This article applies Punctuated Equilibrium Theory (PET) to analyze the dynamics of budget change in Latin America. Using functional data on central government expenditures from 14 countries over more than two decades, the study provides a descriptive assessment of whether annual budget changes follow the leptokurtic distribution predicted by PET—marked by stability interspersed with infrequent but large shifts. The methodological strategy combines descriptive statistics, formal tests of normality, and logistic regression models to examine both distributional patterns and the probability of punctuation. The findings provide robust empirical support for PET. Across all countries, budget changes deviate from a normal distribution, exhibiting high kurtosis and fat tails. Moreover, the likelihood of punctuation varies systematically across policy sectors and national contexts. Volatility is concentrated in areas such as housing and economic affairs, while functions like education and public safety are more stable. Countries with stronger institutional frameworks display lower punctuation frequencies, suggesting a link between budget dynamics and broader governance characteristics. By applying PET to a diverse set of Latin American cases, the study contributes to the global validation of policy process theories and highlights the framework’s flexibility in capturing fiscal dynamics under conditions of institutional heterogeneity and political complexity.