Why Do We Need A Fixed Budget?

Ah, a boring subject – government budgets – except that the average American turns over a quarter or so of family income to the budget makers.  

And although most taxpayers haven’t thought about it much, to make matters worse, the standard approach that most governments use each year to prepare their budgets is, at least in the USA, almost a hundred years old.  Of course, a hundred years ago a budget was the latest reform 🙂

This is just the summary portion of New York City’s latest budget.

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Typically, agencies are asked to start planning their budget proposals way ahead of the fiscal year.  So it’s possible they could be proposing a spending plan 18 months or more ahead of the actual time they need to deliver services – without knowing all the factors that could change during that time.  

Do they know how much snow will need to be removed?  How many people will need unemployment insurance?  Whether there will be an outbreak of the flu that affects everything from school attendance to public employees being able to work? How much money will there be from income or sales taxes in an economy whose future is not certain?

Is it any surprise that a fixed budget leads to mis-allocation of public funds considering the real problems that might exist at any moment after that budget is approved?  

This fixed budget process was developed in an era before readily available computer technology, “big data” and the frequent changes that government has to deal with today.

As I wrote about fixed tax brackets, technology now makes it possible fix the traditional fixed budget.  It is no longer the reform it once was – indeed, it stands in the way of running a more efficient and adaptable government today.

There have been variations on the theme, such as performance-based budgeting, zero-based budgeting, etc.  But not much has changed about budgeting in most governments for a long time, except that now the budgets are kept on computers instead of printed documents.

Experiments to get out from under the old fashioned budget have had various names – conditional budgeting, priority budgeting, flexible budgeting.

All of these approaches, in one way or another, try to match the priorities among the demands on government with its possibly changing revenues.

Perhaps the most interesting innovations have been around priority budgeting.  In its 2011 report, titled “Anatomy of a Priority-Driven Budget Process”, about Snohomish County, Washington State, the Government Finance Officers Association (GFOA) summarizes the approach.

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This is an especially useful area for citizen input, including the use of web-based collaboration platforms.  The average person is much better at defining the relative importance of various outcomes to himself/herself than in understanding the implications of a dollar amount that sits on a line in a budget.
Some of the other associations of government officials have In addition to GFOA, the International City Managers Association (ICMA) and the National League of Cities have been trying to educate their members about priority budgeting.   They have been working with the Center for Priority Based Budgeting.

Variations of priority-based budgeting have been used in Boulder, CO which ICMA has reported on.   It has also been used in Cincinnati, OH among a few dozen other jurisdictions.

An important assumption underlying this more flexible budgeting is that government decision makers cannot foretell the future with precision.  So, even the priority-based budget may need to be changed during the course of the year as the public and its leaders learn from what they’ve spent on so far and as new needs arise.

Technology today makes possible a more dynamic approach to managing government finances than in the past because it makes these four key aspects of flexible budgeting feasible:

  • Identify the cost of delivering each kind of outcome the government has in mind
  • Prioritize those outcomes through some combination of public values and cost-effectiveness
  • To get things started, estimate the revenue expected to come in and the volume of demand for each outcome.
  • Adjust on a monthly basis

This obviously requires some flexibility in the allocation of human resources to.  Some aspects of government are not that flexible – for example, you can’t train a new police officer overnight – so there are bound to be some inflexibilities even in this approach, but much less than the entirely rigid traditional approach.

Besides, such a situation might encourage people in government to get creative.  If crime is going up, maybe people will realize that not all tasks assigned to police officers require an officer.  If crime is going down, maybe there are some on the police force who can work on other things.

But getting more creativity in government is a story for another time.  For now, please let me know if you’re aware of more flexible budgeting in the public sector or you want to explore this more for your government.

© 2015 Norman Jacknis

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Better Driving?

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There have been all kinds of fun new ways that technology has become embedded into cars to help drivers.

Last Friday, the New York Times had an article about Audi’s testing what might be described as a driver-assisted race car, going 120 miles per hour.

Just last month, Samsung demonstrated a way to see through truck on country roads in Argentina.   It was intended to help a driver know when it’s safe to pass and overtake the truck.  But, even those of us who get stuck in massive urban traffic jams, would love the ability to see ahead.   (See the picture above.)

Another version of the same idea was developed and unveiled last month by the Universitat Politècnica de València, Spain.  They call their version EYES and you can see a report about it at https://youtu.be/eUQfalxPK0o

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There have been variations on this theme over the last year or so, but so far the deployment of the technology hasn’t happened on real roads for regular drivers.

But Ford Motor Company announced a couple of weeks ago that it will start to equip a car this year with split view cameras that let drivers see around corners.  They say it’s especially useful when backing into traffic.   This is supposed to be a feature of their worldwide fleet of cars by 2020.

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In the old days, when a driver had to maneuver into a tight corner, he/she asked a friend to stand outside the car and provide instructions.  Now, Land Rover is helping the driver who is alone – without friends? – to get a better view and control the car at the same time by using a smart phone app.

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Is this all a good thing?  The New York Times had this quote in its Audi story:

“At this point, substantial effort in the automotive community is focused on developing fully autonomous driving technology,” said Karl Iagnemma, an automotive researcher at M.I.T. “Far less effort is focused on developing methods to allow a driver to intuitively and safely interact with the highly automated driving vehicle.”

Nevertheless, while these features are surely helpful, on balance, they seem to me to be transitional technologies.  (Allen Wirfs-Brock provided this helpful slide on the subject.)

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A good example was the enhancement of controls for elevator operators when the average passenger could press the very same automated buttons.  Or similarly, the attempt by horse-drawn carriage makers to keep up with auto makers until they firmly lost the battle a hundred years ago.  Maybe Polaroid cameras were the transitional technology between film that needed to be developed at a factory and pictures you can take on your phone.

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The warning signs are there already.  In May 2015, WIRED magazine featured this story, “Google’s Plan to Eliminate Human Driving in 5 Years”.  

Also in May, Uber and its partner, Carnegie Mellon University, did a test drive of its first autonomous vehicle.  Of course, Uber’s plans and its role in disrupting the traditional taxi industry had already led to dire predictions like this one on the website of the CBS TV station in San Francisco: “How Uber’s Autonomous Cars Will Destroy 10 Million Jobs And Reshape The Economy by 2025”.

Based on their promise last October, pretty soon we should soon start to Tesla delivering a car that “will be able to self-drive 90 percent of the time”.

Indeed, taking this idea to its ultimate extreme conclusion, the Guardian reported a few months ago that Tesla’s CEO, Elon Musk, wants to ban human driving altogether.  They quote him as saying:

“You can’t have a person driving a two-tonne death machine”.

So while it will be fun, perhaps we’re just seeing the last gasp of human driving.

© 2015 Norman Jacknis

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Where’s The City? Where’s The Country?

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I’ve written in the May 2014 issue of Urban China magazine and here before about the various ways that life in urban and rural areas is converging.

But when it comes to the economy, especially growing global trade, we often hear of great distinctions between city and countryside.  Indeed, it is often assumed that most of any country’s economy can be attributed to its cities and public policy follows that assumption.  

David Brunnen is Managing Editor of Groupe Intellex and Partner of NextGen in the UK. He has had a long and distinguished career as a leader in technology and public policy.

He has been doing some interesting research and concluded that this urban-rural divide is not as great as myth would have it.  This culminated in a report in May 2015 with the intriguing title, “Global Trade Development outwith the Metros: not beyond belief”.  He also provided something of an executive summary on his blog.

He observed that:

“Conventional wisdom says that the pursuit of global growth is surely what has led to the success of major cities…

“The notion of growth in international trade from enterprises rooted in our countryside and less-regarded towns may, at first glance, seem unlikely.   Scratch the stats however and beneath the glossy megacity headlines you can sniff the fragrance of a less-urban, more rural, renaissance.”

Brunnen points out that part of the myth about the role of cities is a very generous definition of what is a city.  As an example, Brunnen cites the work, ending last year, of the RSA City Growth Commission of the UK, whose aim was to “enable England’s major cities to drive growth”.  

“Some of these encompass far more places than are recognized by any governmental and administrative boundaries. The South Hampshire Metro area includes two cities (Southampton and Portsmouth) and the entire semi-rural conurbations on both sides of the linking M27 motorway. Their London Metro area extends west well into Hampshire, south to include Gatwick airport, east to include places on both sides of the Thames estuary and north to include Luton airport beyond Bedford.  In the debate about building airport capacity for London, it’s a wonder that Birmingham in the West Midlands is not a candidate.”

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This is one newspaper’s view of the London Metro area five years ago.

Brunnen goes on to note:

“Not surprisingly, with these broad definitions of their City Regions, the RSA City Growth Commission suggest that Metros contribute 61% of UK economic growth.  Ask ordinary people whether or not they live in a major city and the map would be very different – in fact it would be perfectly possible to conclude that economic growth is far more evenly spread with only around 50% of growth generated within those megacity places that demand such intensive management.”

But this is not just a story about England.  There are similar situations in many other countries, including the US.

A few years ago, Wendell Cox of Demographia, an international public policy firm, wrote “America is More Small Town than We Think”.  He starts with the statement we’ve often heard:

“America has become an overwhelmingly metropolitan nation. According to the 2000 census, more than 80 percent of the nation’s population resided in one of the 350 combined metropolitan statistical areas.”

According to the census, the figure was 79.0% in 2000 and is now 80.7%.  Moreover, the official definition of urban is not limited to obvious big cities like New York City.  Some of that urban population lives in what the Census Bureau calls urban clusters, whose population is between 2,500 and 50,000.

Focusing more on governance, Cox’s argument nevertheless parallels what Brunnen has written more recently about international trade.

“America is more “small town” than we often think, particularly in how we govern ourselves. In 2000, slightly more than one-half of the nation’s population lived in jurisdictions — cities, towns, boroughs, villages and townships — with fewer than 25,000 people or in rural areas. Planners and geographers might see regions as mega-units, but in fact, they are usually composed of many small towns and a far smaller number of larger cities. Indeed, among the metropolitan areas with more than one million residents in 2000, the average sized city, town, borough, village or township had a population of little more than 20,000.”

The 2012 survey by the Census found more or less the same results.  If anything there were more governments.  Many metropolitan areas are more networks of small towns than one master urban jurisdiction.

Brunnen goes on to explain why those outside the big cities are able to participate so vigorously in global trade.

“Digital transformation is enabling business to thrive in places where employees like to live – in places where they can afford to live – in places where they can appreciate the value of community – in places where they feel more at home.

“Dig deeper still into life beyond Metros and you’ll find a diverse and complex fabric of connections and capabilities – with very different channels and enablers for international trade.

“These less-regarded places are familiar with making do without much, if any, external intervention (or interference) from their national or regional governments. ‘Just Do It’ … This inbred capacity for action plus our newfound ability to network ideas and contacts without the hassle of travel points towards a greater levelling up of opportunity.”

That story has often been drowned out by reports of resurgent cities and ever declining rural areas.  The big city governments of the world have drawn most of the attention from big corporations and governments — perhaps it is easier to sell to or deal with very big municipal organizations?

I’d suggest reading the rest of his report, for the policies — which are both innovative and pragmatic —that he proposes to encourage economic growth.  

The bottom line of all this: the sharp dividing lines between rural and urban are not really all that sharp.  That calls for a better balance across geographic areas.  A nation’s strategy for its economic future, its infrastructure investments, broadband and technology needs to reflect the real distribution of the population and the potential of all areas to contribute to growth.

© 2015 Norman Jacknis

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Where’s Your Mind-Time Spent?

A few years ago, when my son was a high school teenager, he was totally absorbed in online multi-player games.  One day, I heard him talking to his friends during the game (using a form of voice over IP, like Skype).  So thinking these might be high school buddies, I asked who he was talking to.  He said there was one boy from Korea, another from Mexico and a fourth from Russia.

As I told the chief elected executive of our county at the time, my son’s body was there all day long, but his mind was spending lots of time outside of the county (even the country).  

This phenomenon is not limited to teenage boys.   People of all ages are generally more attentive to life online than they have ever been before.  In the US alone, three quarters of the people use social media

Think about where you spend your “mind-time”.

Not the old philosophical debate about a mind-body problem, but a new digital age version has emerged: a new kind of problem where body and mind are in different places.

Moreover, we are actually in the early days of the Internet because our communications with each other generally are not visual.  Without conversational videoconferencing, a major means of communicating fully and building trust is absent from online communities.  We’ll really see the impact when those visual tools are more widely used.

This situation poses an increasing challenge for public officials.  

With their attention focused in all kinds of places around the globe, people are virtually living in multiple jurisdictions.  To which jurisdiction does that person have primary loyalty or interest in? Could they be good citizens of more than jurisdiction? In any case, if their attention is divided, doesn’t that have an impact?  What if they just don’t care about local officials and their government?

Some cynical political advisers might well like a situation that reduces citizen attention and engagement since it makes the outcome of elections and lawmaking more predictable.  But smarter elected officials realize that eventually a lack of public engagement stands in the way of getting things done.  In other countries, lack of engagement, knowledge and trust for the government has led to failure to pay taxes or even physically leaving a jurisdiction forever.

Over the last few decades we’ve seen an erosion of trust in this country as well as the Pew Studies, among others, have shown.

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Some people attribute the lower trust to the time people spend online, which they view as another form of Bowling Alone, as Professor Robert Putnam titled his most famous book.  If anything, the causality may be the reverse – it might be the case that people seek to be engaged in online communities because their physical communities are no longer as inviting to them as a result of the overall decrease in social capital that Putnam portrayed.  But that’s a separate story.

Although this may strike many public officials as something new, the study of virtual communities and their implications go back at least as far as Howard Rheingold’s seminal book on the subject in 1993.  

Much of the research that has been done so far would indicate that online communities and physical communities have many characteristics in common – both positive and negative.  

Size is a good example.  Does a person have a greater sense of belonging to an online community of a few hundred or a physical, offline city of a million?

Unfortunately, there hasn’t been much research or data collection about where people are spending their mind-time and what its implications are, especially for government.  For that reason, the Algorithmic Citizenship measure is interesting to follow. 

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Please let me know if you’re aware of other attempts.  And I’ll keep track of the work of the Citizen Ex project.

© 2015 Norman Jacknis

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