More praise for Public Budgeting in Context “Katherine Willoughby’s Public Budgeting in Context is an excellent textbook, and much more. Students and scholars alike worldwide will find it an authoritative text on American budgeting and an informed and up-to-date guide to the increasingly diverse research literature. Refreshingly, American practice is placed in an international com- parative context. I intend to recommend the book to international colleagues for their teaching and research.” —James L. Chan, PhD, Professor Emeritus of Accounting, University of Illinois at Chicago; Distinguished Overseas Professor, Peking University, China “This is a unique and comprehensive book that covers revenue and expenditure institu- tions and practices at all three levels of the US system using many comparative interna- tional examples. Eschewing jargon, it is written in readable and clear language for both introductory and more advanced students and practitioners. It is especially comprehen- sive, covering for example, the role of the courts in budgeting and efforts of the media and citizenry to make inputs in and monitor budget execution in the US and overseas contexts.” —George M. Guess, PhD, Adjunct Professor, Department of Public and International Affairs, George Mason University “This book showcases Professor Willoughby’s original research on budgeting by sover- eign and subnational governments and adds a highly recommended, rich texture to our need for a renewed focus on the theory and practice of public budgeting.” —W. Bartley Hildreth, PhD, Professor, Andrew Young School of Policy Studies, Georgia State University “This book provides a practical and easy-to-read guide to government budgeting. It equips readers with a functional knowledge of the increasingly complex issues of budget- ing at all levels of government in an international context. The text provides common sense examples of public budgeting that give students an understanding of how budget decisions by government shape all aspects of public policy and everyday life. Most fun- damentally, it answers the question: Why study public budgeting?” —Marilyn Rubin, PhD, Program Director, Master of Public Administration, John Jay College, City University of New York FREE PPremium Content Included with Public Budgeting in Context: Struc ture, Law, Reform, and Results are instructor resources including PowerPoint lectures, exercises, and exams, as well as a guide written by the author to help incorpo- rate these tools into the teaching environment. You can find these materials at www.wiley.com/go/willoughby. Public Budgeting in Context STR UCT URE , LAW, REFORM, AND RESULTS Katherine G. Willoughby Cover Design: Wiley Cover Image: © Jon Boyes / Getty Images Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. 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Description based on print version record and CIP data provided by publisher; resource not viewed. ISBN 978-1-118-91311-6 (pdf) ISBN 978-1-118-91310-9 (epub) ISBN 978-1-118-50932-6 (hardback) 1. Budget—United States. 2. Budget—United States—States. 3. Finance, Public—United States. I. Title. HJ2051 352.4'80973—dc23 2014021832 Printed in the United States of America first edition HB Printing 10 9 8 7 6 5 4 3 2 1 C O N T E N T S Preface xiii Acknowledgments xvii About the Author xix ONE Overview of Modern Public Budgeting 1 What Is a Budget? 3 Macro- and Micro-Budgeting 7 Public and Private Budgeting 8 The Role and Size of Government 10 Modeling the Budgetary Process 13 Budget Principles 20 Conclusion 21 Discussion Questions 22 Notes 22 References 23 TWO Budget Foundations in Selected Countries 25 Developing Versus Industrialized Countries 26 Comparing Budgeting Systems 32 Conclusion 56 Discussion Questions 57 Notes 57 References 61 v THREE Budget Law and History of the US Federal Government 65 Early Budgeting 66 An Executive Budget Process Is Born 69 Congress Strives for Credibility 73 Budget Balance and Management Improvement 76 Then and Now, Budget Numbers 82 Adherence to Rule of Law 86 Conclusion 87 Discussion Questions 88 Notes 89 References 91 FOUR Budget Foundations in US States 95 The Fiscal Landscape of States: Two Centuries of Growth 96 Legal Foundations for State Budgeting 98 Credit Ratings, GASB Standards, and Professional Guidelines 117 Conclusion 122 Discussion Questions 123 Notes 123 References 126 FIVE Budget Foundations in US Local Governments 129 The Multiplicity and Responsibilities of Local Governments 130 Local Government Powers 134 Local Government Fiscal Stress and Bankruptcy 143 Conclusion 149 Discussion Questions 150 Notes 151 References 152 SIX Executive Leadership and the Budget Agenda 155 Presidential versus Parliamentary Systems 156 Strategic Planning and the Budget Process 158 vi Contents Public Leadership: Generating a Budget Plan 159 Executive Leadership in Parliamentary Systems 160 US Presidential Leadership and Budgeting 162 Presidential Job Performance 167 State Executive Leadership and Budgeting 169 US Local Leadership 182 Leadership in a Strong Mayor City Government 185 Conclusion 190 Discussion Questions 191 Notes 192 References 193 SEVEN Budget Powers of the Legislative Branch 197 Measuring Legislative Powers in the Budgetary Process 198 Legislative Budgeting in Select Governments 206 Legislative Reform 224 Conclusion 225 Discussion Questions 225 Notes 226 References 228 EIGHT Public Budgeting and the Courts: Judicial Influence on Economies and Budgets 231 The Judiciary and the Economy 232 Courts and Public Policy 233 The Judiciary and the Budget 240 Judges, Courts, and Corruption 245 Conclusion 260 Discussion Questions 261 Notes 261 References 263 NINE The Bureaucracy, Citizens, the Media, and Public Budgets 267 The Budget-Maximizing Bureaucrat 268 Budget Execution Practices 271 Contents vii Citizens and Budgets 281 Citizen Participation in US State Budgeting 287 The Media and Public Budgets 290 Conclusion 295 Discussion Questions 295 Notes 296 References 298 TEN Budget Mechanics and Reforms 303 Budget Types 304 Budget Cycles and Timelines 309 Best Practices 315 Budget Reforms 320 Conclusion 335 Discussion Questions 335 Notes 336 References 338 ELEVEN Funding with Taxes and Other Revenues 341 Equity 343 Efficiency 345 Adequacy 347 Transparency 348 Collectability 351 Taxes in the United States and Guatemala 358 Intergovernmental Revenues 366 Conclusion 373 Discussion Questions 373 Notes 374 References 375 TWELVE The Results of Government Spending 379 Human Rights Budget Work 380 Government Presence and Prosperity 384 viii Contents