The underlying philosophy of priority-driven budgeting is about how a government entity should invest resources to meet its stated objectives. If helps us to better articulate why the services we offer exist, what price we pay for them, and, consequently, what value they offer citizens. The principles associated with this philosophy of budgeting are:
- Prioritize Services. Priority-driven budgeting evaluates the relative importance of individual programs and services rather than entire departments. It is distinguished by prioritizing the services a government provides, one versus another.
- Do the Important Things Well. Cut back on the Rest. In a time of revenue decline, a traditional budget process often attempts to continue funding all the same programs if funded last year, albeit at a reduced level (e.g. across-the-board budget cuts). Priority-driven budgeting identifies the services that off the highest value and continues to provide funding for them, while reducing service levels, divesting, or potentially eliminating lower value services.
- Question Past Patterns of Spending. An incremental budget process doesn’t seriously question the spending decisions made in years past. Priority driven budgeting puts all the money on the table to encourage more creative conversations about services.
- Spend Within the Organization’s Means. Priority-driven budgeting starts with the revenue available to the government, rather than last year’s expenditures, as the basis for decision making.
- Know the True Cost of Doing Business. Focusing on the full costs of programs ensures that funding decisions are based on the true cost of providing a service.
- Provide Transparency of community Priorities. When budget decisions are based on a well-defined set of community priorities, the government’s aims are not left open to interpretation.
- Provide Transparency of Service Impact. In traditional budgets, it is often not entirely clear how funded services make a real difference in the lives of citizens. Under priority-driven budgeting, the focus is on the results the service produces for achieving community priorities.
- Demand Accountability for Results. Traditional budgets focus on accountability for staying within spending limits. Beyond this, priority driven budgeting demands accountability for results that were the basis for a service’s budget allocation.