This paper examines the benefits of performance-based budgeting as a practical efficiency theory for government planning. Faced with fiscal constraints and demand for better public services, government agencies are using the budget as a means to increase government accountability and efficiency, rather than simply as a means to distribute funds and control spending. Performance-based budgeting has been defined as a system in which managers are given the flexibility to use agency resources as required, in exchange for their commitment to achieving certain performance outcomes. (Brewer, 3) Performance budgeting is a system of planning, budgeting and evaluation that emphasizes the relationship between allocated money and expected results. (Government of Alberta, 1) Performance budgeting represents an important divergence from the usual line-item budgeting. The line item budget is primarily a tool for controlling expenses and typically indicates the amount of spending allowed for particular purposes. As the fiscal year progresses, departmental spending must remain within budgeted amounts unless formal budget changes are approved. Budget spending of an item in one category cannot automatically be used to supplement another category. (Government of Alberta, 2) While traditional budgets can be useful in assisting managers with internal control, they are generally not useful as a policy or decision-making tool. Voice budgets assure elected and administrative officials that money is being spent only for approved purposes, but they do not show what is being accomplished with the money. (Government of Alberta, 3) Additional drawbacks of single-item budgets involve promoting laziness, due to the small changes made to budget planning each year. Budgeting for individual items can result in ineffective and costly actions because management is not given the flexibility to address changing situations. (Virginia Society of Certified Public Accountants, 7) Many government programs are often forced to use up funding or lose funding at the end of a program year; these restrictive processes have the potential to encourage micromanagement and prevent the achievement of program objectives. (Government of Alberta, 3) In comparison, performance budgeting is more political in orientation: it connects plans, measures and budgets and pushes administrators and politicians to contemplate the big picture. (Brewer, 23) Performance budgeting provides useful information about the impact of budget decisions on people and gives departments greater budgetary flexibility. Furthermore, performance budgeting allows for continuous monitoring and strengthens decision-making and legislative oversight.