Public sector budgeting

The V.O. Key’s famous budgeting question was putting a challenge to THE economist to solve the common budgeting problem of dealing with limited resources. He posTed a question on the criteria to use when allocating a budget to two different sectors of the economy (Hyde, 2002). Among the ways which can be used to solve the question of Key include, through improved knowledge of the institutional plans by which allocation of resources decisions are made, by ensuring a thorough and comprehensive study of the budget process. The question of Key can also be answered using economic theory. This theory states that the most competing demands between different projects should be awarded the priority (Hildreth & Khan, 2002). Public interventions can also act as an excellent solution to the problem of Key in that the public can offer information according to the way they feel the resources are utilized.

The process of measuring the cost-effectiveness of projects can also act as a solution to solving the issue of dealing with limited resources. When the expenditure which can be used to do a project is bearable, then the plan can be implemented but if through a close watch the project seems to be expensive and one that cannot be accommodated by the limited resources it is therefore, useful to withdraw the implementation of the specific plan (Hyde, 2002). The process of checking the policy consistency and multiple objectives can also be used to answer the challenge posed by Key. In this method, the issue of relative effectiveness in a much simple way is done by checking whether interventions are moving together with the government policy objectives. If it is within the line of government policy, it is seen as the principal way for implementing programs and projects (Hildreth & Khan, 2002). If the government does not consider the relative effectiveness of projects it might result in giving priority to applications which are not worthy and leaving the worth ones unattended. According to my professional judgment, the type of budgeting system most appropriate for public administration is the economic theory. This is because this theory gives priority to projects which are doing well (Hyde, 2002). When this system is applied, it ensures that all the government sectors work hard in pursuing their daily government activities with a perception that they are will be rewarded if their division performs excellently. This method can be used to grow the economy of a nation to double standards.




Hildreth, W. B., & Khan, A. (2002). Budget theory in the public sector. Westport, Conn: Quorum.

Hyde, A. C. (2002). Government Budgeting: Theory, process, and politics. Belmont, CA: Wadsworth/Thomson Learning.