V. O, key's “the lack of a budgetary theory”: Where are we now?

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Abstract
V. O. Key's essay, “The Lack of a Budgetary Theory,” published in 1940, is considered one of the true classics of public budgeting. The reason is that he posed what many will agree is the question for budgetary decision- making: On what basis shall it be decided to allocate x dollars to activity A instead of activity B? Key's quest for an allocation formula has remained largely unfulfilled. Nevertheless, his conclusion about the influence of economics in the theory and practice of budgeting cannot be sustained. Nor can the assertion that budgetary theory has been advanced be defended given the history of incrementalism. However, as incremental theory becomes increasingly untenable as a complete theory of budgeting, we find ourselves returning to the theme of Key's classic essay. If, as Key tells us at the end of his essay, budgets are reflections of political philosophy, then perhaps the search for an allocation formula to determine how best to distribute budgetary resources is illusory.

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