Budgeting System and Economic Development Outcomes

Abstract

Although public budgeting is considered one of governments’ most crucial policy statements for economic development outcomes, scholarly works that explain the linkages between the two are scant. Drawing on the budgeting system for theoretical context, this article examines the perception of local administrators on the effects of three budgeting practices—planning, budgeting, and evaluation —on economic development outcomes. It utilizes survey data from the ICMA’s 2014 Economic Development Survey and U.S. Census Bureau and logistic regressions to examine the determinants of four economic development outcomes—tax base, job creation, quality of life, and environmental sustainability. The results show that planning impacts sustainability, budgeting influences tax base, environmental sustainability, and job creation. Lastly, evaluation has consequences for the quality of life, tax base, and job creation. The study emphasizes how differing perceptions of budgetary practices shape economic development outcomes, highlighting the necessity of a system approach. It identifies critical leverage points within the budgeting system, where targeted actions can significantly influence multiple economic development outcomes. The study contributes to the Government Finance Officers Association’s (GFOA) Best Practices for economic development.