This paper examines the benefits of performance-based budgeting as a practical theory of government programming effectiveness. Faced with budget limitations and the demand for improved public services, government agencies use the budget as a means of increasing government accountability and efficiency, rather than simply as a means of distributing funds and controlling expenses. Performance-based budgeting has been defined as a system in which managers have the flexibility to use agency resources as needed, in exchange for their commitment to achieving certain performance results. (Brewer, 3) Performance budgeting is a system of planning, budgeting, and evaluation that emphasizes the relationship between budgeted money and expected results. (Government of Alberta, 1) Performance budgeting represents a significant departure from traditional line item budgeting. A budget by budget item is mainly a tool for controlling expenses. It characteristically indicates the amount of expenditure authorized for particular purposes. As the fiscal year progresses, departmental spending must remain within budgeted amounts unless formal changes to the budget are approved. Expenses budgeted by line item in one category cannot automatically be used to complete another category. (Government of Alberta, 2) Although traditional budgets can be useful in assisting managers with internal control, they are generally not as useful as a policy or decision-making tool. Line-item budgets assure elected officials and administrators that money is spent only for approved purposes, but they do not show what is accomplished with that money. (Government of Alberta, 3) Other disadvantages of line-item budgets include the promotion of indolence, due to minor changes to budget planning each year. Line-item budgeting can result in inefficient and costly actions because management does not have the flexibility to deal with changing situations. (Virginia Society of Certified Public Accountants, 7) Many government programs are often forced to use up funds or lose funds at the end of a program year; these restrictive processes can potentially encourage micromanagement and hinder the achievement of program objectives. (Government of Alberta, 3) In comparison, performance budgeting is more politically oriented, connecting plans, measures and budgets, and pushing administrators and decision-makers to see the big picture. (Brewer, 23) Performance budgeting provides useful information about the impact of budget decisions on people and gives departments increased budget flexibility. Additionally, performance budgeting enables continuous monitoring and strengthens legislative decision-making and oversight..