ZERO-BASED BUDGETING (ZBB) IS A WAY OF CONSIDERING ORGANIZATIONAL GOALS, ACTIVITIES, AND RESOURCES IN TERMS OF PRIORITIES. THE PROCESS USUALLY INVOLVES THE FOLLOWING STEPS: (1) CLARIFICATION OF ORGANIZATIONAL GOALS AND OBJECTIVES; (2) EXAMINATION OF EXISTING STRUCTURE, FUNCTIONS, AND ACTIVITIES; (3) IDENTIFICATION OF DECISION UNITS; (4) DEVELOPMENT OF DECISION PACKAGES; (5) REVIEW AND RANKING OF DECISON PACKAGES; AND (6) PREPARATION OF A BUDGET. THE EXPERIENCES OF THE STATES OF NEW JERSEY (DEPARTMENT OF COMMUNITY AFFAIRS), ILLINOIS (DEPARTMENT OF CORRECTIONS), SOUTH DAKOTA, NEW MEXICO, AND GEORGIA ARE PRESENTED. LOCAL ZBB IS EXAMINED FOR NEW ORLEANS, GARLAND, TEX., AND WILMINGTON, DEL. THE CASES PRESENTED, AS WELL AS OTHER STUDIES OF SIMILAR EFFORTS, INDICATE THAT ZERO-BASE BUDGETING CAN BE A USEFUL AND WORKABLE BUDGETING SYSTEM IN STATE AND LOCAL GOVERNMENT. WHILE IT IS NO MAGICAL SOLUTION TO ALL FINANCIAL PROBLEMS, IT SERVES IN REDIRECTING INCREASINGLY SCARCE RESOURCES TO THE MOST NEEDED AND PRODUCTIVE PROGRAMS. IT CAN WORK AS A STRUCTURE FOR DECISIONMAKING IF IT IS INTEGRATED WITH THE ORGANIZATIONAL AND MANAGERIAL ENVIRONMENT OF EACH PARTICULAR AGENCY. ZBB HAS BEEN CRITICIZED FOR THE AMOUNT OF TIME IT REQUIRES AND THE AMOUNT OF PAPERWORK IT GENERATES. ZBB HAS BEEN ADOPTED FOR MANY REASONS: REDUCING BUDGETS, REALLOCATING PROGRAMS, IMPROVING TOP MANAGEMENT'S UNDERSTANDING OF PROGRAMS AND POLICIES, ENHANCING MANAGEMENT CAPACITY AND TEAM WORK, AND MONITORING PERFORMANCE; THEREFORE, NO ONE SET OF CRITERIA CAN BE USED TO EVALUATE IT. IN THE END, DECIDING WHETHER TO IMPLEMENT ZBB IS A SUBJECTIVE JUDGMENT. EACH JURISDICTION WILL HAVE TO WEIGH THE PROS AND CONS FOR ITS PARTICULAR SITUATION AND THEN MAKE THE DECISION. TABULAR AND GRAPHIC DATA AND NOTES ARE PROVIDED. (RCB)