IMPLEMENTATION OF PERFORMANCE BUDGETING IN THE STATES:
THE IMPACT OF MANAGEMENT AND ORGANIZATIONAL CAPACITY
Introduction
Since the late 1980s, performance budgeting has received renewed attention in the
United States. The peak of this attention came in the 1990s when the reinventing-
government movement was in full swing and the Government Performance and Results
Act of 1993 (P.L. 103-62) was enacted. These developments on the national front were
accompanied by similar reforms at the state and local levels and revised standards in the
accounting profession, as the Governmental Accounting Standards Board moved toward
instituting requirements for state and local governments to link their goals and
accomplishments – that is, their performance – to their budgets (Lee & Burns, 2000).
State governments have been experimenting with performance budgeting since
the 1950s. The Second Hoover Commission provided the initial stimulus for all levels of
government to incorporate performance management into the budget process, which
sought to improve work productivity and efficiency (Jordan & Hackbart, 1999). Although
later experiments of Planning, Programming, and Budgeting Systems and Zero Based
Budgeting shifted the focus of budgeting to a planning orientation, the components of
performance measurement remained in state budgeting (Jordan & Hackbart, 1999; Lee &
Burns, 2000). The increased attention to performance budgeting in the 1980s and 1990s
was part of another shift to performance orientation that emphasizes outcomes and
accountability (Jordan & Hackbart, 1999).
Most research on performance budgeting has been conducted in the United States
where reforms have been attempted at the local, state and federal levels. At the state
Convention