Fiscal Reaction to State Aid Uncertainties: Evidence from New York State

Late budgets have become increasingly present across the states and especially persistent in states such as New York and California. The combination of delayed states budgets and institutional constraints may trigger specific budgetary strategies. Uncertainty over state aid may lead school districts to over‐ or underestimate school budgets, which ultimately may have an effect on real property taxes and the amount of education consumed. Evidence from New York State school districts suggests that school districts react to uncertainty in the state budget through a combination of revenue, expenditure, and fund balance changes. The findings suggest that districts engage in “gaming” the institutional constraints, and tend to build up large fund balances as a response to perceived uncertainty.     

The effects of party competition on budget outcomes: Empirical evidence from local governments in Spain

This paper investigates the link between local budget outcomes and the intensity of party competition, measured as the margin of victory obtained by the incumbent in the previous local election (i.e. the difference between the vote share and 50%). Two competing hypotheses are tested in the paper. On the one hand, the Leviathan government hypothesis suggests that the lower the intensity of party competition is, the greater is the increase in the size of the local public sector, irrespective of the ideology of the party in power. On the other hand, the Partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low (i.e., parties on the left/right will increase/decrease the size of the local public sector when the intensity of the challenge from the opposition is low). These hypotheses are tested with information on spending, own revenues and deficit for more than 500 Spanish local governments over 8 years (1992–1999), and information on the results of two local electoral contests (1991 and 1995). The evidence favors the Partisan hypothesis over the Leviathan one. We found that, for left-wing governments, spending, taxes and deficits increased as the electoral margin increases; whereas, for right-wing governments, a greater margin of victory led to reductions in all these variables.     

Fiscal consequences of public corruption: Empirical evidence from state bond ratings

Empirical analyses of public corruption focus predominantly on international differences; regional differences in public corruption within a single country receive little attention. We empirically investigate the effect of public corruption in the United States on state bond ratings, which previous research shows are inversely related to net interest costs on public debt. After controlling for various economic influences on bond ratings, we find that more corrupt states have lower bond ratings, which implies that taxpayers in more corrupt states face a negative pecuniary externality by paying a premium for debt.     

Distribution of transfers and soft budget spending behaviors: evidence from Italian regions

This paper examines empirically the strategic interactions among central and subcentral governments when incomplete information forces the subcentral government to form expectations about the amount of transfers that it will receive from the central one. The empirical analysis features a wide array of proxies for transfer expectations and uses an autoregressive modeling technique to estimate them on a sample of 20 Italian Regions for the 1995–2009 time interval. The analysis shows that transfer expectations are a quantitatively important component of local government spending, revealing evidence of soft budget spending behavior.     

New evidence on the soft budget constraint: Chinese environmental policy effectiveness in SOE-dominated cities

Public Choice - This paper analyzes the efficiency of a set of environmental measures introduced by China’s 11th Five-Year Plan in 2006, using a rich and unique data set assembled from the...     

Conditional political budget cycles: a review of recent evidence

Until recently, most research on political budget cycles was based on the (often implicit) presumption that these cycles do not differ across countries. However, more recent studies focus on heterogeneity. This paper surveys studies examining the factors conditioning the occurrence and strength of manipulation of fiscal policy for electoral purposes, at the aggregate level or at the level of a particular type of government expenditure. Conditioning factors discussed include: the level of development, institutional quality, age and level of democracy, electoral rules and form of government, transparency of the political process, the presence of checks and balances, and fiscal rules.     

Emotions and voting behavior in self-determination referendums: the case of New Caledonia in 2018

In this article we examine the impact of emotions in an independence referendum. New Caledonia – a French Pacific territory with 270,000 inhabitants – held a self-determination referendum in November 2018, in which 56% of the voters opted to remain a part of France. We conducted a post-referendum survey with 1496 respondents that included a specific battery to measure emotions as well as control variables. We find that experiencing anger with the national status of the territory increases the probability of voting for independence, while experiencing pride reduces it. These results remain after controlling for partisan, ethnic and national identification, expected effects of independence as well as sociodemographic factors. Moreover, emotions and identity interact and increase the effect of (the lack of) national identification. Beyond the effects of the traditional control variables, the results suggest that knowledge about voting behavior in independence referendums is transferable to decolonization in Pacific Islands.     

The equity effects of state school finance reforms: A methodological critique and new evidence

Since 1970, over half the states have reformed their school finance systems with improvement in equity of revenue and resource distributions as one of the stated goals. While numerous studies evaluating the equity effects of these often expensive reforms have been undertaken, there remains much disagreement about how to assess the reforms' impacts. In this article, we address the problems of measuring equity effects with an emphasis on the need for multiple definitions and an understanding of the value judgments inherent in all measures of equity. Next, three methodologies that have been used to assess the equity impacts of school finance reform are critiqued. Finally, in an effort to correct shortcomings of each, a fourth methodology is developed and new empirical evidence on the effects of reform based on that methodology are presented. The article concludes with observations about the importance of the choice of a methodology with which to evaluate complex policy changes that involve value judgments about what is fair, just, and equitable.The authors contributed equally to this article, but for reasons of equity, the names are not listed alphabetically. The research was supported by funds from the Ford Foundation. We would like to thank James Knickman, Richard Schramm and two anonymous referees for comments provided on an earlier draft of the article, Chris Hakusa for computer assistance, and Karen Gruhn for research and secretarial assistance.     

New York city and subsidized housing: Impacts and lessons of the city's $5 billion capital budget housing plan

Abstract

New York City has devoted far more resources to the development and rehabilitation of affordable housing than any other U.S. city, investing more than $4 billion from 1986 to 1997. This article surveys the impact, status, and implications of New York's housing programs. It looks at correlations between publicly funded housing starts and changes in the housing stock, welfare rolls, and crime and at the economic impact of the city's housing investments within low‐income neighborhoods.

New York's housing programs have transformed neighborhoods, replacing large swaths of abandoned shells and vacant land with new housing and preserving thousands of buildings at risk of abandonment. While these housing investments correlate most strongly with reductions in vacant units and vacant lots, they also show significant correlations with reductions in welfare rolls and violent crime, but uneven economic impacts as well. New York's housing programs are important nationally less for the specifics of particular programs than for the institutional collaborations on which they are founded.     

Fiscal Capacity, Fiscal Need, and Fiscal Comfort among U.S. States: New Evidence

During its lifetime, the U.S. Advisory Commission on IntergovernmentalRelations periodically published estimates of each state's relativefiscal capacity. This research note provides new estimates updatedto fiscal year 1994, the latest year for which all requisiteunderlying data are available. We find that dispersion in capacitynarrowed from 1987 to 1994, largely because the capacities ofCalifornia and the Northeast states, historically enjoying amplecapacity, fell relative to the national average. We also findthat these states generally experienced an increase in relativefiscal need, further narrowing interstate dispersion in fiscalcomfort (capacity relative to need). We conclude with evidencesuggesting that states with low fiscal comfort generally preferrelatively low levels of state and local public services.     

The Political Consequences of Policing: Evidence from New York City

Political Behavior - This paper explores the effect that municipal policing can exert on politics, and specifically investigates the effect that Stop, Question, and Frisk (SQF) policing has had on...     

The estimated cost impact of privatizing student transportation in Minnesota school districts

Student transportation makes up a substantial portion of a typical school district??s operating budget, and sub-contracting bus service to private firms has been advanced by some as a way to reduce transportation costs. Previous studies have found conflicting evidence regarding the cost impact of privatization. This paper seeks to improve on previous studies by estimating cost equations using data that spans six school-years. The primary result is that privatization acts to substantially increase transportation costs. Estimates using a pooled cross section predicted that going from fully outsourced to fully in house reduced costs by approximately 15.8%, while the analogous estimate using a first-differenced equation was a savings of 20.7%.     

Fragmented Government Effects on Fiscal Policy: New Evidence

Using a panel of 22 OECD countries over the 1971–1996period, this paper extends previous literature on the effectsof fragmented government on fiscal policy outcomes in variousdirections. First, we focus on data relating to centralgovernment as alltheories refer to central government. Second, we also examinegovernment's position vis-à-vis parliament andgovernment's political fragmentation. We find evidence thatmore fragmented governmentshave higher deficits, while governments that have a largemajority in parliament have lower deficits. Right-winggovernments appear to have been fiscally more responsible inthe seventies. Political fragmentation does not affect agovernment's budget deficit.     

Fiscal illusion at the local level: Empirical evidence for the Flemish municipalities

Fiscal illusion refers to a systematically biased perception of fiscal parameters, due to demand-side error/ignorance or supply-side abusive behaviour. As such it is a component of a more general tax choice framework. This paper focuses predominantly on the empirical estimation of the four major sources of fiscal illusion, namely the flypaper effect, renter illusion and the complexity and elasticity of tax systems. The results — based on a dataset of 302 Flemish municipalities — on balance suggest the existence of important illusionary effects.     

Does whole‐school reform boost student performance? The case of New York City

Thousands of schools around the country have implemented whole‐school reform programs to boost student performance. This paper uses quasi‐experimental methods to estimate the impact of whole‐school reform on students' reading performance in New York City, where various reform programs were adopted in dozens of troubled elementary schools in the mid‐1990s. This paper complements studies based on random assignment by examining a broad‐based reform effort and explicitly accounting for implementation quality. Two popular reform programs—the School Development Program and Success for All—were not found to significantly increase reading scores but might have been if they had been fully implemented. The More Effective Schools program was found to boost reading scores, but this effect seems to disappear when the program “trainers” leave the school. © 2005 by the Association for Public Policy Analysis and Management.     

Home rule and municipal revenue stability: New evidence from Texas

Scholars have long debated whether home rule powers help improve municipal financial well-being; however, a consensus has yet to be reached. This study advances the home rule literature by causally estimating the impact of home rule in Texas on municipal revenue stability. To accomplish this, we employed a difference-in-differences estimator coupled with event-study specifications on a 40-year-long panel data set. This approach revealed strong empirical evidence that cities adopting a home rule charter had a significant reduction in the probability of experiencing revenue decline. This finding remained robust with multiple measures of revenue change, an alternative sample, and different model specifications. Moreover, we found that home rule cities’ revenue stability was likely to come from their increase in property taxes.