ABSTRACT
Although line-item budgets are very useful, especially in maintaining control and accountability in expenditures, they do not always provide as much information about what government is actually doing with its money as some decision makers would like to have. Budgets may tell us, for instance, that the Department of Parks and Recreation is proposing to spend $1,750 on grass seed and fertilizer but offer no clue as to whether it is an efficient use of public money. What exactly are we getting for this $1,750? Have expenses for playing field maintenance been proportionate to the number of people who use the fields? Questions like these, which line-item budgets fail to address, are made to order for a performance budget. Because performance budgets are built around the activities in which a government engages rather than the commodities it buys, a person who reviews a budget in this format is able to ascertain the relative efficiency of public undertakings. Indeed, it is for this reason that a performance budget is often called an activity budget.
