Magazine article Government Finance Review

Government's Budget Myopia: Governors, Mayors and Budget Directors Need to Update the Budgeting Process to Ensure IT-Enabled Innovations

Magazine article Government Finance Review

Government's Budget Myopia: Governors, Mayors and Budget Directors Need to Update the Budgeting Process to Ensure IT-Enabled Innovations

Article excerpt

Most of us know that budgeting is the premier policy process in government: a priority isn't a priority until it's funded.

We may also know that the biggest changes over the last several decades (and the biggest changes expected over the next several decades) come from innovations that are enabled by information technologies. This is the information age. We live in an extended era of adjustment to the explosively growing capabilities of digital data, processing, and communications.

What far too many fail to realize, however, is that government budgeting is poorly structured when it comes to allocating resources for high-value IT initiatives. I'm a former budget director, and I love budgets. But we are myopic in dangerous ways about IT budgeting.

So, why and how is IT budgeting myopic?

The core problem is that budgeting, by historic design and necessity, looks first for how to balance next year's budget. It does this most naturally by looking one year at a time, one program at a time, with a search for increments up and down so the budget can be balanced.

But that's not where the high-value IT-enabled initiatives are to be found. If, as the age-old joke employed by my fellow columnist Babak Armajani goes, the foolish mullah insists on searching under the lamppost for keys lost some distance away "because the light is better," we'll continue to ignore the fundamentals. For high-value IT, budgeting must find and then fund:

Investments, not expenditures. When, for example, we create a way to deliver services over the net for "online, not in line" access, the infrastructure and standardization required will be used for many years, not just one.

Integration across programs, not just within program silos. Our critical problems now include "connecting the dots" in counterterrorism; sharing health information safely and efficiently across hospitals, laboratories, doctor's offices, patients, insurance companies and the government; and lifelong education that is fruitfully integrated with changing job markets and lifestyles.

Innovations, not just ups and downs within the old ways of working. Over time, progress comes from innovation, not simply from doing well what we've already learned to do. First agriculture, then industry, and now today's global, knowledge-based economies are all fruits of once risky innovations.

But budgeting myopia--focusing too narrowly on single years, single programs, and current activities--has been the norm forever. What makes us think that now is the time to do something about it?

The answer is because the economy will dramatically change government budgets now, so our analysis and decisions are even more difficult and more important than before. Those who are too slow in making information age adjustments will lose their most interesting and important jobs to inherently better-supported and more efficient communities. Failing behind at this point is not just unfortunate; for many, it will become a self-reinforcing death spiral. "Ghost towns" may no longer be a thing of the past.

And what can we do about it?

We can correct for our excessively single-year, single-program, up-or-down myopia:

Budget for multi-year investments and fund them as such. …

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