Zero Base Budget Review

It ’s rare to find a concept taking hold overnight in a function as broad as government budgeting. Yet, it is here, undoubtedly new, widely discussed

and perhaps only slightly understood among many who have budget responsibilites:

zero-base budgeting. It holds great potential, because it is particularly

appropriate for service and support activities-those typical of governmental

organizations. It alters the basic concept of budget making, a

process that is fairly well standardized among governmental units.

During each year there comes the time for budget preparation. The budget

office looks at this year’s budget, the budget requests for next year and the

estimate for the next year’s revenues and, if more funds are anticipated,

decides how the increase over last year should be allocated. If revenues are

not expected to increase or, as has frequently been the case, if they are likely

to decrease, then budget makers face the problem of how to slice here and

there at last year’s budget to make it fit a tighter shoe.

Zero-base budgeting takes a different tack. It assumes that, for any given

activity, the choice of an appropriate level of expenditure starts at zero.

Accordingly, any expenditure greater than zero has to be supported.

Zero-base budgeting will be considered by the federal government during

the 1977 congressional session. In a unanimous report approving a zero-base

budgeting bill during 1976, the Senate Committee on Government Operations

stated:

It is necessary to challenge the traditional assumption of budgeting-because a

program was funded last year, it deserves to be funded this year at the same or higher

level.

The zero-base review concept . . . has a very different assumption as its

foundation-that programs are not entitled automatically to continued funding once

they are created; rather, that a case must be made for continued funding.

Depending on how well that case is made, programs can be funded at the current

level or at lower or higher levlels; or revised to reflect the findings of the zero-base

review.

If they fail to meet the test of reauthorization, they will be terminated.

Zero-base budgeting requires public officials, in effect, to demonstrate

why the functions of their offices should not be eliminated. It forces budget

makers to examine the merits of each governmental activity and to justify it.

It encourages consideration of alternative methods of accomplishing a de-sired result. If an activity is considered worthwhile, it forces the governmental

executive to consider the effect of various levels of performance, from a

basic minimum upward. “Why must we perform that activity at the same

cost and to the same degree we did last year?” is a typical question.

Using the traditional budget process, a proposed new program usually

received intensive scrutiny. Decisions were made as to whether the program

was desirable and, if it was, the appropriate level of service and funding.

For existing programs, traditional budgeting has looked primarily at the

increases sought. Zero-base budgeting subjects all programs to the level of

scrutiny that was usually reserved for new programs.

The process essentially consists of three steps: (1) determining the organizational

level appropriate for making budget recommendations, (2) developing

the budget requests and (3) ranking the budget