Budget Rules and Flexibility in the Public Sector: Towards a Taxonomy

The practices and norms of public budgeting have often been seen as a brake on the flexibility needed of government organisations. This remains true despite historically significant financial management reforms designed around budgetary devolution. Seeing flexibility as operating along two dimensions - devolution and discretion - this paper revisits the underlying features of traditional public budgeting to develop a taxonomy of six generic 'budget rules'. By isolating key properties of budget control, the paper uses two of the more prominent rules - annuality and purpose - to illustrate how the rules interact to generate control capacity, as well as the scope for rule variability in promoting increased flexibility.