Budget preparation and execution in individual governments, and within the public sector in general, is both empirically driven and influenced by political and social variables, including significant market factors. Market and social forces tend to be the most disruptive when preparing and executing budgets in governments. Effective resource allocation and program implementation require a significant amount of budgeting policy making variability and flexibility to sufficiently respond to dynamic market and social forces. More specifically, government budgeting success depends on how sensitive the estimates and assumptions are to changing market and social circumstances. Flexible budgeting can provide the ability to minimize the effect of shortfalls due to deviations from revenue forecasts resulting from severe market disruption. The ability to adjust to both sudden occurrences and large shortfalls is very important to both policy makers and practitioners. In short, local governments must engage in flexible budgeting.