic trends todetermine available revenue under existing tax legislation. The next step is forthe president to issue general budget and fiscal policy guidelines, which agen-cies use to develop their individual budgets. These budgets are then submittedin late summer to the OMB. Throughout the fall and into the later months of theyear, OMB staff members review agency requests and hold hearings withagency spokespersons. Not until late in the process , usually in November,December and into January, does the president become deeply involved in theprocess. It culminates in February with the submission of a proposed budget the state and local levels, a similar process is used where executive budg-eting systems prevail.

10 The central budget office issues budget request instructions,reviews the submitted requests, and makes recommendations to the chief execu-tive, who decides which items to recommend to the legislative body. In jurisdic-tions not using executive budgeting, the chief executive and the budget office playminor roles. In this type of system, the line agencies direct their budget requeststo the legislative preparation phase, as well as the other three phases in thebudget cycle, is replete with political considerations, both bureaucratic and parti-san, in addition to policy considerations. Each organizational unit is concernedwith its own survival and advancement. Line agencies and their subunits attemptto protect against budget cuts and may strive for increased resources. Budgetoffices often play negative roles, attempting to limit agency growth or imposingagency budget cuts.