What is meant by the term incremental budgeting? What are the advantages and disadvantages of incremental budgeting?

Question

What will be an ideal response?

Answer 1

Incrementalism means that the changes in an agency’s budget from year to year tend to be predictable. It involves the sequential examination of marginal changes from the status quo and decisions about whether to make those marginal adjustments to current policies. It is a process built on earlier decisions, seeking to improve the situation rather than altering current policies or budget priorities completely. Supporters argue that it is a rational method because it provides an experiential base from which to work. Errors can be more easily reversed since changes are small. Also, it is cost-minimizing by limiting the range of alternatives and limiting research necessary. Further, it reduces the cost a change--and possibly costs of correcting errors. Further, changes in the budget are small and predictable, thus, providing budget stability. Critics argue that incrementalism is too conservative, perpetuating the status quo long after better solutions are available. There is no mechanism for using a non-incremental approach when one is needed. It is hard to identify what a “big” change would be and when it would be appropriate. Though agencies may experience incremental change, managers of agencies can drastically alter priorities within the agency and produce rapid change. When the uncontrollable elements of the budget are removed from the analysis, find that the controllable portion of the budget is subject to major change. Incrementalism may not apply to new agencies or more marginal programs Finally, while the reversibility of error is seen as a major benefit, it the real world, this rarely happens. Once a commitment is made to a client or a benefit is indexed, it is difficult for government to take it away.