What budgeting approach requires justification for the inclusion of every activity each year? Briefly describe this method and how it can be effective.

Question

What will be an ideal response?

Answer 1

The budgeting approach described is zero-based budgeting (ZBB). Under this approach the basic concept is that each program must periodically be justified from scratch. This approach can overcome one of the fundamental weaknesses of incremental budgeting; namely that programs tend to be continued long after they have outlived their usefulness. Practically, however, since many government services are nondiscretionary in nature (e.g., police and fire protection, operation of the courts, etc.), it may be more effective to concentrate on a few major programs each year, being sure to review every program at least once in every few years.