Non-Routine Decision-Making: a Study of Demonstrated Flexibility in West German Municipalities' Budgetary Priority-Setting.

This study answers two questions lying at the heart of the controversy about the incrementalist description of resource allocation decision-making. First, how much does budget share stability vary across cities? Second, under what conditions do cities deviate from their existing budget share patterns? The incrementalist description of the resource allocation decision process enjoys widespread acceptance, due in part to its capacity to account for historical expenditure patterns. It assumes that governmental decisions about how much money to spend on each department are based largely on precedent and guided by simple rules. Formulation of a polity's budgets with shares for administrative units that remain stable over time conforms to these assumptions. For this reason, it constitutes a special case of incremental decision-making. Criticism of the incrementalist description stems from studies finding large increases and decreases in administrative unit funding that are inconsistent with maintenance of stable budget shares in particular and with incremental decision routines generally. The major benefit attributed to stable budget shares is the avoidance of boom and bust financing patterns that can severely damage a department's effectiveness. However, this benefit probably is more than offset by the long-run cost of maintaining stable budget shares. These costs include prolonging the life of old programs that are no longer needed and blocking the initiation or expansion of new programs that are needed more urgently. A simple computer model, based on a stable share decision rule, is employed to predict how each of 105 West German municipalities allocates its budget shares over a ten-year period. Test results show that, on average, the simple process model successfully predicts the allocation of about 95% of cities' resources among their respective individual departments. Yet anywhere from 2% to 17% of the resources allocated by individual cities are unaccounted for by the model. These process model residuals are defined as demonstrated budgetary flexibility. Next, a statistical model analyzes the effects of environmental influences on intercity variation in demonstrated budgetary flexibility. Five variables: resource availability, fiscal autonomy, environmental complexity and dynamism, and interparty competition explain approximately 50% of this variation. Inferences about how these variables lead officials to deviate from their established decision routines are corroborated through analysis of interviews with key participants in specific, deviant resource allocation decisions. The study's main conclusions concern process models, recent West German municipal government reforms, and the efficient use of scarce resources. The study shows that, although even very simple process models can produce quite accurate predictions about resource allocation decisions, they are most accurate when applied to poorer, fiscally more dependent, larger, more slowly growing, and politically more competitive municipalities. It indicates that two recent West German reforms, which introduced federal revenue-sharing with the cities and reorganized local government, enhanced cities' capacity to demonstrate budgetary flexibility little, if at all. Finally, it argues that, since cities with the above-mentioned characteristics transfer relatively fewer resources across departmental jurisdictions, they therefore are slower and less efficient in responding to social change.PhDPolitical scienceUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/157979/1/8025753.pd