State resource allocation and budget formats: towards a hybrid model

This article evaluates quantitatively the impact of four common budget approaches on disaggregated United States state spending data in the 1990s. Pooled time series cross sectional data of the 50 states are used to test the impact of incremental, program, zero-based, and performance-based budgeting on the dependent variables state total and functional expenditures. The results demonstrated that there was support for all of these approaches in terms of their impact on state budget outputs. These findings imply that budget decision-making should focus more on a system-wide approach, which takes into account many of the characteristics of these rival models, rather than exclusively focusing on each one singly. A possible suggestion is a hybrid form of budgeting, which is a combination of incremental and rational approaches.