Capital Budgeting and Management Practices: Smoothing Out Rough Spots in Government Outlays

Public capital budgeting and management literature recommends long‐term capital and fiscal planning practices to prevent large fluctuations in outlays caused by fiscal stresses. This study extends the literature by examining the effects of long‐term capital planning and management practices such as the use of a capital budget, separate impact analyses, and the use of bond financing and dedicated revenue sources on capital spending volatility. The empirical results confirm that several of these practices smooth out state government capital outlays that vary because of socio‐economic and financial factors.     

State and local tax reform for the 1990s: Implications from Arizona

The state of Arizona recently established a temporary, blue-ribbon committee to evaluate the state's fiscal system and to recommend changes that would improve the system. The impetus for the committee was a series of budgetary difficulties in the 1980s that lawmakers hoped might be avoided in the future by implementing major structural changes suggested by a long-run analysis of the state's economy and taxes and expenditures. The findings and recommendations of the committee are relevant for states across the country. It is likely that many states will be faced with tough budgetary challenges in the decade of the 1990s because the states' revenue systems have not adapted to the changes in the level and nature of state spending responsibilities.     

Using Panel Data to Determine the Effect of the Americans with Disabilities Act on Per‐Student Public Education Expenditures at the State Level

The purpose of the present study is to determine whether passage of the American with Disabilities Act (ADA) in 1990 resulted in a statistically significant increase in per‐student public education expenditures at the state level. Although numerous studies have estimated educational cost functions, no prior study has examined the impact of the ADA on per capita education spending. The results of the present study are consistent with anecdotal evidence in that enactment of the ADA has had a positive effect on per‐student educational expenditures; this result suggests that legislative mandates may lead to increased government spending. In addition to the ADA, several of the leading determinants of per‐student education spending include population density, per capita income, percentage of the state that is over the age of 65, percentage of state's residents who have a four‐year college degree, percentage of state's residents who are homeowners, and total student population.     

State health reform: Effects on labor markets and economic activity

Individual states are actively weighing health care reform proposals and their potential impacts on many levels, including states' own economies. This article considers the effects on state economies of two instruments of health reform: employer mandates and cost containment. The literature suggests that an employer mandate will reduce employees' wages in the long run. In the short run, however, to compensate for the costs associated with mandated health care insurance for their employees, firms may raise their prices to consumers, reduce the number of employees or allow a drop in profit margins. By increasing health care spending and the number of insured persons, mandates would also increase states' levels of economic activity. Though cost containment may dampen the stimulative effects of expanded coverage, resources not spent on health care as a result of effective cost containment might be redistributed to other sectors in a state's economy.     

Does social spending add substance to formal rights?

This article examines the effects of social spending on political participation and various forms of collective action conditioned on a state's level of respect for empowerment rights. It brings the language of rights to the more well-developed comparative study of voter turnout. I theorize that a state which spends more on social initiatives drives down economic and social barriers between individuals and the polls or participating in collective action. This increases the substantive use of rights guaranteed formally by the state. I find that spending helps most where rights are already respected. I also find that spending can negatively impact participatory democracy where these rights are less well established. Ultimately, I conclude that institutional strength has a greater effect on the substantive use of rights than social spending.     

Terrorism and pork-barrel spending

The horrifying, tragic events of 9/11 made Americans aware of their vulnerability to terrorist attacks and triggered the creation of the Department of Homeland Security along with a substantial increase in federal spending to both thwart terrorist attacks and to increase our ability to respond to such emergencies. Much of this large increase in spending was in the form of direct transfers to states and cities through several grant programs. Homeland Security grants may be used for protection against terrorist activities, thereby enhancing public interests, or as wealth transfers to state and local governments, enhancing the reelection efforts of incumbents, and thus, private interests. Using 2004 per capita Homeland Security grant funding to states and their cities, we find that the funding formula used for some of the grant programs, which allocates almost 40% of the funds in some grant programs through a minimum percent to each state with the rest allocated based on population, means that per capita funding is related to electoral votes per capita, i.e., to the politics of Presidential re-election. However, the funding in other grant programs is also related to some of the dangers and vulnerabilities faced by states and their cities. Some of the variation in per capita grant allocations is also explained by the amount of airport traffic in the state and the state's population density, which are variables closely linked to the state's vulnerability to attack. Per capita Homeland Security grant allocations, however, do not seem to be related to the closeness of the 2000 presidential race.     

Road to Ruin? A Spatial Analysis of State Highway Spending

Do states engage in infrastructure expenditure competition to attract new economic activity? Economic theory is inconclusive on the matter. States might respond to increased infrastructure spending in competitor states by increasing their own infrastructure spending. Conversely, states may decrease spending in the presence of positive spillovers from competitor states' infrastructure investment. Using spatial econometric techniques and focusing specifically on highway spending, we demonstrate that states expend less on highways when spending in neighboring states increases. We explore this possibility further by modeling state personal income growth as a function of own‐state and neighbor‐state highway spending. Our findings suggest positive spillovers influence interstate relationships for highway spending rather than race‐to‐the‐top competition for economic activity.     

Economic Effects of State‐Level Tax and Expenditure Limitations

As a result of devolution, state governments have taken on greater responsibility for financing and providing public services. Increasingly, states have adopted state‐level tax and expenditure limitations (TELs) to manage the growth and size of state budgets. The adoption of TELs is supported by claims that they have a positive effect on state economies, although such claims lack empirical evidence and have been contested by several scholars. Despite the ongoing debate about validating the actual economic effects of state‐level TELs, there is a lack of empirical assessments of their effects. The empirical results of this article indicate that the presence of state‐level TELs has a negative effect on the level of employment but no effect on the state's personal income per capita. The presence of state‐level TELs has no effect on either the growth of personal income per capita or the growth of employment.     

Determinants of Pay‐as‐You‐Go Financing of Capital Projects: Evidence from the States

Although states have long practiced pay‐as‐you‐go in financing their capital projects as a supplement to debt, academia has paid scarce attention to pay‐go financing. This study fills in the niche by providing empirical evidence on what determines the use of pay‐go in financing capital projects. It develops a model that considers the preferences of both voters and politicians when they make capital financing decisions in a given institutional setting. The empirical results suggest that the use of pay‐go is affected by a state's income level, its economic conditions, the presence of a divided government, as well as its budgetary institutions.     

Intergovernmental Structure and Fiscal Management Strategies: A Crossnational Analysis

Does intergovernmental structure have a systematic effect on the impacts of local governments' fiscal policy responses? Using empirical data from more than 800 local governments in five countries, the article concludes that intergovernmental structure is associated with the impact attributed to various fiscal management strategies. Such strategies have generally had greater impact in local governments in federal systems than those in unitary state systems. There are similarities between federal and unitary local governments regarding the fiscal management strategies that have least impact, and both types stress the importance of productivity gains via technology. But the differences in relative importance and level of impact are more striking than the similarities. In particular, fiscal management strategies involving the relations of the local government with other governments, such as obtaining intergovernmental revenue and shifting service provision to other governments, have greater impact in significantly more federal systems than in unitary state systems. These federal local governments also experience greater impacts from increasing user charges and raising local taxes. In contrast, local governments in unitary state systems place greater reliance on the more politically expeditious strategy of across–the–board expenditure reductions and on reductions of capital spending. These findings suggest that local governments in more decentralized systems have greater flexibility to manipulate relations with other governments in order to enhance their own fiscal situation. The data also suggest that the government's level of fiscal stress is not systematically associated with the level of impact from most fiscal management strategies, especially in the unitary state systems.     

Defining Environmental Justice Communities for Regulatory Enforcement: Implications from a Block‐Group‐Level Analysis of New York State

The absence of a clear definition of environmental justice areas has been cited as one of the U.S. Environmental Protection Agency's major deficiencies in managing federal environmental justice programs. Several states have explicitly defined potential environmental justice areas and integrated targeted efforts into the policy‐making process. At the block‐group level, this study evaluates the effects of New York State's environmental justice policy, which defines communities of concern in terms of demographic and socioeconomic characteristics as well as mandates supplemental regulatory enforcement activities for these neighborhoods, on the agency's policy implementation practices under the Clean Air Act and Clean Water Act. The empirical findings suggest that there is inconclusive evidence regarding race/ethnicity‐ and class‐based environmental inequity. Also, the state's policy intervention is not universally effective. Moreover, task environments of a given community are a consistent determinant of the agency's regulatory compliance monitoring and assurance activities. This study then derives broader implications regarding the adoption of a policy instrument that defines and screens potential environmental justice communities.     

Japan and the Gulf crisis: Still searching for a role

Neither the major assumptions of developmental statist theories nor their revised arguments (e.g. network and internal organization theories) can persuasively elucidate the South Korean state's strong autonomy vis‐à‐vis the capitalist group in establishing and implementing economic/ industrial policies. A more relevant elucidation can be made by attending to the following three points: 1) one can more clearly show the former's autonomy in relation to the latter by examining discordant rather than amicable aspects of the relationship between them; 2) the strength of the East Asian state's autonomy lies not in its inherent, absolute cohesiveness but in its ‘political integrating power'; 3) in interpreting the state's strong autonomy vis‐à‐vis society, more research on political and administrative factors (rather than economic ones) need to be conducted. Also important are the behaviour of political and administrative agents who operate institutions and various interactions among them. To enforce these points, this article analyzes the political aspects of the state‐capital relationship while the South Korean government established anti‐chaebôl policies to restrict economic concentration via big businesses.     

The Rationality Crisis in US Higher Education

Over the course of the last century, many of the stresses and contradictions of advanced capitalism have been displaced onto colleges and universities, which are now directly attached to the state—whether legally, politically, or financially—as an important component of the ideological and economic state apparatuses. As a component of the ideological and economic state apparatuses, the university is implicated in the state's ongoing fiscal crisis as both a cause of the crisis and a solution to the crisis. The author argues that the possibilities for crisis management within the existing corporate model of higher education have been exhausted in a rationality crisis that threatens to implode the administrative apparatus in higher education. The author calls for a radical reconstruction of power relationships within the university and in its relationships to capital and the state.     

State strategies for welfare reform: The Wisconsin story

Wisconsin is commonly cited as exemplar of the capability of states for reforming welfare. Wisconsin's welfare and caseload declined 22.5 percent between 1986 and 1994. I argue that the decline resulted from restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utilization by means other than denying access are jeopardized by proposed changes in federal cost-sharing, a prospective state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. Wisconsin Works, the state's plan for public assistance in a post-block grant world, continues benefit reduction and eligibility restriction but expands emphasis on employment. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere.     

Austerity Policies,the UK State and the Energy Utilities: a Changing Paradigm or Business as Usual?

In 2008, the economic downturn coincided with a major shift in the energy sector paradigm. This state of emergency forced the UK government to try to steer the objectives of its major energy players. This crisis put the UK state's capacity to influence its mostly privately‐owned energy sector to the test. Using the example of energy utilities, this article aims to explore whether the austerity agenda impacted the relationship between the UK state and its public services. The purpose is to determine whether current multiple crises have forced the UK state to adopt an exceptionally interventionist approach that doesn't tally with the austerity agenda, or whether these crises merely revealed dynamics which had been underlying in the management of its energy utilities since the beginning of the neo‐liberal era.     

Has the Shift to Managed Care Reduced Medicaid Expenditures? Evidence from State and Local‐Level Mandates

From 1991 to 2009, the fraction of Medicaid recipients enrolled in HMOs and other forms of Medicaid managed care (MMC) increased from 11 percent to 71 percent. This increase was largely driven by state and local mandates that required most Medicaid recipients to enroll in an MMC plan. Theoretically, it is ambiguous whether the shift from fee‐for‐service into managed care would lead to an increase or a reduction in Medicaid spending. This paper investigates this effect using a data set on state‐ and local‐level MMC mandates and detailed data from the Centers for Medicare and Medicaid Services (CMS) on state Medicaid expenditures. The findings suggest that shifting Medicaid recipients from fee‐for‐service into MMC did not on average reduce Medicaid spending. If anything, our results suggest that the shift to MMC increased Medicaid spending and that this effect was especially present for risk‐based HMOs. However, the effects of the shift to MMC on Medicaid spending varied significantly across states as a function of the generosity of the state's baseline Medicaid provider reimbursement rates.     

State Tax and Expenditure Limitations,Business Climate,and Economic Performance

The influence of state‐level tax and expenditure limitations on economic performance within the framework of the state's business climate is examined using a family of parametric and nonparametric tests of subsample equivalency. An index of tax and expenditure limitation strength or restrictiveness developed by Poulson is used to test for patterns in 84 separate measures of economic performance, business vitality, and development capacity. In general, we find no evidence that tax and expenditure limitations are associated with higher levels of economic performance or business climate. There is limited evidence that tax and expenditure limitations are associated with a poorer business climate and lower economic performance in some cases.     

Easy Money: Tax Exporting and State Support for Higher Education

There is a substantial literature that assesses the effects of tax‐exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state‐level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need‐ and non‐need‐based aid awarded to in‐state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax‐exporting capacities exert upward pressure on voter demand for state appropriations to public universities.     

Structure of State‐Level Tax and Expenditure Limits

While much consideration has been given to the approval process, base classification, and codification of tax and expenditure limits (or TELs), these factors tell us nothing about how they actually work. This study focuses exclusively on the technical elements of these limits and finds how states estimate their limits have over time eroded their potency. More specifically, if a state resets or rebases its limit annually by using actual revenues or expenditures for the preceding year, the limit will trend closely with actual revenues or expenditures, effectively restricting growth in spending as prescribed by law. However, if the law requires a state to estimate its limit using the appropriation limit for the preceding year instead of actual revenues or expenditures, that is, without rebasing, the limit will reflect cumulative changes to the base when it was first approved. Over time, the TEL cap is significantly above the states revenues or expenditures as it remains unaffected by the state's underlying fiscal and economic environment.     

A Framework for Understanding State Balanced Budget Requirement Systems: Reexamining Distinctive Features and an Operational Definition

Studies of state fiscal and budgetary policies often use balanced budget requirements (BBRs) as explanatory variables. While current measures laid the crucial groundwork for a basic understanding of state BBRs, their lack of comprehensiveness threatens the validity of empirical work. Based on comprehensive legal research, this article offers a framework for analyzing state requirements: each state's BBRs form a coherent system for achieving budget balance through budget cycles; a fully developed BBR system offers a three‐line construct against imbalance; and the more complete, developed, and explicit a BBR system is, the more stringent it will be in achieving budgetary balance.