Target-Based Budgeting and Adaptations to Fiscal Uncertainty

Abstract

Since 1983, the state of New Jersey, like many other states and npmerous localities, has used target-based budgeting (TBB) to prepare its eixecutive budget. As in many other states, the process replaced a zero-based budget (ZBB) process that had been criticized as too cumbersome and insufficiently directed by the governor's office. The change also reflected the recession of the early 1980s in the desire to have agency budget processes driven by revenue considerations as well as the central budget review. Since TBB was implemented, New Jersey's fiscal fortunes have fluctuated, and the governor's office has changed hands and parties. This article discusses TBB in NewJersey and the system's adaptation to changing fiscal conditions. The article is divided into three parts. The first is a brief overview of TBB. Second, the budget process in New Jersey is described, with particular attention to the process of setting targets for the executive agencies. My focus is on the target-setting process, because decision packages are subject to the same sorts of analytical processes used in ZBB; target setting can be contentious; and target setting is important in the light of suggestions about how the budget process can be adapted to promote entrepreneurial government. Finally, I draw some conclusions and raise some questions about TBB-at least NewJersey's experience of it.