Reality-Based Budgeting
The "Great Recession" that has crippled local economies throughout America has exposed the traditional budgeting procedures used by legislators and municipal leaders as a fallacious exercise in stopgap financing that fails to address the systemic problems of mismanagement, inefficiency, and wasteful spending. As an increasing number of city and state governments struggle to balance their budgets in the wake of curtailed income and overextended expenditures, economists have worked to develop innovate forms of budgeting which are better suited to meet the demands of modern financial planning. The concept of reality-based budgeting has emerged in recent years as a viable alternative to the traditional method of balancing governmental budgets, which is largely predicated on a combination of across the board spending cuts and untargeted increases in tax rates. As Bob Williams wrote in a recent article published by the non-profit organization State Budget Solutions, "reality-based budgeting assumes...
prompting governors and legislators to ask four key questions at the start of each legislative session" (Williams, 2013). These four questions are concerned with assessing 1) the state's predetermined goals which must be accomplished, 2) the government's method of measuring is success of failure relative to these goals, 3) the extent of the budget available for outlay, and 4) the most efficient and effective way of satisfying the responsibilities inherent to governmental rule.
With states across the country feeling the pressure of financial shortfalls, examples of reality-based budgeting in practice have become commonplace throughout the governmental planning process. One such example has been established in New York State, where Governor Andrew Cuomo has embraced the innovative, yet pragmatic, budgeting methodology developed to address the nation's mounting debt crisis. According to a recent press release…
