Budget Incrementalism - Paper Example

The budgeting process remains an important factor of management control systems. The reason for this is that budgeting offers a system of planning, regulation and coordination for management (Ryu, 2004). However, it is a difficult process that instills fear in those making budget preparations. Budgeting process is more difficult in the public sector given the difficulty in defining the objectives in a quantifiable manner. Different strategies have been adopted to make the process easier. This paper analyzes the impact of the incrementalism model regarding government budget.

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About Incrementalism Model and how it Changes with the Level of Government

Incremental budgeting refers to the traditional method of budgeting in which the budget is prepared by considering the present periods budget as a base. Incremental amounts are then added into the new budget period (Denhardt, 2011). Some of the incremental amounts will comprise adjustments made for things like expected increases in costs and inflation among others. Most governments find it difficult to allocate funds to priorities that keep changing, particularly when austerity limits increases in spending. Recession periods could have a negative effect on funds reallocation even as budget holders seek to protect what they have. There has been little research on this pattern (Krause, 2015). Some financial institutions are made to boost allocative efficiency of government spending by allowing policymakers allocate funds to the major priorities.

Efficiency of the Model

The incremental method is an effective model in reality for three major reasons. One is that it is impossible in real life to identify and prioritize all the values and goals connected to a specific challenge (Robert, 1997). Goals and values must be presented in marginal terms in regard to specific policies. Secondly, the most efficient public policies are those that are already in use and supported by different competing parties. As a result, it will be easy for the decision maker to demystify the process of choice to proportions that can be managed with ease. Another factor that makes the incrementalism model a reality is the fact that almost every priority has it watchdog. To this effect, the interaction of different competing groups would finally result in policies which are responsible to different interests.

To make sure that there is no error, the government would adhere to the following steps: past trends of policy steps provide knowledge regarding the likely effects of further similar steps; there is no need to try major steps toward achieving set goals given that the government does not expect the budget to be the final solution to the problem (Denhardt, 2011). On the contrary, the decision is just one step; the government can test past predictions as it advances to others steps; and that the government is able to address a previous mistake fairly quickly, much faster than when budget proceeded via more distinct steps that are broadly spaced in time.

Conclusion

In summary, in a world that is largely unpredictable due to rapid changes, it becomes difficult for the government to make final decisions regarding funds allocations. Put differently, it would be important to provide room for adjustments just in case of things like inflation. Incrementalism model is a perfect method of ensuring that government budget lives up to the demands of an ever changing world that is in existence today.

References

Denhardt, R. (2011). Theories of public organization (6th Edition). Boston, MA 02210, USA:

Wadsworth Cengage Learning. 71-91

Krause, P. (2015). Overcoming Incrementalism: Budget reforms and budget allocations in

Chile. Working Paper 415. Retrieved from https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/9566.pdfRobert, G. (1997). Public budgeting and finance, fourth edition. CRC Press, 9 Jun 1997

Ryu, E. (2004). The public budgeting and finance primer, Armonk, New York: ME SHARPE