Facts Summary
The case study on Smithville’s budget issue indicates that the city requires improved approaches to plan a balanced solution for the next fiscal year. The provided information suggests that a significant number of businesses have left the town, causing disruptions in tax revenues. The situation damages public expenditures and budget planning for such institutions, like police, firefighters, and hospitals. In this case, the mentioned unions attacked the City Council, as the proposed ongoing budget reduces payments and salary rates for the police, nurses, and firefighters.
On the contrary, the City Council has voted for the employment reductions and dismissals of the managerial staff in hospitals, making an emphasis only on vital personnel, which are needed for efficient and timely service delivery and responses. Nonetheless, the budget plan still has some nuances and pitfalls, which may distort the overall welfare of Smithville citizens.
Issues
The primary issue of the case is that tax revenues have declined after several companies were closed. Moreover, such a reduction in finance supply disrupted budget planning, as the current expenditures are high. In this instance, the City Council has to decide which expenses should be eliminated or decreased without substantial damage to the municipalities, public services, and social institutions.
What is more, several unions oppose the budget adjustments, as they believe that the salary reductions and freeze on payment increase are the harmful and undesirable action from the City Council. These unions suggest that there are alternatives, which may help to balance the ongoing budget. Nonetheless, unions do not offer any proposals, leaving the City Council with limited options and on its own.
Actors
The primary actor is the City Manager, James Harmsworth, who is responsible for budget planning, communication between other actors, and the decision-making process. He is the one who initiated the budget review and reduction. Besides, the City Manager works toward alternatives so that other actors may find common ground and find the agreement on the ongoing budget.
The City Council is another actor, who votes and reviews the budget plan and any related proposals. The City Council may offer adjustments to the budget; however, it has the only influence on acceptance or denial of the proposed budgetary program.
The Unions are the third actor in this case. They influence the decision-making process through communication and interaction with the City Manager. Nonetheless, unions have little impact on the final decision, as they avoid confrontations with the City Council, which directly affects the budget plan.
Core Concept
The core concept in the case is the procedural theory of public administration, which aims to find out how people think to meet their needs, and seek to show how to influence an individual’s behavior so that they become more motivated to perform their duties. Procedural theory, which is widely recognized, is called the theory of faith. This theory is based on the idea that people will act in a certain way because they expect an essential reward for them (Dong 127). The critical solution of this theory is that public administration aims to understand the goals of the individual, the connection between effort, and fulfillment. In this instance, it differentiates between awards and achievements of individual work.
Another concept in the case study is the organizational theory, which is less generalized. It deals with the issues of effective functioning and management of social systems. Since one of the spheres of this activity is the work of managerial staff, the theory of organization deals in a certain way with the work of the team of public administration (Dong 148). This theory of public administration is located one step below the level of generalization because it deals not with all institutions established for performing socially useful activities, but only those that are related to public administration. By limiting the field of their interests, in the same way, the science of administrative management compensates for this by developing those elements of the theory of organization that are related to the specifics of public administration.
The interconnections of all three disciplines can be represented in this way: everything that is of interest to praxeology matters to the theory of organization, and what is of importance to the method of organization is essential to the theory of government. But not the opposite: not everything in the philosophy of public administration is included in the theory of organization, and not everything that studies the theory of organization is in the field of praxeology.
Alternatives
Budget Limitations
Given the limited availability of budgetary resources, effective medium-term planning will be a prerequisite for imposing budgetary constraints by setting spending limits for all significant spending units. The use of budget planning theories and approaches, it can be stated that the City Council should work toward balanced budget to align Unions’ needs and city’s expenditures. Preliminary estimates of the cost of existing budget programs should be based on the allocation of limited amounts, following the national strategy (Wildavsky 50). The advantage of implementing minimal medium-term planning is that the central spending units will show not a desirable amount of expenditures, which is not confirmed by available resources, but a more realistic picture of spending in the medium term.
The existence of such constraints, coming from the forecasted resources and the medium-term policy of the authorities, will force the central spending units to identify the most priority area of their activity. However, it should be noted that marginal volumes in the medium term are contingent, as they will be adjusted annually based on changes in the economic situation. The changes in government policy and will depend on the priorities and structural changes in the spending of the central spending units and the quality of justification for their expenses estimations.
Systematization of Budget Programs
Another prerequisite for improving budget planning is the systematization of budget programs. In budget theory, the need for continuous functioning and the possibility of free access to the program budget guide local budgets, which are a set of summarized brief characteristics of budget programs regarding its direction, structure, term of implementation, is urgent. Also, they manage funds, volumes, and sources of financing.
Performance indicators also need to be improved, as the content of those currently used to evaluate the effectiveness of planning and execution of budget programs does not meet either the substance or the requirements of the programmatic targeting method. It is necessary to change the naturalistic approach to cost planning and expand the list of product metrics by enlisting those who have benefited most from the services they provide (Wildavsky 110). Further, the city council should calculate the performance of budget programs as the ratio of the integral effect indicator to the cost of achieving it. They should enter mandatory quality metrics for all budget programs. This approach will determine the effectiveness of their implementation and priority areas of spending budgetary funds.
Budget Social Orientation
The Improvement of the system of expenditures’ planning organization for the local budget should have social orientation based on the city economy. It is a necessary condition for the achievement of stability both in the short and long term. Therefore, the necessity of applying medium-term budgetary planning is apparent, it will allow the participants of the fiscal process to agree on the development policy in the sphere of budgeting directly, moving to the formation of long-term budgetary policy. Besides, the process of planning local budget expenditures by the program-targeted method should be imitation-scenario (Wildavsky 158). The utilized theory for this improvement is the Postmodern Public Administration theory, which aligns gap between social needs and expectations and authorities. The budget should be developed depending on the expected development of events “optimistic” and “pessimistic” budget plan to predict the directions of use of local budget funds on the ground. Also, based on the medium-term planning of local budgets, it is necessary to outline the range of problems that may arise during the medium-term period and measures to overcome them in the short term.
Decisions
The selected decision is the systematization of budget programs. This approach will allow the City Council to address all issues related to the expenditures adequately. Moreover, the chosen choice reduces the negative impact of the budget reductions, making an emphasis on the strategic planning and division of all expenditures’ statements. In this case, the balanced solutions between the city’s needs and unions’ demands can be found, as the latter will obtain a beneficial action plan to overcome the financial shortage.
Obstacles
The only obstacle for the plan implementation and the recommended decision selection is the lack of room for financial maneuvers. In this case, the City Council is limited in options and can only follow the accepted plan for budget expenditures. As a result, the city will face distortion in some public services and institutions. Nonetheless, the primary issue with unions’ dissatisfaction will remain and only grow.
The implementation of the selected decision will be based on the City Manager’s proposal. The unions and public services will be revised and evaluated to define the non-essential or low-performance entities, which can be frozen to decrease budget expenditures. Moreover, the budget will target vital services and positions to maintain them appropriately. In this case, the solution will assist the city in avoiding over expenditures; however, it will support essential institutions, jobs, and services to preserve the city’s welfare.
Works Cited
Dong, Lisheng. Public Administration Theories: Instrumental and Value Rationalities. Springer, 2016.
Wildavsky, Aaron. Budgeting and Governing. Routledge, 2017.