Spending Surges: Considerations Toward a Proposed Model for Explaining Budgetary Slack in Expiring Budgets

A review of an expiring budget and its impact on the budgeting process is very important. Two issues can quickly arise from the practice of budgeting based on budgetary slack. First, a department might feel incentivized to initially reduce (or hold back) spending during the early stages of the budgeting cycle. Second, as an extension to the prior idea, the department might experience an increase in spending as the end of the budget cycle draws near. The present research serves two purposes: The first purpose of this paper is to explore spending surges towards the end of a budgeting cycle. The secondary purpose of the paper is to explore the honesty of a department by using slack levels as an indicator. Based on the review of the literature, two general research questions will guide the development of a theoretical model to explain spending surges toward the end of a budgetary cycle.