More than 50 years ago, V.O. Key (1940) asked the central question of budgetary decision making - on what basis shall we decide to allocate X funds program A instead of program B? It remains an important, if elusive, area of inquiry. Much of the contemporary budgeting literature has focused on macrobudgeting - budget process, environmental constraints, judicial intervention, and a generally top-down and systematic perspective (Rubin, 1993). This approach has done little to advance our knowledge of how individual budget actors decide budget allocations. The budgetary process is not at the heart of Key's question. He is asking which govern decisions of budgetary officials (p. 1144, emphasis added), and he is particularly concerned with decisions on the requests of individual (p. 1138). The aim of this article is to develop answers to Keys question by focusing attention on key budget actors and their decision strategies. The result is the beginning of a microbudgeting theory to explain how budget decisions are formulated to allocate resources among agency programs. Key and others (e.g., Lewis, 1952) are attracted to the applicability of economic rationality to budget decisions. Unfortunately, the extant literature on individual budgeting decisions is limited largely to applications of normative microeconomic theory to budgeting actors (Straussman, 1985). These microeconomic applications, based on utility-maximization assumptions and commonly grouped under the umbrella of theory (Niskanen, 1971), explore how individual budget actors may seek to maximize their own personal utility by using their position in the budget process. Niskanen (1991) confesses that empirical tests have been unable to distinguish between a political and a maximizing bureaucratic explanation budget expenditures (p. 25). Moreover, some waste (i.e., discretionary budget allocation) is there for the same reason that the programs are there - because it meets some political demand (p. 27). One of the major weaknesses of the microeconomic approach to budgeting as explicated by Niskanen and other public choice theorists is that the model has low or no political control over bureaucrats. Aucoin (1991) argues that the real dynamic is between spenders and guardians, not politicians and bureaucrats (p. 126). Kiewiet (1991) notes that legislatures commonly delegate oversight work to central budget bureaus and legislative audit agencies (p. 158). The microeconomic approach (public choice and principal-agent theories) fail to account key institutional actors and are unable to disaggregate acknowledged political and economic factors in budget decisions. Moreover, this approach bypasses Key's question about allocating resources among programs. At the heart of Key's analysis is a discussion of the relative influences of political and economic factors in budgeters' allocation decisions. Although attracted to the application of economic rationality to budget problems, Key cannot dismiss the social and political factors that are inherent in budgeting. Although they have remained the grist budgeting debates, the evidence the relative influences of political and economic factors in decision making is sorely lacking.[1] Willoughby (1991; 218) correctly notes, Very little budgeting research is both behavioral in perspective, and empirical in methodological approach. In general, budget reforms (PPBS, ZBB, and so forth) intended to bring economic rationality to budget decisions have affected the budgetary process more than budget decisions (Rubin, 1990).[2] In this article, I address Keys question by exploring the conditions under which budget decisions are influenced more by politics, or by economics. Building upon earlier experimental results, I integrate previously unpublished logistic regression analyses from a budget experiment[3] with other recent studies about decision-making rationalities in budgeting to frame a microbudgeting theory that may open a useful avenue of budgetary research. …