Participatory budgeting (PB) is a process of democratic deliberation and decision-making, and a type of participatory democracy, in which ordinary people decide how to allocate part of a municipal or public budget. Participatory budgeting allows citizens to identify, discuss, and prioritize public spending projects, and gives them the power to make real decisions about how money is spent. When PB is taken seriously and is based on mutual trust local governments and citizen can benefit equally. In some cases PB even raised people's willingness to pay taxes.
Participatory budgeting generally involves several basic steps: 1) Community members identify spending priorities and select budget delegates 2) Budget delegates develop specific spending proposals, with help from experts 3) Community members vote on which proposals to fund 4) The city or institution implements the top proposals
A comprehensive case study of eight municipalities in Brazil analyzing the successes and failures of participatory budgeting has suggested that it often results in more equitable public spending, greater government transparency and accountability, increased levels of public participation (especially by marginalized or poorer residents), and democratic and citizenship learning.
The first full participatory budgeting process was developed in the city of Porto Alegre, Brazil, starting in 1989. Participatory budgeting was part of a number of innovative reform programs started in 1989 to overcome severe inequality in living standards amongst city residents. One third of the city’s residents lived in isolated slums at the city outskirts, lacking access to public amenities (water, sanitation, health care facilities, and schools).
Participatory budgeting in Porto Alegre occurs annually, starting with a series of neighborhood, regional, and citywide assemblies, where residents and elected budget delegates identify spending priorities and vote on which priorities to implement. Porto Alegre spends about 200 million dollars per year on construction and services, this money is subject to participatory budgeting. Annual spending on fixed expenses, such as debt service and pensions, is not subject to public participation. Around fifty thousand residents of Porto Alegre now take part in the participatory budgeting process (compared to 1.5 million city inhabitants), with the number of participants growing year on year since 1989. Participants are from diverse economic and political backgrounds.
The participatory budgeting cycle starts in January and assemblies across the city facilitate maximum participation and interaction. Each February there is instruction from city specialists in technical and system aspects of city budgeting. In March there are plenary assemblies in each of the city's 16 districts as well as assemblies dealing with such areas as transportation, health, education, sports, and economic development. These large meetings—with participation that can reach over 1,000—elect delegates to represent specific neighborhoods. The mayor and staff attend to respond to citizen concerns. In the following months, delegates meet weekly or biweekly in each district to review technical project criteria and district needs. City department staff may participate according to their area of expertise. At a second regional plenary, regional delegates prioritize the district's demands and elect 42 councillors representing all districts and thematic areas to serve on the Municipal Council of the Budget. The main function of the Municipal Council of the Budget is to reconcile the demands of each district with available resources, and to propose and approve an overall municipal budget. The resulting budget is binding, though the city council can suggest, but not require changes. Only the Mayor may veto the budget, or remand it back to the Municipal Council of the Budget (this has never happened).
A World Bank paper suggests that participatory budgeting has led to direct improvements in facilities in Porto Alegre. For example, sewer and water connections increased from 75% of households in 1988 to 98% in 1997. The number of schools quadrupled since 1986.
The high number of participants, after more than a decade, suggests that participatory budgeting encourages increasing citizen involvement, according to the paper. Also, Porto Alegre’s health and education budget increased from 13% (1985) to almost 40% (1996), and the share of the participatory budget in the total budget increased from 17% (1992) to 21% (1999).
The paper concludes that participatory budgeting can lead to improved conditions for the poor. Although it cannot overcome wider problems such as unemployment, it leads to "noticeable improvement in the accessibility and quality of various public welfare amenities".
Based on Porto Alegre more than 140 (about 2.5%) of the 5,571 municipalities in Brazil have adopted participatory budgeting.
Implementation around the world
Since its emergence in Porto Alegre, participatory budgeting has spread to hundreds of Latin American cities, and dozens of cities in Europe, Asia, Africa, and North America. More than 1500 municipalities are estimated to have initiated participatory budgeting. In some cities, participatory budgeting has been applied for school, university, and public housing budgets. These international approaches differ significantly, and they are shaped as much by their local contexts as by the Porto Alegre model.
The Dominican Republic has implemented participatory budgeting in all local governments, and a number of towns and cities in France, Italy, Germany, and Spain have also initiated participatory budgeting processes. In Canada, participatory budgeting has been implemented with public housing, neighbourhood groups, and a public schools, in the cities of Toronto, Guelph, Hamilton, and West Vancouver. In India, a village called Hiware Bazar has served as an epitome of the process. The village, once bereft of water, education, and basic needs for life, is now self-sufficient with a high per capita income. Arvind Kejriwal, the national conveyor of Aam Aadmi Party is trying to introduce the concept of participatory budgeting (swaraj) in the whole country. Similar budget processes have been used in communities in Africa. In France, the Region Poitou-Charentes has launched an experience of participatory budgeting in its secondary schools.
The first recorded Participatory Budgeting process in the United States of America is in Chicago, Illinois. Led by the ward's Alderman, Joe Moore, Chicago's 49th Ward is undertaking this process  with the Alderman's "Menu Money." Menu Money is a yearly budgeted amount each of Chicago's 50 wards receives for use on capital expenses. This money in other wards is typically allocated at the complete discretion of a ward's Alderman. Since 2011 more examples have been occurring in the U.S., in New York City, and now in city wide in Vallejo, California.
Forms of participatory budgeting have also been trialed in the UK over many years, mostly with smaller sums than in other countries, though on occasion these have reached in the millions. For information on PB in the UK see the PBNetwork 
Reviewing the experience in Brazil and Porto Alegre a World Bank paper points out that lack of representation of extremely poor people in participatory budgeting can be a shortcoming. Participation of the very poor and of the young is highlighted as a challenge. Participatory budgeting may also struggle to overcome existing clientelism. Other observations include that particular groups are less likely to participate once their demands have been met and that slow progress of public works can frustrate participants.
- Participatory economics
- Participatory planning
- Participatory justice
- Programme budgeting
- Public participation
- Tax choice
- Eva-Maria Verfürth, Giovanni Allegretti (February 2013). "More generous than you might think". dandc.eu.
- "Participatory Budgeting in Brazil". psupress.org.
- "Porto Alegre's Budget Of, By, and For the People by David Lewit — YES! Magazine". YES! Magazine.
- "Where Has it Worked?". The Participatory Budgeting Project.
- "History". The Participatory Budgeting Project.
- "Participatory Budgeting – Working together, making a difference · Toronto Community Housing". torontohousing.ca.
- "SWARAJ". google.com.
- "Goal of Swaraj". Aam Aadmi Party.
- "Chicago’s $1.3 Million Experiment in Democracy". The Permaculture Research Institute.
- YES Magazine, 2010 Apr. 10, "Chicago’s $1.3 Million Experiment in Democracy; For the First Time in the U.S., the City’s 49th Ward Lets Taxpayers Directly Decide How Public Money is Spent," http://www.yesmagazine.org/people-power/chicagos-1.3-million-experiment-in-democracy
- "Participatory budgeting in Chicago's 49th Ward". Retrieved April 20, 2015.
- "Participatory budgeting in New York City". Retrieved April 20, 2015.
- "Participatory budgeting city wide in Vallejo, CA.". Retrieved April 20, 2015.
- "PB Network in the UK". Retrieved April 20, 2015.
- Map (non-exhaustive) of participatory budgeting initiatives around the world
- The Participatory Budgeting Project - a non-profit organization that supports participatory budgeting in North America and hosts an international resource site.
- www.pbnetwork.org.uk - information on participatory budgeting in the UK
- Case study on the Electronic Participatory Budgeting of the city of Belo Horizonte (Brazil)
- Study with cases of Participatory Budgeting experiences in OECD countries
- www.citymayors.com - PB in Brazil
- PB in Rosario, Argentina Official Site of PB in Rosario, Argentina (Spanish).
- www.chs.ubc.ca/participatory - links to participatory budgeting articles and resources
- http://fcis.oise.utoronto.ca/~daniel_schugurensky/lclp/poa_vl.html - links to participatory budgeting articles and resources
- Participatory Budgeting Google Group - participatory budgeting listserv
- www.nuovomunicipio.org - Rete del Nuovo Municipio, the Italian project linking Local Authorities, scientists and local committees for promoting Participatory Democracy and Active Citizenship mainly by way of PB
- "Experimentos democráticos. Asambleas barriales y Presupuesto Participativo en Rosario, 2002-2005" - Doctoral Dissertation of Alberto Ford on Participatory Budgeting in Rosario, Argentina (Spanish).
-  - "More generous than you would think": Giovanni Allegretti shares insight of PB in an interviews with D+C/E+Z's Eva-Maria Verfürth