Zero-base budgeting (ZBB) is a term currently used to describe a couple of methods of budgeting. Originally, however, it was used specifically to describe a system of budgeting that begins every budget cycle at zero, rejecting any assumption that the activities that were funded in the last budget will continue in the coming one. It requires a rationale for each activity that will be funded in the new budget. It was intended to foster thorough analysis and prioritization of every program and activity, with an emphasis on cost-effectiveness and economy.

Businesses first began using zero-base budgeting in the early 1970s. Jimmy Carter-its first prominent public sector advocate-started promoting it in the mid-1970s, as governor of Georgia and then as president. By 1978, the federal Office of Management and Budget had developed detailed procedures for using the method for developing the federal budget.
Proponents believed zero-base budgeting would:

• Eliminate the assumption that current activities and funding would automatically continue with only minor (or incremental) changes by forcing reconsideration of every activity and demand for resources.
• Encourage the termination of ineffective programs, through its emphasis on analysis and comparison of programs.
• Reallocate resources from lower priority programs or activities to those with higher importance.

• Improve managers' skills at all levels, enrich their communications with policymakers and foster discussion of key issues and problems.
• Modified forms of zero-base budgeting have seen widespread use in state and local governments, but no state has used any one form for an extended period of time. The modified forms in use today are:

• Alternative budgeting, which requires agencies to make budget requests at various levels below and above their current level, along with comparisons of the consequences of each level.
• Periodic agency review budgeting, which requires each agency-over a number of years, usually five to eight-to review, from the ground up, their budgets, responsibilities, strategies and performance.

Lessons Learned

Disadvantages aside, zero-base budgeting appeals to a serious and widespread desire to look at public budgeting in a fresh new way, free of old assumptions, not letting past experiences control the future. So, what can be learned from the kinds of experiences related here?
•    A proposal to adopt zero-base budgeting should be clear on whether it is expected to be an analysis of all government, a tool to respond to a fiscal crisis, or a periodic, revolving review of state agency operations and budgets.
•    In any of its forms, zero-base budgeting is likely to be an elaborate and time-consuming process, and can add complexity to the current budget process.
•    Continued commitment from leadership and a commitment of time from legislators immediately involved are essential to make it useful to a legislature.