Participatory Budgeting: Increasing the Power of the Taxpayer over Public Expenditures

Today in the United States, many local governments face a tension between balancing a shrinking budget and addressing a growing demand to increase public expenditures. Government officials are challenged to meet expectations for greater public services, and, as a consequence, tend to rely heavily on debt financing to avoid budget cuts towards these expenditures. Underlying these decisions, governments struggle to understand the priorities of local residents, avoid spending inefficiencies that waste taxpayer money, and allocate funding towards projects that offer the greatest value of benefits for constituents.

The author of “The Effects of Participatory Budgeting on Municipal Expenditures and Infant Mortality in Brazil,” Sonia Goncalves, reveals that allowing the public to vote on the allocation of public funding results in increased political accountability and responsiveness. Specifically, the study explains how participatory budgeting in Brazil increased the portion of public expenditures in health and sanitation services and consequently decreased the high infant mortality rate that historically plagued the country.

The city of Porto Alegre, Brazil implemented the first model of participatory budgeting in 1989. Participatory budgeting has since been leveraged in approximately 1,500 municipalities globally, including district level models in Chicago, New York, and Boston. Participatory budgeting is defined as a democratic process that allows community members to determine how to spend a portion of their budget. Cities use a multi-tier process that begins with small meetings to discuss and pick projects. Volunteer delegates analyze the feasibility of the proposed projects and write budget proposals for those that are valid. Lastly, participants vote on a menu of approved projects and monitor the implementation of the winning projects following the vote. The main goals of participatory budgeting are empowerment, inclusion, and equality. However, the popularity of the process revolves around the notion of enhancing government transparency, accountability, and responsiveness regarding how to budget taxpayer funding.

The author uses a series of regressions to answer the broad question of whether participatory budgeting improves political accountability and government responsiveness. The data used in the study is collected from a panel of Brazilian municipalities for the period between 1990 and 2004. In the 1980s, one of the top issues in Brazil concerned sanitation, specifically water quality. By allowing the public to vote through participatory budgeting, the budget allocation for health and sanitation services increased by two to three percentage points, which reflected a 20 to 30 percent increase in the total budget allocation for these services. Even though the allocation to health and sanitation increased, the total budget did not increase, therefore making this a budget neutral mechanism for Brazil.

Additionally, as a result of increases to health and sanitation services, the infant mortality rate dropped by five to ten percent of the total infant mortality rate. Specifically, Brazil decreased its average infant mortality from 48 to approximately two infants for every 1000 infant residents. The author is able to associate the decline in the infant mortality rate to the larger expenditure allocated to health and sanitation services (i.e., cleaner water for municipalities).

There are two main issues that arise naturally from using participatory budgeting as a mechanism for public inclusion, empowerment, and equality. The first issue is selective participation by the “usual suspects,” meaning that only voters with specific preferences and who normally turn out for local elections participate and vote. As a result, the projects chosen may not always reflect the preferences of the representative area. The second issue is that a perception of tokenism occurs, meaning that the residents are given power over such a small budget allocation that any impact to resident voters is relatively small. In this way, representatives are perceived by the larger population as yielding power to citizens, even though this power is minimal.

In the United States, the issues above as well as concerns about voter education are pervasive in cities that have implemented participatory budgeting. Specifically, concerns about bottom-up policy making revolve around the ability of the public to become informed about the public budgeting process itself. An evaluation of New York’s participatory budgeting program in 2011 revealed that 75 percent of the projects initially proposed were not eligible for the participatory program, falling under expense funds rather than the discretionary capital funds required for eligibility. Lack of voter knowledge on public budgeting, combined with selective participation and tokenism plague the process and may slow down its acceptance as a norm into municipal government in the United States.

Funding projects through collective action makes participatory budgeting an attractive and innovative method for prioritizing public projects. Given the composition of neighborhoods in the United States, the feasibility of participatory budgeting at the district or ward level within major cities is practical. Including the public in the responsibility of how the city or their local representative should prioritize and allocate funding to match preferences in their local district, the participatory budgeting model works well in the United States and continues to gain popularity within larger cities. While research from this study effectively shows that participatory budgeting is beneficial to municipalities in Brazil, more comprehensive and evaluative research is needed to explore the actual effects of the existing programs in the United States.

Article Source: The Effects of Participatory Budgeting on Municipal Expenditures and Infant Mortality in Brazil; Sonia Goncalves, World Development; Volume 53, Issue 4, January 2014, Pages 94-110.

Feature Photo: cc/(NASA Goddard)