Performance budgeting: Its rise and fall

Among various budgeting theories and practices at the federal level, performance budgeting has played an important role with its long developmental history. Performance budgeting was short-lived as it was replaced by program budgeting in the early 1960s. Looking at the period between the first decade of the twentieth century and the mid-1960s, the present paper seeks to investigate two major questions to which budgetary literature has given short shrift: 1) What forces led to the emergence of performance budgeting and its earlier forms?, and 2) Why did the budgeting practice fall into disfavor at the federal level shortly after a prolonged period to get institutionalized? The paper's investigation of the first question reveals three major factors that gave rise to performance budgeting and its forerunners: the rise of scientific management by Frederick Taylor, increasing public pressure on the government's role and practices, and the expansion of government responsibilities. Three principal opposing forces attributed to the long gestation of performance budgeting and its premature decline are its inherent weaknesses and limitations, the legislature's hostility to it, and the rapid rise of a new budgeting practice.