Assessing the Efficacy of Rational Budgeting Approaches: Financial Recovery Planning and Municipal Budgetary Solvency
Jimenez, Benedict S. (2019) Assessing the Efficacy of Rational Budgeting Approaches: Budget Diagnosis, Financial Planning, and the Fiscal Performance of Municipal Governments. Public Management Review. 21(3): 400-22.
38 Pages Posted: 30 Jul 2019 Last revised: 5 Nov 2019
Date Written: 2019
This study assesses the effects of financial recovery planning on the budgetary solvency of US cities. Budgetary solvency is the ability of governments to meet their service responsibilities and other financial obligations in a fiscal year. Financial recovery planning, which is based on rational decision-making theory, is designed to help cities recover from fiscal stress by facilitating diagnosis of fiscal problems, and the implementation of short- and long-term fiscal recovery strategies. Using data from a national survey of cities and multi-year audited financial reports, the results of the regression analyses show that planning is associated with stronger budgetary solvency, but its effectiveness varies across cities. Specifically, planning helps majority of fiscally struggling cities, but not those facing extreme fiscal decline.
Keywords: Rational Budgeting, Financial Planning, City Budgetary Solvency, Great Recession
JEL Classification: h70
Suggested Citation: Suggested Citation