Hamburg Participatory Budget used to address a large budget deficit

Hamburg participatory budget

The Hamburg Participatory Budget project was introduced in 2006 by city politician Rüdiger Kruse, Christian Democratic Party spokesman for finance and the environment in the hope that it would address the city’s large budget deficit.

Kruse believed that more prudent budgeting would happen if the process was made more transparent.  His idea was to pay back 200m euros of debt a year and give 50% of interest back to the public to decide what to do with it.

Any worries that involving the public in spending decisions would simply lead to even higher budgets was not borne out, with the opposite effect occurring.  Planning budgets reduced spending by 10 per cent and helped fight new debt.

Once the council had agreed to let all citizens have a go at setting the next city budget, the problem they faced was making what is an extremely complex financial calculation understandable. The solution was to use a piece of software which displayed the various parts of the city budget as three-dimensional pie charts, with accompanying ‘sliders’ which people could use to move spending plans in each area up or down.  Participants were forbidden from exceeding current spending overall, though they could spend less.

The exercise was then publicised widely throughout Hamburg between 18 April and 12 May 2006, using the image of an iced cake decorated with the city’s castle logo being sliced up by a large knife website.

By the end of the four-week project the website had attracted around 50,000 unique visitors, with 2,870 registering as participants; 2,138 creating draft budgets (people were allowed to begin drafts, save them and return later); all of which led to 38 final concrete new budget proposals.

Overall trends of citizen-set budgets included more spending on services for children, less for culture and less for adults and social welfare, he said. There was also generally less money allocated for the Ministry of Finance – “no-one likes them” – and more for universities.

Although the results of the project had no formal status, they may have played a part in the council’s subsequent decision to stop new public borrowing. Other positive outcomes included that the city’s finance department had had so much fun with the software that they decided to set up a budget planning education programme for children and young people.

If you would like to know more about how participatory budgeting can help your organisation drop us a line.

Posted on September 25, 2014 in Blog

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