Participatory Budgeting

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participatory budgeting = a democratic process in which city residents decide how to allocate part of a municipal or public budget

URL = http://www.ParticipatoryBudgeting.org


Definition

From the Wikipedia:

"Participatory budgeting is a process of democratic deliberation and decision-making, in which ordinary residents decide how to allocate part of a municipal or public budget. Participatory budgeting allows citizens to present their demands and priorities for improvement, and influence through discussions and negotiations the budget allocations made by their municipalities.

Participatory budgeting is usually characterized by several basic design features: identification of spending priorities by community members, election of budget delegates to represent different communities, facilitation and technical assistance by public employees, local and higher level assemblies to deliberate and vote on spending priorities, and the implementation of local direct-impact community projects.

Various studies have suggested that participatory budgeting results in more equitable public spending, higher quality of life, increased satisfaction of basic needs, greater government transparency and accountability, increased levels of public participation (especially by marginalized or poorer residents), and democratic and citizenship learning." (http://en.wikipedia.org/wiki/Participatory_budgeting)


Description

Josh Lerner:

"Low-income residents and activists in hundreds of cities around the world have designed a different way of managing public money: participatory budgeting. This is a process in which people who are impacted by a budget directly and democratically decide how it is spent. The most famous example is the Brazilian city of Porto Alegre, where residents decide on municipal spending in an annual cycle of assemblies and meetings. Since Porto Alegre pioneered participatory budgeting in 1989, however, it has spread throughout the world. Most of these experiences share a common process: diagnosis, discussion, decision-making, implementation, and monitoring. First, at neighborhood assemblies, residents identify local priority needs, generate ideas to respond to these needs, and elect delegates to represent each community. These delegates then discuss the local priorities and develop concrete projects that address them, together with experts. Next, residents vote for which of these projects to fund. Finally, the government implements the chosen projects, and residents monitor this implementation. For example, if neighborhood residents identify access to medical care as a priority, their delegates might develop a proposal for a new community health clinic. If the residents approve the proposal, the city funds it. The next year, a new health clinic is built.

Roughly 1,200 cities have participatory budgets already. Several countries have passed laws making participatory budgeting mandatory for local governments. The UN and other international organizations have actively promoted it. Even the Church of England is a fan.

Why such broad support? Probably because participatory budgeting offers something for everyone. It gives residents a forum to voice their demands and resources to satisfy many of those demands. They feel more connected to their city and better able to improve their environment, and they learn a lot in the process. Low-income and marginalized residents gain the most, thanks to their high rates of participation (unlike in most consultations) and ?pro-poor' spending criteria that redistribute funds to those with the greatest needs. Social movements and community organizations get to spend less time pressuring policy-makers and more time deciding policies themselves. Regular budget assemblies even help them recruit members and build stronger community networks. For bureaucrats and economists, participatory budgeting is a way to get better information on public needs and minimize corruption. For politicians, it can provide closer links with constituents and increase their popularity." (http://trustcurrency.blogspot.com/2009/12/money-talks-how-participatory-budgeting.html)

Characteristics

1. Community members identify spending priorities.

2. Community members elect budget delegates to represent their neighborhood.

3. The budget delegates transform the community priorities into concrete project proposals.

4. Public employees facilitate and offer technical assistance.

5. Community members vote on which projects to fund.

6. The municipality or institution implements the chosen projects.


Robert Steele, paraphrasing from the Anwar Shah edited book cited below:

"Guiding Tenets Include:

+ Division of municipality into regions for easier discussion and implementation + Government-sponsored meetings throughout the year + Quality of Life Index is created to weight program toward less well off + Deliberation and negotiatiion is public + Bus caravan visits all the proposed projects before voting on them + Elected representatives vote on all the projects (open or secret) + Municipal councel is elected with two representatives from each region + Year end report is published + Everything in monitored publicly year round


+ Types of participation

- Information sharing - Consultation - Joint decision making - Initiation and control by citizen stakeholders

+ Preconditions and Enabling Factors

- Openness and democratic depth of the political and governance systems - Existence of enabling legal frameworks - Capacity for participation inside and outside government - Existence of functional and free media institutions - Willingness and capacity of government to make budget information open"

(http://www.phibetaiota.net/2008/08/participatory-budgeting-public-sector-governance/)

Examples

... of participatory budgetting, from Jay Walljasper:

Porto Alegre

"Porto Alegre, Brazil (population 1.3 million) decided to do exactly that after the left wing Workers’ Party was elected to office in 1989. They threw open the budgeting process to anyone that wanted to take part. Citizens gather in neighborhood assemblies to talk over what’s most needed in their own parts of town, and then elect representatives to advise the city council on government initiatives and financial priorities. This “participatory budget” process has been credited in lowering unemployment, improving public transit, and revitalizing poor neighborhoods." (http://onthecommons.org/content.php?id=2340)


Minneapolis

"Minneapolis, Minnesota embarked on a unique program two decades ago to put neighborhood groups in charge of how to spend millions of dollars each year. Activists across the city used to protest about how much municipal funding went into lavish downtown projects, while neighborhoods struggled with economic, crime, and housing issues. This led to an inspired idea: let neighborhoods themselves spend $20 million a year of the property tax revenues coming out of these taxpayer-supported downtown projects. That’s how the innovative Neighborhood Revitalization Program (NRP) was born.

The city is divided into eighty one neighborhoods, and each was allotted a certain sum of money based on its economic needs. Communities came together in a series of meetings to discuss what could be done to improve life in their part of town. Half of the money was earmarked for housing programs, based on neighbors’ assessment of needs and their ideas for solutions. The rest of the money was available for other projects that the neighborhood would decide. Plans were then carried out by a committee elected by residents, who worked with city staff.

The Neighborhood Revitalization Program (NRP) unleashed a tide of remarkable creativity on the part of Minneapolis residents as they conceived projects and innovations that had never before been discussed inside city hall. One community launched its own neighborhood school—a controversial idea at the time that has now become the norm throughout Minneapolis. Others refurbished business districts, improved libraries and community centers. Addressing poverty and racial injustice was part of many neighborhood’s agenda. The Neighborhood Revitalization Program, which is still underway in a scaled-back and some say less participatory form, literally changed the face of Minneapolis." (http://onthecommons.org/content.php?id=2340)


London Borough of Tower Hamlets

Tower Hamlets Partnership is the local strategic partnership for the London Borough of Tower Hamlets in East London, UK. It was launched in November 2001, bringing together key stakeholders to work together to provide and improve services for local residents. Members of the Partnership include the Council, Police, the Primary Care Trust (National Health Service), public services, voluntary and community groups, faith communities and local businesses and residents. Tower Hamlets Partnership launched You Decide! in 2009, a participatory budgeting project designed to give local residents a say over how part of the local budget is spent. In its second year, in 2010, events in eight local areas were held and facilitated by members of the steering committee, which welcomed anyone from the local community to join. A menu of services in various service categories, including a pre-determined budget were made available to event participants in the form of a brochure. Participants were allowed to vote for and "purchase" services for their local areas. It was an iterative process of service selection and voting until the total budget for the local area was fully allocated.

More information is available on the Tower Hamlets Partnership, You Decide! website.


Many More: Europe and beyond

Tiago Peixoto:

'In Europe, for instance, the issue has gained significant traction in the recent years. In Germany, since 2005 Berlin-Lichtenberg combines face-to-face citizen assemblies with online participation. An online platform enables citizens to discuss and elaborate budgetary proposals to, subsequently, prioritize them. In 2008 the city of Freiburg combined online deliberation with the use of a budget simulator, enabling citizens to better assess the impacts of their choices. The results of this deliberative process were then collaboratively aggregated in a wiki and edited by the participants of the process themselves. Similar initiatives have been also conducted in the cities of Bergheim, Cologne, Hamburg and Leipzig.

In Italy, developing upon the combination of online and offline methods adopted earlier on in Brazil, in 2006 the city of Modena allowed its citizens to send by e-mail proposals to be discussed by the PB assemblies. Modena citizens could also watch live video streaming of the PB meetings and be updated about the process via SMS. The use of SMS as a means to reach a broader and younger audience, pioneered by the Brazilian city of Ipatinga in 2004, has also been identified in other Italian PB processes, such as those of Rome, Bergamo and Reggio Emilia. The ability to vote via the Internet for the public works in Italy can be illustrated by the experience of the cities of Vimercate and Parma. For example, through the Parmesan website votes can be case once ID number is provided, allowing the system to identify the eligible participants, that is, Parma residents. Finally, the website provides geo-referenced information, allowing citizens to visualize the location of the projects and to access further information about each of them.

In Spain, I have identified the use of the Internet to support citizens’ participation in the cities of Albacete, Cordoba, Getafe, Jun, Petrer, Malaga and Jerez. For instance, in the city of Getafe in 2008, in one of the districts of the city, citizens were allowed to watch live video streaming of the PB meeting and to cast their vote online. Through the Getafe’s PB website citizens are able to submit individually or collectively proposals for the PB process. In the municipality of Malaga citizens can submit proposals online and subscribe to SMS updates that inform them on the status of public works selected in the. In Lisbon, Portugal, through the Internet citizens can submit proposals for public works online. Once the municipal services analyze the technical feasibility of the public works and estimate their costs, eligible public works are resubmitted online to be voted for by the public.

The use of ICT in PB processes has not been confined to Brazil and Europe however. In Africa, more precisely in the South-Kivu region in the Democratic Republic of Congo, mobile phones have been used to mobilize citizens to attend PB meetings, to vote on budgetary priorities and to update citizens on the status of public works selected." (http://democracyspot.net/2012/08/24/participatory-budgeting-technology-innovation-in/)

Statistics

Via [1]:

  • "Sonia Gonçalves finds that municipalities that adopted participatory budgeting in Brazil “favoured an allocation of public expenditures that closely matched the popular preferences and channeled a larger fraction of their total budget to key investments in sanitation and health services.” As a consequence, the author also finds that this change in the allocation of public expenditures “is associated with a pronounced reduction in the infant mortality rates for municipalities which adopted participatory budgeting.” [2]
  • in Comparative Political Studies, the authors Michael Touchton and Brian Wampler come up with similar findings (abstract):

"We evaluate the role of a new type of democratic institution, participatory budgeting (PB), for improving citizens’ well-being. Participatory institutions are said to enhance governance, citizens’ empowerment, and the quality of democracy, creating a virtuous cycle to improve the poor’s well-being. Drawing from an original database of Brazil’s largest cities over the last 20 years, we assess whether adopting PB programs influences several indicators of well-being inputs, processes, and outcomes. We find PB programs are strongly associated with increases in health care spending, increases in civil society organizations, and decreases in infant mortality rates. This connection strengthens dramatically as PB programs remain in place over longer time frames. Furthermore, PB’s connection to well-being strengthens in the hand of mayors from the nationally powerful, ideologically and electorally motivated Workers’ Party. Our argument directly addresses debates on democracy and well-being and has powerful implications for participation, governance, and economic development."



Discussion

The Benefits of Citizen Engagement: a (Brief) Review of the Evidence

By Tiago Peixoto:


* INCREASED TAX REVENUE / REDUCTION OF TAX DELINQUENCY

"As shown in a cross-national analysis by Torgler & Schneider (2009), citizens are more willing to pay taxes when they perceive that their preferences are properly taken into account by public institutions. Along these lines, the existing evidence suggests the existence of a causal relationship between citizen participation processes and levels of tax compliance. For instance, studies show that Swiss cantons with higher levels of democratic participation present lower tax evasion rates, even when controlling for other factors. This effect is particularly strong when it comes to direct citizen participation in budgetary decisions, i.e. fiscal referendum (Frey & Feld 2002, Frey et al. 2004, Torgler 2005). In the Latin American context, a number of authors have observed a similar relationship with regard to participatory budgeting processes. In the municipality of Porto Alegre (BR) for instance, Schneider and Baquero (2006) show that the adoption of PB led to a substantive increase in tax revenues. In a similar vein, a comparative study of 25 municipalities in Latin America and Europe finds a significant reduction in levels of tax delinquency after the adoption of PB (Cabannes 2004: 36). In another study Zamboni (2007) compares the performance of similar Brazilian municipalities with and without PB processes: even when controlling for other factors, the study finds a significant relationship between the existence of PB and the reduction of tax evasion.

Some evidence suggests that participation may be even more effective at curbing tax evasion than traditional deterrence measures, such as fines and controls. At odds with conventional economic reasoning, the literature in the field of “tax morale” suggests that citizen participation actually comes across as a better remedy for tax evasion than commonly adopted deterrence policies (e.g. Torgler 2005, Feld & Frey 2007, Feld & Torgler 2007) .


* INCREASED EFFICIENCY / BETTER ALLOCATION OF RESOURCES

According to a study by the Institute of Development Studies (IDS) on the PB process in Rio Grande do Sul state, “PB has promoted a redistributive development model while improving budgetary planning and efficiency” (Schneider & Goldfrank 2002, p. iii). From an efficiency point of view, the study observes that the PB process improved governmental capacity to allocate funds across governmental divisions (e.g. secretariats) to enact planned projects. For instance, with the implementation of PB, the rate of completion of budgeted education projects increased from an average of 62.5% to 82.5% (Schneider & Goldfrank 2002) . The implementation of PB also increased the planning capacity of the state, leading to a budget that better forecast the revenue receipts, with the government actually spending amounts systematically closer to the planned expenses (Schneider & Goldfrank 2002).

Another study on the municipality of Porto Alegre shows that prior to the implementation of the PB process, no more than two percent of the municipal budget was dedicated to investment, with most of the budget allocated to personnel expenses. Five years later, the combination of increased tax revenues and efficiency gains – engendered by the PB process – led to a tenfold increase in the percentage of investments (Baiocchi 2003). Finally, as shown by Zamboni’s (2007) quantitative study, even when controlling for other factors, municipalities that adopt PB processes are better managed and present less financial irregularities (e.g. corruption) than those without PB.

The elements highlighted above lead to another question regarding the extent to which citizen engagement leads to more targeted and evidence-based allocation of resources. The literature dealing with citizen participation primarily approaches this issue by considering the extent to which participatory processes lead to an inversion of priorities and to increased social justice. In this respect, the available evidence suggests that participatory budgeting leads to significant shifts in priorities and policies, towards expenditures that directly benefit poor sections of society (Avritzer 1999, Navarro 2001, Blore et al. 2004). In a similar vein, quantitative analysis by Baiocchi et al. (2006) finds that participatory budgeting is strongly associated with a reduction in extreme poverty and increased access to basic services. More recently, a World Bank report demonstrated that participatory budgeting bears a statistically significant impact on a number of social indicators. Amongst others, the authors of the report find that PB is positively and strongly associated with improvements in poverty rates and water services (World Bank 2008).


* INCREASED TRUST AND IMPROVED IMPLEMENTATION PROCESSES

The relationship between participatory budgeting and increased trust and legitimacy draws from a well-established body of literature dealing with issues of citizen participation, social capital and trust in government. It is widely known that citizen engagement leads to increased levels of trust in institutions: this holds true even when controlling for other factors (Brehm & Rahn 1997, Keele 2007, Tampubolon 2010) . Indeed, in some cases, one of the strongest effects of participatory processes is precisely that of increased trust in institutions (Altschuller & Corrales 2009).

The understanding that PB reduces implementation hurdles draws both from broader literature dealing with policy implementation and from the specific experience of PB itself. In a more general perspective, the evidence from experimental settings suggests that decisions made democratically lead to better cooperative models, mitigating problems of free-riding and facilitating subsequent policy implementation (Ertan et al. 2009, Dal Bó et al. 2010). Beyond experiments in controlled environments, the case for increased participation in decision-making processes – as a means to reduce implementation drawbacks – has been made in fields as diverse as those of economic reforms (Frieden 1991), agriculture policies (Bardhan 2000) and workplace decisions (Black & Lynch 2001). For PB the evidence is by no means different: as the outcome of an inclusive decision-making process, the implementation of PB decisions has been documented as less subject to elite capture and clientelist exchanges (Wampler 2001). The literature has also demonstrated the substantive popular support enjoyed by public works and services selected through the PB process, with local communities often collaborating with supplementary personnel, financial and material resources in order to increase the resources available for the implementation of PB projects (Cabannes 2004)." (http://democracyspot.net/2012/11/24/the-benefits-of-citizen-engagement-a-brief-review-of-the-evidence/)

Disempowerment through Political Cooptation

Josh Lerner:

"When politicians control decision-making and use it to support their own agendas, participatory budgeting can become disempowering. This danger of co-optation is particularly strong in the US. New York, Los Angeles, and other municipalities are increasingly holding consultations on city priorities, but not giving these consultations much power. Politicians and bureaucrats set the agendas, and although residents can share their opinions, they cannot make decisions. This controlled participation may look good for the city, but it rarely changes government spending. In the long run, it shows people that getting involved isn't worth the bother.

Co-optation is not the only challenge. Compared with Brazil, US cities have less urgent needs, more linguistic diversity, and fewer leftists in power. Experiences with participatory budgeting in developed countries, however, suggest strategies for adapting it to the US. Start small, with a pilot project in one neighborhood, agency, or program. Experiment with budgets in any institution that is receptive. Begin by engaging the most marginalized communities, so that they learn to play the game first. Build a bigger funding pot by attracting money from different sources. Use popular education and active facilitation to engage diverse residents and make sure that the loudest voices don't dominate. Link with existing participatory budgets for more legitimacy and fresh ideas." (http://trustcurrency.blogspot.com/2009/12/money-talks-how-participatory-budgeting.html)

Tools

YouChoose (UK) online software at http://www.idea.gov.uk/idk/core/page.do?pageId=22436695


Key Book to Read

  • Participatory Budgeting. Ed. by Anwar Shah. World Bank Publications, 2007

Review by Robert Steele:

"This is the very best book on Participatory Budgeting I could find (other than those on Puerto Alegre specifically ... For my purposes the two most important parts of the book were overview by the editor Anwar Shah (top expert with the World Bank); the guide to participatory budgeting by Brian Wampler; and the concluding appendix by Alan Folscher, on Citizen Participation and State Effectiveness, and also–very important–Preconditions and Enabling Factors for Citizen Engagement with Public Decisions. The rest of the book is regional case studies, and the CD ROM is country case studies." (http://www.phibetaiota.net/2008/08/participatory-budgeting-public-sector-governance/)

More Information

  1. More details at http://www.nhi.org/online/issues/146/canadianbudgeting.html
  2. Wikipedia overview at http://en.wikipedia.org/wiki/Participatory_budgeting
  3. Shareable Magazine story by activist Mira Luna at http://www.shareable.net/blog/participatory-budgeting-sharing-power-over-public-resources



Bibliography

Altschuller, D., Corrales, J. (2009) “The Spillover Effects of Participation in Development Projects: Evidence from Honduras and Guatemala.” Working paper, CCEUP.

Avritzer, L. (1999) “Public Deliberation at the Local Level: Participatory Budgeting in Brazil.” Paper delivered at the Experiments for Deliberative Democracy Conference, Wisconsin January, 2000

Baiocchi, G.; Heller, P.; Chaudhuri, S. and Kunrath Silva, M. (2006) “Evaluating Empowerment: Participatory Budgeting in Brazilian Municipalities”, in R. Alsop, M. Frost Bertelsen and J. Holland (eds), Empowerment in Practice: From Analysis to Implementation, Washington: World Bank

Cabannes, Y (2004) “Participatory budgeting: a significant contribution to participatory democracy”. Environment and Urbanization 16(1): 27-46

Goldfrank, Benjamin (2006) “Lessons from Latin American Experience in Participatory Budgeting.” Paper presented at the Latin American Studies Association Meeting. San Juan, Puerto Rico, March 2006.

Navarro, Z. (2001) “Decentralization, Participation and Social Control of Public Resources: “Participatory Budgeting” In Porto Alegre (Brazil).” Development, 41(3), 68–71

Schneider, A. and B. Goldfrank. (2002) ‘Budgets and ballots in Brazil: participatory budgeting from the city to the state’, IDS Working Paper 149. Brighton: IDS.

Schneider, A. and M. Baquero (2006) “Get What You Want, Give What You Can: Embedded Public Finance in Porto Alegre.” Brighton: Institute of Development Studies.

Wampler, B (2004) “Expanding Accountability Through Participatory Institutions: Mayors, Citizens, and Budgeting in Three Brazilian Municipalities,” Latin AmericanPolitics & Society, 46:2.

World Bank Report (2008). “Brazil: toward a more inclusive and effective participatory budget in Porto Alegre.” Report No. 40144-BR.

Zamboni, Yves. 2007. “Participatory Budgeting and Local Governance: An evidence based evaluation of participatory budgeting experiences in Brazil.” Working Paper, Bristol University.