For the vast majority of states and municipalities, government budgeting needs transformation to produce more equitable community outcomes.
Traditional budgeting typically results in incremental shifts in financial allocations based on how money was spent in the prior year. That means that while governments may intend to create safer, cleaner and more equitable states and cities, traditional budgeting can disconnect government spending from changing community needs and priorities over time.
A conscious attempt at budgeting with outcomes in mind can help solve that disconnect. In addition, requirements for recipients of pandemic-related financing may create a model for governors, legislators, mayors and other state and local leaders to revamp their long-term budgeting process. Program guidance for Coronavirus State and Local Fiscal Recovery Funds (SLFRF), part of The American Rescue Plan Act (ARPA), requires that recipients address factors including how funded projects help prioritize equity and focus on economically distressed areas, support community empowerment and incorporate evidence-based interventions.1 The performance indicators that track project results give state and local governments muscles that can be used in their regular budget planning to build outcome-based budgets.
Getting started with outcome-based budgeting
Outcome-based budgeting has been tried and tested in small, medium and large cities across the country, including Baltimore, Maryland; Dallas, Texas; Fort Collins, Colorado; Redmond, Washington; and Roanoke, Virginia.