Local governments have long relied on incremental, line item budgeting where last year’s budget becomes next year’s budget with changes around the margin. Though this form of budgeting has its advantages and can be useful under circumstances of stability, it also has important disadvantages. The primary disadvantage is that it causes local governments to be slow to adapt to changing conditions. The premise of the Rethinking Budgeting initiative is that the public finance profession has an opportunity to update local government budgeting practices to take advantage of new ways of thinking, new technologies, and to better meet the changing needs of communities. This paper describes why Rethinking Budgeting is necessary and what you can expect from the Rethinking Budgeting initiative in the future.

• Publication date: January 2022