Participatory Budgeting:

A Comprehensive Review

Loreen Davis

Katie Dougherty

Brandon Nye

University of Alaska-Anchorage

April 8, 2017

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Table of Contents

Table of Contents ............................................................................................................................ 2

Abstract ........................................................................................................................................... 3

Introduction ..................................................................................................................................... 4

Citizen Participation and Healthy Democracy ................................................................................ 5 Promoting “Deep Democracy” ................................................................................................................. 5

Participatory Budgeting .................................................................................................................. 7

Literature Review............................................................................................................................ 8 Participatory Budgeting: Guiding Concepts ........................................................................................ 8 Preconditions ....................................................................................................................................... 9

Chicago, IL ............................................................................................................................................. 12 New York City, NY ................................................................................................................................ 15 Vallejo, CA ............................................................................................................................................. 15

Figure 1. Cycle 3 of Participatory Budgeting in Vallejo PB Rulebook, 2015, p. 3 .......................... 16 Three Cities, Same Basic Process ........................................................................................................... 17

Strengthening Anchorage’s Democratic Institutions: Why Now?................................................ 18

Changing Demographics ........................................................................................................................ 18 Figure 2. Composition of General Government Revenues Categorized by Major Determinants in

FY 2016 53.......................................................................................................................................... 20 Figure 3. Composition of General Government Fund Revenues 1998-2016 54 ............................... 21

Review of Current Processes .................................................................................................................. 21 The Budget Process ................................................................................................................................ 22

Means of public involvement........................................................................................................ 23 Drawbacks to the Current Process and Mechanisms for Involvement ................................................... 25 How could Anchorage integrate participatory budgeting techniques? ................................................... 26

Conclusion .................................................................................................................................... 27

Notes ............................................................................................................................................. 29 Pages 1-8 ................................................................................................................................................. 29 Pages 9-12 ............................................................................................................................................... 30 Pages 13-15 ............................................................................................................................................. 31 Pages 16-28 ............................................................................................................................................. 32

Bibliography ................................................................................................................................. 34

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Abstract

Participatory budgeting (PB), a budgetary process that allocates part of a municipality's budget

into the control of its citizens, is one approach to address the public's dissatisfaction with the lack

of transparency regarding how tax dollars are spent. By allowing the citizens to plan and vote for

projects they would like to have completed in their neighborhoods, these neighborhood residents

are empowered and more engaged in civic activities.1 This paper explores the current state of PB

using a literature review, narrowing the broad collection of information regarding PB to a focus

on the practice of participatory budgeting through the lens of case studies from New York City,

New York, Chicago, Illinois, and Vallejo, California, analyzing public policy considerations and

the potential for implementation of participatory budgeting for the Municipality of Anchorage.

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Introduction

The essence of a democracy is government through the will of the people. Two major

challenges facing any democracy is active participation of the people and just distribution of

revenue generation through lawful collection authorization by legislation. While not widely

exercised, the practice of participatory budgeting as a matter of public policy requires active

participation in order to justly distribute tax revenue in accordance with the will of the people.

This paper will present a comprehensive literary review of participatory budgeting from a

diverse collection of scholarly work. This literary review will be followed by presentation of

three case studies from within the United States of the practice and effects of participatory

budgeting. A brief overview of the budgetary process for the Municipality of Anchorage will

precede a concluding public policy analysis of the potential implementation of participatory

budgeting within the Municipality of Anchorage.

In the United States Constitution, Article 1, Section 8, Clause 1 gives Congress, “...power

to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common

defense and general welfare of the United States."2 When collecting tax revenue, the U.S.

government has a duty to spend this money for the welfare and benefit of its citizens, though

little prescriptive language in the Constitution leaves much to be wondered as to what constitutes

the “general welfare.” As a result, questions of accountability and legitimacy have repeatedly

arisen as the public’s major concern with the use of this revenue - that is, the public’s inability to

"see" or "track" the dollars.

In addition, today’s governments have a reputation for being slow, unresponsive, and

inefficient. Governments at the local, state, and federal levels have developed a number of

responses to these complaints, turning toward more participatory mechanisms that emphasize

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transparency, accountability, and deep citizen engagement. Indeed, as noted by Rondinella:

"Today, in front of a long-standing crisis of legitimacy which affects our democracies,

the implementation of participative procedures is more than ever needed, and public

deliberation is the process through which legitimate choices and decisions should be

shaped and made. In this context, civil society may provide fundamental contributions in

terms of stimulating social participation, activation of resources, sharing of information

and knowledge, so to engender a shared idea of progress and well-being…"3

Citizen Participation and Healthy Democracy

The representative democracy we know at the federal, state, and local levels has

expanded to accommodate new Americans and changing conceptions of identity and citizenship.

Means of civic engagement have transitioned from representative to direct and deliberative,

where citizens are invited to participate in both discussions about decision-making as well as the

decision-making process. Forms of citizen engagement have been transformed and reimagined as

democratic institutions have been eroded and rebuilt by time and the political zeitgeist, but the

basic tenet of participation in decision-making has never been lost.

Promoting “Deep Democracy”

Maintaining and promoting citizen engagement has a number of advantages in terms of

the quality and profundity of democracy. In discussing the turn toward direct participation,

Michels and de Graaf note that “complex decision-making structures, in which many actors

interact, and the decline of the representation function of political parties (e.g. decreasing voter

turnout and increasing electoral volatility) foster the discussion of the legitimacy of democracy

and have raised demands for additional forms of political participation.”4 The foundation for this

discussion can be traced back to Jean-Jacques Rousseau, who emphasized citizen participation as

crucial to the function of the state.5 Modern advocates of participatory democracy emphasize

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three functions of direct engagement in decision-making: education, integration, and legitimacy.

Participation serves an educative function through the development of civic skills and

competencies, familiarizing citizens with governance processes and channels for input. The

integrative component takes place as engagement “contributes to citizens’ feeling of being public

citizens, part of their community.”6 Greater participation also, through the expression of

differing opinions, produces decisions acceptable to more citizens.

For confirmation, we can turn to Robert Putnam’s foundational analysis in Bowling

Alone, which examines the role that active participation in social and voluntary networks plays in

life satisfaction and democracy. Putnam notes that engagement allows the expression of interests

and demands, inclusion, and civic education, promoting social capital, “connections among

individuals - social networks and the norms of reciprocity and trustworthiness that arise from

them.”7

Promoters of deliberative democracy focus, similarly, on the networks and connections

that produce policy in democratic processes. They argue that deliberative processes contribute to

“rational collective outcomes.”8 Michels and de Graaf seek to confirm these theories through

examination of participatory policy-making processes in two municipalities in the Netherlands,

Eindhoven and Groningen. In Eindhoven, nearly 40 interactive projects, ranging from

neighborhood revitalization and reconstruction projects to safety improvement, have been

initiated with the purpose of both accomplishing project objectives and increasing citizen

participation. In Groningen, a budget was allocated to neighborhood groups and local

organizations with concrete neighborhood improvement plans to strengthen participatory policy-

making. The authors analyzed the quality and scope of participation in Eindhoven and

Groningen on three dimensions - inclusion, skill development, rationality, and legitimacy.9

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In conclusion, the study found: (1) a positive relationship between citizen involvement

and democracy, (2) residents felt an increased sense of responsibility for public decisions as their

participation in the processes increased, (3) participatory policies encourage a diversity of

opinions and mutual understanding, and (4) citizen participation contributes to legitimacy.

However, they identify two potential pitfalls of participatory processes: (1) an absence or

exclusion of some groups, and (2) a lack of expectation management, contributing to

disappointment and disillusionment on the part of citizens. Participatory processes will

necessarily have to widen their reach to encourage the engagement of disenfranchised or

alienated communities or individuals, and will have to “make absolutely clear what contribution

is expected from citizens and how this input will be used.”10

Participatory Budgeting

Participatory governance of any dimension is not a new idea, nor is it unique to the

United States.11 In the United States, the upward trend of shifting from traditional government to

governance, where the emphasis is on collaboration and shared leadership involving both the

government and the public in decision-making, occurs primarily at the municipal level.12

Participatory budgeting (PB), originally implemented in Porto Alegre, Brazil in 1989, and now in

practice in cities to varying degrees throughout the world, "is a decision-making process through

which citizens deliberate and negotiate over the distribution of public resources.”13 Participatory

budgeting provides a framework for ensuring responsible and legitimate government spending,

based on direct citizen involvement.

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Literature Review

This section of the paper will provide an overview of municipal-level participatory

budgeting (PB) since its inception in the United States in 2009. In addition, noteworthy aspects

of several cities' PB processes, as well as more general guiding concepts, will be identified.

Participatory Budgeting: Guiding Concepts

For the concepts undergirding the development and practice of participatory budgeting,

we can turn to the list of activities compiled by Wampler. While every municipality is unique,

and principles and guidelines are broad enough to reflect these differences, Wampler’s list

provides a strong starting point for the development of a picture of participatory budgeting at the

municipal level, painted in broad strokes.

● The municipality is divided into regions to facilitate meetings and the distribution of

resources.

● Government-sponsored meetings are held throughout the year, covering different aspects

of the budgeting and policy-making cycles: distribution of information, policy proposals,

debates on proposals, selection of policies, election of delegates, and oversight.

● Each municipality devises its own formula to guarantee the equitable distribution of

resources.

● Public deliberation and negotiation take place among participants and between

participants and the government over resources and policies.

● Visits to pre-approved project sites allow delegates to evaluate the social needs of

proposed projects.

● Elected representatives vote on all final projects. Voting can be done by secret ballot or

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through a public showing of hands. The results become part of the public record.

● A municipality-wide council is elected. All regions elect representatives to this council,

which oversees participatory budgeting and makes final budget recommendations. The

council meets regularly with the municipal government to monitor the program.

● After final approval of the annual budget by participatory budgeting delegates, the mayor

sends it to the municipal legislative chambers to be approved. The legislative branch can

block specific projects.

● A year-end report is published, detailing implementation of public works and programs.

● Regional or neighborhood committees are established to monitor the design and

implementation of policy projects.14

Preconditions

Gordon et al. refer to the 2004 Global Campaign on Urban Governance where they list

preconditions for the implementation of a participatory budgeting framework or process.

Besides ensuring that all legal requirements have been met, elected officials, citizens, and civic

organizations must all be willing to participate. Shared understanding of purpose must exist,

procedures must be clearly delineated, and enough research needs to be complete so that there is

an accurate sense of capacity. Training for officials, staff and citizens is required, and plans for

an efficient means to disseminate information must be in recommended that both citizens and

staff attend the same training to acquire the necessary knowledge place. In addition, a plan for

resolving differences between competing demands and limited resources is essential.15

These preconditions are a partial list of what must be done in the preparatory phase.

Without thorough preparation and planning, systemic failure is likely. In addition, staff may

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need training to adopt new behaviors and attitudes to accept citizens' input.16

Clark discusses the dilemma of public versus individual interest; for example, resurfacing

on a street near your own home is more attractive than resurfacing on a street you rarely visit.

Clark also revisits the difficulties of equalizing access, and ensuring understanding and power to

all socioeconomic groups.17 One of the many challenges revolves motivating all segments of the

population to get involved, harking back to Michel and de Graaf’s review of projects in

Eindhoven and Groningen.18

However, Gordon et al. suggest that PB has evolved over three phases: "experimentation,

consolidation, and extension and diversification.”19 Research suggests that these three phases are

not stationary or static; rather, their dynamism means that they move about in time and space

depending on circumstance. As participatory budgeting began to take hold and spread, it

experienced a consolidation of early experiences into a more standardized approach for citizen

engagement. As this occurred, these processes began infiltrating cities around the world, with

each adapting the approach to its own political culture and realities. Gordon’s view is

characterized by expansion into more cities and diversification as these communities adapt the

model to meet their needs.20

While the literature on participatory budgeting offers some insights, any thorough review

requires examination of American cities with existing participatory budgeting processes. Indeed,

lessons from Illinois, New York, and California suggest that not only must the preconditions

above be addressed, there are also positive and negative considerations.

For instance, Wampler mentions the positive effects of citizens being directly involved in

deciding how and where resources should be spent, along with the opportunities that

participatory budgeting can facilitate for engaging, educating and empowering citizens,

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contributing to a more vibrant society. In addition, participatory budgeting allows for a high

degree of transparency which reduces government inefficiencies and corruption.21

Both Birskyte and Wampler address the ways that successful participatory budgeting can

engage and give voice to those citizens who have historically been excluded from the

governmental process by allowing them to choose how some of their tax money is spent.22

Peters & Pierre argue that participatory processes make the government more accessible to the

public and empower citizens with greater influence in government matters.23 Wampler suggests

that participatory budgeting creates checks and balances that can improve state performance and

enhance the quality of democracy. It can also strengthen the demand for good governance and

make the government more responsive to citizens’ needs and preferences.24

However, participatory budgeting has its critics. Due to resource limitations and the

constraints placed on the resources, some citizens have expressed dissatisfaction. Citizens hear

they will have some control over the way money is spent only to find out that there are many

restrictions. For instance, in Chicago’s Roger’s Park, the money is limited to touch-and-feel

capital projects, meaning that residents cannot choose operational programs.25 Clark tells the

story of Sydney, a Roger’s Park resident:

"Just in the last month, there were, like, four shootings," she said. Free programming for

young people that would keep them away from the violence, she says, is what would most

benefit the community she's lived in all her life. "Yeah, the murals are nice and give the

neighborhood a good feel," Sydney said, but, "as someone who lives up here, it's just not what

we need right now."26

Participatory budgeting requires an immense amount of time and effort to get residents

involved and, once involved, public emotion can be strong; controlling meetings can be

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challenging. There is also a danger of those who do choose to participate forming special

interest groups and, if the rules are not written properly, these alliances can be used to assist in

reelection campaigns.27

In addition to the expenses associated with holding special elections, the public must be

educated on the limitations of spending. This education must include general civics lessons as

history has shown that particular projects are overrepresented (park projects are popular in PB

communities; over half of New York City’s funded projects were parks).28

The public often complains that government is slow and inefficient; when projects are

approved and do not come to fruition quickly, this belief may be reinforced.29 Indeed, unless a

city has thoroughly planned and prepared for implementation of participatory processes,

problems can arise. Shah advises caution, noting that “processes can be captured by interest

groups, masking the undemocratic, exclusive, or elite nature of public decision making, giving

the appearance of broader participation and inclusive governance while using public funds to

advance the interests of powerful elites.”30 Shah also suggests other barriers for meaningful

citizen participation include citizens' indifference, occasional incompetence of municipal

administration, bureaucratic inertia and lack of financial resources.31

Case Studies

Chicago, IL

Since its inception, Chicago’s participatory budgeting program has engaged 13,000

residents in 12 communities to directly spend $18 million in public dollars. This process began

with each of the fifty council members asking the residents in their ward how to spend $1

million. This distribution of funds leaves $300,000 in savings for emergencies and cost

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overruns. Although overall there is an upward trend in cities adopting participatory budgeting,

Chicago lost two of five participating districts after one year, with both citing the immense

amount of work it takes to get and keep residents involved.32

Each year, the city publishes a Rulebook, which contains guidelines based on the needs,

issues, and interests of the community. For instance, the 2015-2016 Chicago Rulebook specifies

the idea collection period running from October through November; proposal development

occurring from December through March; expositions and voting being completed from April

through May; and implementation following from June onward. Chicago's Rulebook also

mandates research as a component of the program. The research examines who does and does

not participate in the city’s process, why people choose to participate, and how the city’s

outreach efforts influence participation. This research also investigates what is learned, whether

it be skills, beliefs, or attitudes of the participants and elected officials. The information acquired

can then be used to further refine and develop the process.33

In 2015-2016, each Chicago Alderman received $1.32 million to spend on capital

investments in their ward. To facilitate involvement in the process "mobile voting” in high

traffic areas that are accessible to the community is made available. Prior to the voting,

residents from each participating ward are invited to gather and learn about community needs

and the budget, as well as exchange ideas at neighborhood assemblies. Next, events are held

where community representatives or volunteers from the community do the work necessary to

turn ideas into project proposals. Following development of proposals, each ward holds at least

two project expos where community representatives present projects they are sponsoring and get

feedback. Voting time varies for the different wards and occurs over a period of one to two

weeks. Ward staff and leadership committees oversee everything. The proposals with the most

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votes win and the implementation phase begins.34

Carroll et al.’s document, Democratizing Tax Increment Financing Funds Through

Participatory Budgeting, which they refer to as a “TIF Toolkit,” explains how the program is

financed. Even prior to implementation of participatory budgeting, Chicago relies almost

exclusively on tax increment financing (TIF) to pay for infrastructure, finance development, and

attract businesses.35 TIF “is public financing used as a subsidy for redevelopment, infrastructure,

and other community-improvement projects. … municipalities typically divert property tax

revenue increases from a defined area or district toward an economic development project or

public improvement project in the community.”36 For each of these TIF districts, the local

government subsidizes developers to make physical and economic improvements using various

funding options such as “pay as you go” funding or issuance of bonds. With the improvements,

property values and tax revenues increase, and allow the government to pay off the initial and

ongoing development expenditures.37

Prior to Chicago’s participatory budgeting, residents of low-income neighborhoods not

only felt disenfranchised as private developers and the municipality made deals behind closed

doors, but also faced hardships such as displacement, congestion, and low-wage/non-union retail

and service job as the developments proceed.38

Community organizations faced a choice; oppose TIF and the projects it subsidizes, or

utilize its power to serve residents in their service areas. Within Chicago there are over 160 TIF

districts; few developers consider developing without asking for TIF funds. In order for the

communities to have some say on how the TIF funds were being dispersed they needed a

mechanism that would allow their voice to be heard. Implementing PB offered a solution, giving

residents a voice in deciding how public funds are spent in their neighborhood.39

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New York City, NY

In New York City, between September 2013 and April 2014, ten City Council Districts

participated in the City’s participatory budgeting program. 17,000 residents voted to accept fifty

community projects, funded with approximately $14 million. New York's Rulebook offers a

much more comprehensive overview and more specificity with respect to what can and cannot be

done than that of Chicago.40

In New York City, the timeline for the process allows a little over a month for planning,

two months to collect ideas and recruit budget delegates, five months to develop proposals, and

two months to share proposals and vote, before moving forward with implementation,

monitoring and evaluation. The only requirement for participation is to be 14 years of age and a

resident of the concerned district. Each voter may cast five votes; one per project. Every

attempt is made to provide translated materials for non-English speaking individuals and, after

the votes are tallied, Council Members submit the projects receiving the most votes to the City to

be allocated in the budget at adoption in June.41

Vallejo, CA

In 2012, Vallejo City Council established the first city-wide participatory budgeting

process in the United States.42 Although the application of PB city wide may be significant, one

needs to consider the actual population base of each city/district to determine how PB may be

implemented in any given city. For the last official census count in 2010, Vallejo's population

was 118,837. Upon reviewing New York City's 2010 census - where 10 districts participated in

participatory budgeting - five had populations above 200,000.43 Indeed, Vallejo used New York

City's process as a benchmark when developing their own citywide PB process.44

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Vallejo's timelines for activities are in step with NYC and differ from Chicago's. Two

months is allotted for idea collection for both cities; however, Chicago allows just half (three

months) of what Vallejo does for proposal development. Vallejo and Chicago each set aside one

month for project expos and voting. The last step in Vallejo's timeline is evaluation and

monitoring.45

In Vallejo, the participatory budgeting program is funded through "Measure B," a 1%

sales tax, narrowly approved by residents in 2011, as indicated in Figure 1.

Figure 1. Cycle 3 of Participatory Budgeting in Vallejo PB Rulebook, 2015, p. 3

Differences unique to Vallejo’s program include that the city’s requirement of

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documentation that all program beneficiaries reside within the incorporated city limits, and that

51% of these beneficiaries are low- or moderate-income. There are no special elections,

however, anyone 16 years or older may vote for the PB projects. Proposals are limited to

requesting funding for either capital infrastructure/durables or programs and services; a

combination of both is not allowed.46

Three Cities, Same Basic Process

While the examples from Chicago, New York City, and Vallejo demonstrate the

variations in the implementation of participatory budgeting, the process essentially follows the

same distinct phases, each progressing over a period of several weeks to several months.

• Idea collection phase: residents come together in public meetings and online for

brainstorming sessions and to discuss ideas for projects that could be financed with the

money their public representatives allocate to the PB process.

• Budget delegate phase: in groups or committees, resident volunteers work together to

further develop the initial ideas into project proposals. These volunteers normally work

closely with relevant city agencies to assess feasibility and costs of projects.

• Voting phase: ballots are made available to all those qualified to vote on the projects.

There are various methods for reaching the people and this phase typically lasts several

days.

• Implementation phase: the government commits to the projects that win the most votes

and meet the criteria for allocated funds.

Evaluating the effectiveness of each cycle is essential to the continual improvement of

the process and requires feedback from everybody involved. There are many sub-steps within

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each, and every city should be encouraged to tailor the process to meet their community's

needs.47

Strengthening Anchorage’s Democratic Institutions: Why Now?

Anchorage, Alaska is a community experiencing rapid and significant economic and

demographic change, a situation which calls for strengthening the City’s democratic institutions

by ensuring broad participation by new Alaskans, and improved accountability and transparency

mechanisms as the City confronts a decline in revenue sources.48 Participatory budgeting may

be an ideal way to promote the three functions of direct engagement outlined above - education,

integration, and legitimacy - by including foreign-born communities, fostering their knowledge

of Anchorage’s decision-making processes, and increasing resident involvement proportional to

the Municipality’s increased reliance on property tax.

Changing Demographics

Between 2009 and 2014, the population in Anchorage grew 6.3%, from 280,378 to

298,043. In that increase, the foreign-born population rose by 1.1% and accounted for 1.5% of

overall population growth during that period. Although this group made up 8.5% of

Anchorage’s total population, they made up 10.3% of its employed labor force in 2014.

According to a 2016 factsheet compiled by the Partnership for A New American Economy, in

conjunction with the Anchorage Economic Development Corporation, Wells Fargo, and the

Municipality of Anchorage, “Alaska is confronting a steep decline in revenue sources.

Underemployment and unemployment contribute to this by minimizing consumers’ purchasing

power and limiting opportunities for home ownership, which in turn negatively affects revenues.

New Americans help combat unemployment rates, and play a critical role in the workforce in

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Anchorage.”49

In 2014, immigrants in Alaska earned $1.8 billion, of which nearly $61 million went to

state and local taxes. In fact, the state’s foreign-born households were able to contribute more

than one in every 13 dollars paid by residents in state and local tax revenues.47 Moreover,

immigrants in Alaska are naturalizing at a rate nearly 10% higher than the country overall,

suggesting that they are “laying down roots” in the state and may be, or become, homeowners,

job-holders, and voters.50

The data indicate that Anchorage - and Alaska - benefit from the presence and

participation of its foreign-born population in the economy. The growing population and broad

economic impact call for additional measures to ensure that their voices continue to be

incorporated into the Municipality’s decision-making processes. In addition, the literature’s

emphasis on the educative and integrative components of direct participatory processes make

them an ideal tool for creating the “connections between individuals” that strengthen community,

and for providing the civic knowledge necessary to promote future engagement.

Devolution and Property Taxes

Current Anchorage Mayor Ethan Berkowitz has made devolution from the state to the

local government a central point of discussion in any conversation about the Municipality’s

budgeting process. In Mayor’s Berkowitz Six-Year Fiscal Plan (2017-2022), he emphasized this

trend:

“The state’s fiscal situation has led to a reduced state role, which has consequences for

the Municipality. As we manage this transition, our focus is on building self-sufficiency and

resilience. That means finding efficiencies and making strategic investments. It also means

demonstrating the fiscal discipline that accompanies a results-based budget, which addresses

performance and success of services, directing resources to accountable programs that result in

the highest level of public service.”51

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As Anchorage moves forward with increased fiscal responsibility and declining support

from state government, pressure on property tax revenue to fund government operating expenses

is growing. As noted in the Six-Year Fiscal Plan (and reflected in figure 1), 71.2% of annual

government revenue is determined by the yearly mill rate multiplied by taxable value of property

or asset, up from “between 60 percent to 65 percent of general government revenues each year

over the last eighteen years” (see figure 2).52

Figure 2. Composition of General Government Revenues Categorized by Major

Determinants in FY 2016 53

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Figure 3. Composition of General Government Fund Revenues 1998-2016 54

The heavy - and growing - reliance of the Municipality on property tax revenue to fund general

government operating expenses necessitates a proportional increase in the level of public

participation in the budgeting process. As the Municipality’s residents both diversify and

become an even more crucial support for government, the budgeting process should also expand

to allow for additional participation.

Review of Current Processes

While the Municipality’s current process offers some mechanisms for public involvement, these

are insufficient. There are three major issues with the status quo that would benefit from

implementation of participatory budgeting processes: 1) access; 2) clarity of outcomes; and 3)

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limited time or space for involvement (exclusion).

The Budget Process

Anchorage’s fiscal year runs concurrent with the calendar year. Budget

preparation begins the summer before the fiscal year begins, when the Municipality’s Office of

Management and Budget begins working with departments to review programs to forecast

changes in spending and revenue for the coming year. Late in the summer, the Mayor reviews

department requests and submitted information, sometimes asking for reductions or changes.

The Mayor is required to submit the proposed operating and capital

budgets to the Anchorage Assembly 90 days before the end of the fiscal year on October 2. On

September 2, the Mayor is also required to provide information on project revenue, a preliminary

tax cap calculation, anticipated capital budget, and any major reorganizational plans.

Preliminary strategic and businesses plans for the city’s utilities - Alaska Water and Wastewater

Utility (AWWU) and Municipal Light and Power (ML&P) - and enterprises - Merrill Field

Airport, Solid Waste Services (SWS) and the Port of Anchorage - are also submitted at this time.

The budget is formally introduced at the Assembly’s first meeting in October. The

Assembly holds budget work sessions in order to discuss particular items in the budget with

administration officials. Based on the worksessions and feedback from the community,

Assembly members propose amendments to the budget, which are passed or rejected by a simple

majority vote at a meeting in late November or early December. The Mayor has veto authority

over the budget, and is able to line-item veto any proposed operating expenses seven days after

Assembly action. The Assembly can override the veto with a super-majority within 21 days of

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the veto.

The Anchorage Charter requires Assembly approval 21 days prior to the end of the year

on December 10. If no budget is approved by that time, the Charter also allows the Assembly

and Mayor to continue working. On January 1, the new fiscal year begins with the approved

budget. As cost and revenue information is collected, the budget is updated, and the Mayor

submits a revised budget to the Assembly. The approval process, worksessions, and information

collection repeats, culminating in adoption of a Revised Budget, on which property tax collection

is based.55

Means of public involvement

a) Community Councils

Anchorage’s capital budget process depends on the involvement on the Municipality’s 38

community councils.

Based on the 2014 amendments to Anchorage Municipal Code Chapter 2.40 - “Providing

for the Establishment, Recognition, Duties, and Responsibilities Related to Community Councils

in Reference to Charter Section 8.01” - “community councils shall have the following advisory

[function]... advise the Assembly of the community council’s annual priority list of capital

improvement projects.”56 Each spring, a Community Council survey is routed from the Office of

Management and Budget to the Federation of Community Council and distributed to its

members. The current (2018) survey uses the Approved 2016-2021 Capital Improvement

Program (CIP) project list. Mayor Ethan Berkowitz’s letter to the community councils about the

survey notes that “the primary goal… is to have community councils provide an overall priority

ranking of all capital projects in their area and suggest any additional projects.”57

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Of the 38 community councils within the Municipality of Anchorage, 13 did not submit a list of

priority projects in 2015 or 2016.58 Of those that completed the survey in the last two years, 12

submitted capital project priorities for both years. While a 30% two-year completion rate is an

accomplishment, considering the recent institution of the process and the large number of

councils, the participation in community council processes is sometimes homogenous and not

reflective of the wider neighborhood community. While the CIP/CIB Community Council

Survey is a step in the right direction, it has not been able to realize the goals of broad

community participation - rather, it’s achieved deeper engagement with individuals already

involved in governance. In addition, the process focuses on using community participation to

inform decision-making process within the existing hierarchy; it doesn’t devolve any authority to

the councils.

b) Individuals

i) Munibudget.org: A Citizen’s Guide to City Budget

The Municipality of Anchorage maintains a citizen-facing budget website, apart from the

city’s site, to inform and engage the public on issues concerning the municipal budget. The site,

which includes CIP/CIB Frequently Asked Questions, a “Budget Dictionary,” and a public poll,

is designed to solicit input and provide information.59

ii) Public hearings

After the Mayor’s proposed budget is formally introduced to the Assembly, the Assembly

is obligated by Municipal Code to hold at least two public hearings on the proposed budget,

which are scheduled during October and November. Citizens have three minutes to testify at the

public hearing. Worksessions are open to the public, but public testimony is not taken.60

iii) Budget Advisory Commission

25

The Budget Advisory Commission (BAC) “provides the Assembly and the School Board

well-informed advice on budgets for both the Municipality of Anchorage and the Anchorage

School District” by producing public reports on each body annually.61 The Commission has

eleven seats, and terms of appointment of three years.

Drawbacks to the Current Process and Mechanisms for Involvement

As indicated in the literature, participatory methods suffer from an inability to attain

broad involvement across a variety of socioeconomic groups. Anchorage’s process is no

exception. Where the community council involvement, budget website, and Assembly public

hearings are designed to act as two-way tools to both gather and disseminate budget information

between the public and the policy-makers, these opportunities are limited on multiple

dimensions. Access to these tools are contingent on English-language proficiency, ability to be

present for public meetings - dependent on childcare, transportation, and, more ephemerally, a

feeling of engagement and enfranchisement - which exclude many of Anchorage’s foreign-born

and economically disadvantaged residents.

In addition, limitations on Assembly members’ time and the size of the BAC mean that

very few residents are able to engage directly in budgetary decision-making or the discussion

preceding it. These constraints, too, serve to exclude large segments of the population. Lastly,

there is little to no indication how participation outside the community council process is

integrated into decisions made by Assembly members or the administration. For example, for

the budget poll on the munibudget.org website, no clarification is offered regarding how this

information will be used, reported, etc. Given Michels and de Graaf’s insistence, on “[making]

26

absolutely clear what contribution is expected from citizens and how this input will be used,”

current municipal process may - despite making every effort toward engagement and

participation - be alienating even middle-class, English-speaking residents.62

How could Anchorage integrate participatory budgeting techniques?

The Municipality should expand on the success of the existing community council

partnership and budgeting process by integrating the basic process exhibited in Chicago, New

York City, and Vallejo - idea collection, budget delegation, voting, and implementation. To

start, instead of simply allowing community councils to prioritize pre-identified projects, the City

should add a dimension to the annual survey that invites ideas for new projects within the

district, following up with the classic participatory budgeting instruments - electing delegates,

hosting an exposition of project proposals, and ultimately inviting a vote. Funding for projects

would be small at first, and could draw from the City’s reserves. While small, any move toward

increased participation in budgeting would be welcome in a community that feels burdened by

the increasing reliance on property tax revenue.

Adding to this process would help to mitigate some of the current exclusionary

tendencies, while making use of the soft infrastructure already in place for civic engagement.

Anchorage should also make translation of materials its highest priority when encouraging

citizen participation - polls and websites should be available wherever possible, and a translator

should be present at all public meetings.

In addition, Anchorage recently joined the national “Welcoming Cities” initiative,

creating “Welcoming Anchorage,” a partnership between Anchorage Economic Development

Corporation and the Municipality. One of Welcoming Anchorage’s five pillars is civic

27

engagement, working to include the city’s diverse residents in an equitable and accessible

decision-making structure. Incorporating elements of participatory budgeting into the existing

municipal process would bring foreign-born residents into the fold, accomplishing one of the

administration initiatives and reinforcing the legitimacy of the government.

Lastly, studies in Brazil on the use of Information and Communication Technologies

(ICT) in the implementation of Belo Horizonte’s participatory budgeting program suggest that

increasing the window of time allowed residents to vote for initiatives at their convenience and

widespread access to voting points helped to alleviate the effects of the digital divide and

prompted citizens to cast their vote. In addition, “if one considers the average number of votes

per capita received by each district and its average income per capita, no correlation is found.”63

That is, the use of ICT’s in Belo Horizonte helped to counterbalance the problem of traditional

participatory budgeting, in which residents of higher socioeconomic class are overrepresented.

The Municipality should, if it decides to integrate the techniques described, strive to create and

promote an online platform that expands on the style of the community council survey, in which

priorities are communicated and published publicly.

Conclusion

Participatory budgeting is a tool that allows for direct democracy. This tool addresses

citizens' desire to maintain some control over the money they are mandated give the government

for services and goods often perceived as not benefiting them personally. Our research indicates

that, although there are complexities and barriers to both implementing and sustaining a

participatory budgeting program, the trend for cities to involve their residents via this mechanism

is increasing.

28

In reviewing the guiding tenets, its implementation and practice provides a unique

framework to present and preserve democracy for the people of specific government

constituencies who engages in participatory budgeting. Using these guidelines, cities may tailor

PB programs that meet the needs of their community as evidenced by the variations each of the

three case study cities' rulebooks. Differences in budgetary constraints, demographics, and the

willingness of both the government and citizens to become and remain involved all contribute

significantly to how a city will design a PB program.

Applying participatory budgeting as a public policy for the Municipality of Anchorage in

Alaska presents the opportunity to implement the best practices with the ability to review

information from other municipalities. By considering the conceptual framework and processes

of other municipal participatory models such as Chicago, Illinois, and Vallejo, the Municipality

of Anchorage may be able to utilize the structure of the budget model and incorporate these into

the existing community council structure already present in Anchorage.

In providing an Anchorage-specific vision for participatory budgeting, the principal

consideration is the nature of community involvement. Since Anchorage has a robust

infrastructure for communities to voice concerns for consideration, implementation of

participatory budgeting could be more seamless than the developments documented in Chicago

or Vallejo. The unique challenge for Anchorage would be to distill the complex budget system

for revenue generation and expenditures and to insert a mechanism for incremental decision-

making from the people through their community councils. The political caveat is ensuring the

policy considerations and impacts are understood by people but broad enough to utilize financial

resources most efficiently for the communities and the municipality as a whole.

The municipality can leverage information technology through social media and existing

29

web based platforms to disseminate real-time data and information. This strategy can mitigate

the risk of making decisions with outdated material and obsolete data. Utilization of technology

also provides the ancillary benefit of engaging diverse groups within the municipality. The

active involvement of multi-generations creates a confluence of ideas and perspectives which

engage the benefits of participatory budgeting as a fiscal model.

Notes

Pages 1-8

1. Victoria Gordon, Jeffery Osgood, & Daniel Boden, "The Role of Citizen Participation and the

Use of Social Media Platforms in the Participatory Budgeting Process," International Journal of

Public Administration 40, no. 1 (2017): 2.

2. United States Constitution, 1787.

3. Tommaso Rondinella, Elisabetta Segre, & Duccio Zola, "Participative processes for measuring

progress: Deliberation, consultation and the role of civil society,” Social Indicators Research

130, no. 3 (2017): 959.

4. Ank Michels and Laurens de Graaf, “Examining Citizen Participation: Local Participatory

Policy Making and Democracy,” Local Government Studies 36 (2010): 479.

5. Qvortrup Mads, The Political Philosophy of Jean-Jacques Rousseau: The Impossibility of

Reason (New York: Manchester University Press, 2003), 57.

6. Ank Michels and Laurens de Graaf, “Examining Citizen Participation: Local Participatory

Policy Making and Democracy,” 480.

7. Robert Putnam, Bowling Alone: The Collapse and Revival of American Community (New

York: Simon & Schuster, 2006).

8. Ank Michels and Laurens de Graaf, “Examining Citizen Participation: Local Participatory

Policy Making and Democracy,” 480.

9. Ibid., 489.

10. Ibid., 489.

30

11. Heidi Brooks, "The Mass Movement and Public Policy: Discourses of Participatory

Democracy in Post-1994 South Africa," The Journal of Modern African Studies, 55, no. 2

(2017): 105-127.

12. Victoria Gordon, Jeffery Osgood, & Daniel Boden, "The Role of Citizen Participation and the

Use of Social Media Platforms in the Participatory Budgeting Process," International Journal of

Public Administration 40, no. 1 (2017): 65-76.

13. Danilo R. Streck, "The Scale of Participation: From Municipal Public Budget to Cities'

Conference,” International Journal of Action Research 2, no. 1 (2006): 78-97.

Pages 9-12

14. Brian Wampler, “A Guide to Participatory Budgeting,” In Public Sector Governance and

Accountability: Participatory Budgeting,” ed. Anwar Shah, (Washington, DC: The World Bank,

2007): 26.

15. Victoria Gordon, Jeffrey Osgood, and Daniel Boden, “The Role of Citizen Participation and

the Use of Social Media Platforms in the Participatory Budgeting Process,” International

Journal of Public Administration 40, no. 1 (2017): 65-76.

16. Daniel Boden, et al., Participatory Budgeting in the United States: A Guide for Local

Governments (New York: Routledge, 2017).

17. Anna Clark, “Is Participatory Budgeting Real Democracy?” Forefront, (April 28, 2014): 4-6.

18. Ank Michels and Laurens de Graaf. “Examining Citizen Participation: Local Participatory

Policy Making and Democracy,” 489.

19. Gordon et al., “The Role of Citizen Participation and the Use of Social Media Platforms in the

Participatory Budgeting Process,” 23.

20. Ibid., 22-24.

21. Wampler, “A Guide to Participatory Budgeting,” In Public Sector Governance and

Accountability: Participatory Budgeting,” 25-26.

22. Liuciia Birskyte, “Involving Citizens in Public Decision Making: The Case of Participatory

Budgeting in Lithuania,” Financial Theory and Practice 37, no. 4 (2013): 384; Wampler, “A

Guide to Participatory Budgeting,” In Public Sector Governance and Accountability:

Participatory Budgeting,” 24.

31

23. B. Guy Peters and Jon Pierre, “Citizens Versus the New Public Manager: The Problem of

Mutual Empowerment,” Administration & Society 32, no. 1 (2000): 10.

24. Wampler, “A Guide to Participatory Budgeting,” In Public Sector Governance and

Accountability: Participatory Budgeting,” 25-26.

25. Clark, “Is Participatory Budgeting Real Democracy?” 3.

26. Ibid.

27. Wampler, “A Guide to Participatory Budgeting,” In Public Sector Governance and

Accountability: Participatory Budgeting,” 25-26; Howard Michael, “City News: Speaker’s Trip

for Fundraiser is Questioned,” Wall Street Journal (June 6, 2014).

28. Clark, “Is Participatory Budgeting Real Democracy?” 6.

29. Liuciia Birskyte, “Involving Citizens in Public Decision Making: The Case of Participatory

Budgeting in Lithuania,” 389.

30. Anwar Shah, “Overview,” In Public Sector Governance Accountability: Participatory

Budgeting,” ed. Anwar Shah (Washington, DC: The World Bank, 2007), 1.

31. Ibid., 2.

Pages 13-15

32. Carroll et al., “Democratizing Tax Increment Financing Funds Through Participatory

Budgeting,” City of Chicago Publication (June 2016); PBChicago website.

33. City of Chicago Participatory Budgeting Rulebook, 2015-2016, 3-19.

34. Ibid.

35. Carroll et al., “Democratizing Tax Increment Financing Funds Through Participatory

Budgeting.”

36. Google search, Wikipedia “TIF.”

37. Carroll et al., “Democratizing Tax Increment Financing Funds Through Participatory

Budgeting,” 4.

38. Ibid.

39. Ibid.

32

40. New York City Council Rulebook, 2017, 3-44; City of Chicago Participatory Budgeting

Rulebook, 2015-2016, 3-19.

41. New York City Council Rulebook, 2017, 3-44.

42. Derek Prall, “Pioneering Participatory Budgeting,” The American City & County, (2014), web

access.

43. NYC Open Data, (2017), web access.

44. Participatory budgeting in Vallejo Cycle 3 Rulebook, (2015), 1-11, web access.

43. Ibid.; NYC Open Data, (2017); City of Chicago Participatory Budgeting Rulebook, 2015-

2016, 3-19.

44. Participatory budgeting in Vallejo Cycle 3 Rulebook, (2015), 1-11.

Pages 16-28

45. Ibid.

46. Ibid.

47. Anwar Shah, “Overview,” In Public Sector Governance Accountability: Participatory

Budgeting,” ed. Anwar Shah (Washington, DC: The World Bank, 2007), 1-3.

48. “New Americans in Anchorage,” Partnership for a New American Economy, 2016.

Municipality of Anchorage, Mayor’s Corner, pg. 3.

49. Ibid., pg. 2.

50. “The Contributions of New Americans in Alaska,” Partnership for a New American

Economy, 2016. Municipality of Anchorage, Mayor’s Corner.

51. Ibid., 18.

52. “2017 Approved General Government Operating Budget,” Municipality of Anchorage, Office

of Management and Budget, I-5.

53. Ibid., I-22.

54. Ibid., I-23.

33

55. “Budget Process,” Municipality of Anchorage Citizens Guide to the Budget, accessed March

30, 2017, http://munibudget.org/budget-101/how-budget-created.

56. “An Ordinance of the Anchorage Assembly Amending Anchorage Municipal Code Chapter

2.40 Providing for the Establishment, Recognition, Duties, and Responsibilities Related to

Community Councils in Reference to Charter Section 8.01.” Municipality of Anchorage, Clerk’s

Office, published online February 11, 2014.

57. Berkowitz, Ethan. Letter to Community Councils re CIP/CIB. Municipality of Anchorage

Citizens Guide to the Budget, written February 23, 2016,

http://munibudget.org/sites/budget.localhost/files/2018%20Mayor%20Letter.pdf.

58. “2018 Community Council Surveys,” Municipality of Anchorage Citizens Guide to the

Budget, accessed April 2, 2017, http://munibudget.org/cc-surveys.

59. Municipality of Anchorage Citizens Guide to the Budget, accessed March 24, 2017,

http://munibudget.org.

60. “Budget Process,” Municipality of Anchorage, accessed March 30, 2017,

http://munibudget.org/budget-101/how-budget-created.

61. “Budget Advisory Commission,” Municipality of Anchorage, accessed March 24, 2017,

http://munibudget.org/get-involved/budget-advisory-commission.

62. Michels and de Graaf, “Examining Citizen Participation,” 489.

63. Peixoto, Tiago. “Beyond Theory: e-Participatory Budgeting and its Promises for e-

Participation.” European Journal of e-Practice, 7 (2009): 5.

34

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