First, a quick refresher course courtesy of the Government Finance Officers Association (of Canada, that is).
When using zero-base budgeting (ZBB), a government builds a budget from the ground up, starting from zero.
There has been renewed interest in ZBB in today’s environment of fiscal constraint, not least because the “zero” in zero-base budgeting sends a powerful message that taxes and spending will be held in check.
Zero-base budgeting, also known simply as ZBB, has had a long … history in the public sector.
Zero-base budgeting first rose to prominence in government in the 1970s when U.S. President Jimmy Carter promised to balance the federal budget in his first term and reform the federal budgeting system using zero-base budgeting, a system he had used while governor of Georgia.
ZBB, as Carter and budget theorists envisioned it, requires expenditure proposals to compete for funding on an equal basis – starting from zero. In theory, the organization’s entire budget needs to be justified and approved, rather than just the incremental change from the prior year.
Today, there is an apparent resurgent interest in ZBB.
GFOA’s survey shows that traditional budgeting methods, namely line-item and incremental budgeting, have declined in use in the last few years, while all forms of budgeting that are thought to be better adapted to cutting back the budget, not just ZBB, have increased Source
OK, they’re talking about Canada, not the U.S.
Still a couple of takeaways:
1. The process – in government, at least – traces back to Jimmy Carter.
2. Many Canadian governments are using ZBB
3. In Canada, the use of ZBB is increasing
Now. here’s what I think is interesting …
Although they stumbled into it, the GOP may have landed on a masterful plan.
In effect, the GOP’s piecemeal approach to unraveling the government shutdown is nothing more than real-time ZBB.
Think about it for a second.
A week ago the gambit was to fund everything except ObamaCare.
Non-starter, right?
Now, in concept at least, the piecemealing approach allows everything to be funded … except ObamaCare.
Everything that matters – either really or because of political optics – can be quickly restored with short, separate authorization bills.
Anything that’s questionable stays squashed.
Anything that’s essential gets an appropriation,
Eventually everything that’s essential gets funded.
Gee, that sounds like zero-based budgeting, doesn’t it?
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