Debt and Deception: How States Avoid Making Hard Fiscal Decisions

Government borrowing occurs whenever the government forgoes control over some future flow of resources or benefits in order to acquire resources for current use. Based on this definition, the authors identify several ways that state governments borrow, which include widely recognized forms of debt as well as types of actions that are less transparent. Case studies for Connecticut, Illinois, and New York document the large amounts of future commitments that these states have taken on to cover operating deficits over the last decade. The authors conclude by evaluating the usefulness of current financial statements for assessing the amount of borrowing that states have done to support current services and suggest areas for which additional information is needed.     

When States Discriminate: The Non-uniform Tax Treatment of Municipal Bond Interest

There is a long history of states using tax systems to encourage residents to invest in bonds issued by jurisdictions within their state. This preferential or discriminatory tax treatment was ruled unconstitutional in 2006 by the Kentucky Court of Appeals. The Kentucky court decision, which sets the stage for this essay, was overturned by the U.S. Supreme Court in 2008. This essay addresses the possible implications of this and similar discriminatory tax policies. Such discriminatory policies are the foundation of the municipal bond market, and altering the practice would have significant implications for revenue collections and borrowing costs in most states and localities. While the Supreme Court's position has been rendered, the case has caused policy makers and administrators to scrutinize discriminatory tax policies and their impact on budgets and borrowing costs.     

Two Steps Forward, One Step Back: The Family and Medical Leave Act as Retrenchment Policy

abstract This article discusses recent efforts by states to adopt paid family leave since the original passage of the Family and Medical Leave Act in 1993. In proposing their legislation, 21 of 26 states dropped the family component of the original law and, instead, reduced coverage to baby care or parental leave. I explore the potential policy implications of what appears to be a retrenchment of the FMLA, as it shifts from an emphasis on family (including care of elderly parents) to parental (baby care only). This discussion is particularly important in light of a growing aging population that will demand greater assistance from family caregivers who will most likely be in the workforce and in need of benefits such as family leave.     

THE ROLE OF STATE ECONOMIC DEVELOPMENT PROGRAMS IN NATIONAL INDUSTRY POLICY

A decade of economic stagnation has produced a plethora of calls for government action to stimulate economic growth in employment. Arguing that activists federal industry policy is likely not to emerge in the United States, Rasmussen and Ledebur examine the potential role of states in a "federalist industry policy." States presently administer effective programs of financial assistance to business enterprises. These efforts are "rationally parochial" in that their purpose is served equally well by cresting a new job or pirating from other jurisdictions. This paper considers how state programs can be reoriented to serve national growth and development objectives as well as those of specific jurisdictions. It concludes that a subnational industry policy offers a unique opportunity to reallocate existing state resources to achieve a much higher social return.     

Into the Words: Using Statutory Text to Explore the Impact of Federal Courts on State Policy Diffusion

I examine the impact federal appellate courts have on state policy diffusion through the use of computational text analysis. Using a dyadic framework, I model the impact courts have on the decision to adopt a policy and, if adopted, how much text to borrow directly from another state's preexisting law. A court decision ruling a statute unconstitutional can generate up to a 28% relative reduction in the probability of adoption, and a ruling of constitutionality can both increase the probability of adoption by a similar amount and more than double the amount of borrowed text. These findings shed light on how states learn from one another.     

State-Federal Diffusion and Policy Learning: From Enterprise Zones to Empowerment Zones

There is little empirical evidence on whether the federal governmentlearns from policy experimentation in the states, the "laboratoriesof democracy. " Interviews with participants involved in formulatingthe federal Empowerment Zones/Enterprise Communities programoffer evidence of limited policy learning from state enterprisezones. Respondents were aware of general trends and drew a fewgeneral conclusions, rather than borrowing from any particularstate. None of the federal policymakers conducted an activesearch for information about the state zones, but state andfederal organizations served as channels of information aboutthe state programs. This finding suggests that such organizationsassist state-federal diffusion as well as interstate diffusionof policy ideas.     

The limits of tax and expenditure limits: TEL implementation as a principal-agent problem

Previous scholarship has shown that Tax and Expenditure Limits (TELs) often fail to constrain government growth. This paper views the implementation of TELs as a principal-agent problem. Agency theory predicts that delegation is affected by the preferences of agents and the costs of monitoring those agents. Using panel data for the US states from 1970 through 2008, I conduct an empirical test of the validity of the principal-agent model for TELs. I find that state spending limitations are only effective at cutting the growth of state and local spending under the direction of agents who have a preference for limited government. Additionally, state property tax limitations are only effective when monitoring does not require costly coordinated action. These findings contradict an alternative theory of TEL implementation that looks towards the policy’s origin. My research suggests that the arrangements of delegation determine when and under what conditions TELs effectively reduce government growth.     

Interstate tax competition after TRA86

When a governor announces that a tax increase is necessary, how do voters decide whether the governor is representing the situation honestly, or just preparing to line his or her pockets? This paper presents evidence that voters may look at the tax increases in neighboring states to obtain information on whether a tax increase is appropriate and, using this information, decide whether to reelect their governor. The data suggest that comparisons with neighbors influence gubernatorial behavior: Governors are more likely to raise taxes when neighbors are doing the same. TRA86 allows us an extra check on the rnodelpresented: I f the marginal dollar taken in state taxes is more costly to state residents, this may increase the extent to which residents use information provided through neighboring states to sort good governors from bad.     

The Effect of Political Competition on Democratic Accountability

Representing uncompetitive, homogeneous constituencies is increasingly the norm for American legislators. Extensive research has investigated how competition affects the way representatives respond to their constituents’ policy preferences. This paper explores competition’s effect on the other side of representation, how constituents respond to their legislators’ policy record. Combining multiple measures of state competitiveness with large-N survey data, I demonstrate that competition enhances democratic accountability. Voters in competitive states are more interested in politics, more aware of the policy positions their U.S. senators have taken, and more likely to hold them accountable for those positions at election time. Robustness checks show that these effects are not due to the intensity of campaigning in a state: general competition, not particular campaign activities, drives citizens’ response. The recent increase in uncompetitive constituencies has likely lessened the degree to which legislators are held accountable for their actions in office.     

State Renewable Energy Governance: Policy Instruments,Markets, or Citizens

Since the 1990s, state governments in the United States have diversified policy instruments to encourage the electric power industry to deploy renewable sources for electricity generation. This study identifies the trends and variations in renewable energy (RE) policy governance among states and examines the effectiveness of policy instruments in the deployment of RE sources for electricity production. This study explores 18 state legislative, RE‐related regulations, programs, or financial incentives existing between 2001 and 2010 in 48 states in the United States. Renewable energy policies were classified into three types of policy approaches: command‐and‐control, market‐based, and information instruments. Results suggest that authoritative approaches are more likely to be effective in the governmental intervention toward a pre‐existing market, and information instruments and citizen participation became important in the power industry in the 2000s. In addition, it gives us some evidence that federal assistance under the American Recovery and Reinvestment Act of 2009 influenced the overall growth of the renewable electricity industry, in addition to state government–led policy designs.     

States of Environmental Justice: Redistributive Politics across the United States, 1993–2004

In the 20 years since a president committed federal government agencies to achieving environmental justice (EJ), states have been at the forefront of policy development. But states have varied in the nature and extent of their EJ efforts. We use Guttman Scaling to measure state EJ effort and test hypotheses regarding the relative importance of problem severity, politics, and administrative variables to variation in state policy development. Our analysis offers a novel characterization of state policy intensity and demonstrates its scalability. Income‐based problem severity, environmental group membership, and nonwhite populations were important predictors of state EJ policy intensity during our study period. The political geography of EJ policy also displayed a distinctive southern pattern and the EJ policy intensity model contrasted significantly with a model of environmental policy innovation. The findings suggest that state EJ politics are more indicative of redistributive policy than regulatory.     

Designing state aid formulas

This paper designs a new equalization‐aid formula based on fiscal gaps of local communities. When states are in transition to a new local aid formula, the issue of whether and how to hold existing aid harmless poses a challenge. The authors show that some previous studies and the formulas derived from them give differential weights to existing and new aid in filling the gap and hence effectively treat communities receiving greater amounts of existing aid more favorably than communities receiving less or no existing aid. As a fairer alternative, the authors propose a new approach that considers existing and new aid as completely equivalent in filling the gap by focusing on the equalizing impact of combined (new and existing) aid. In addition, unlike most previous research that focuses only on a single year's new aid distribution, the authors simulate the dynamics of aid distributions over multiple years using Massachusetts data. They further provide and compare several possible methods by which state policymakers could direct extra aid dollars to communities with larger unfilled gaps in dollar terms. Although the proposed aid formula is designed for municipal aid and tailored to Massachusetts, the authors note that foundation aid formulas for education implicitly treat existing aid in the same way and suggest that the framework, principles, and policy recommendations might also be applicable to other states. © 2009 by the Association for Public Policy Analysis and Management.     

The Dynamics of State Policy Liberalism, 1936–2014

Applying a dynamic latent‐variable model to data on 148 policies collected over eight decades (1936–2014), we produce the first yearly measure of the policy liberalism of U.S. states. Our dynamic measure of state policy liberalism marks an important advance over existing measures, almost all of which are purely cross‐sectional and thus cannot be used to study policy change. We find that, in the aggregate, the policy liberalism of U.S. states steadily increased between the 1930s and 1970s and then largely plateaued. The policy liberalism of most states has remained stable in relative terms, though several states have shifted considerably over time. We also find surprisingly little evidence of multidimensionality in state policy outputs. Our new estimates of state policy liberalism have broad application to the study of political development, representation, accountability, and other important issues in political science.     

The Use of Executive Guidance in State Budget Preparation

The method by which a state budget is developed is critical to the policy-making process. A longitudinal study of states finds an increasing use of budget guidance techniques that control how agencies may propose policy changes and request funds to support those changes. The article examines whether the use of budget guidance is associated with several factors, including regions of the United States, state socio-economic characteristics, state government characteristics, various aspects of state budgeting (such as the use of policy analysis by the executive), and the educational characteristics of the professional staffs in state budget offices.     

Interdependenz und ideologische position: Die konditionale Diffusion der Zigarettenbesteuerung in den US-amerikanischen Bundesstaaten 1971–2006

This paper inquires into the interdependence of cigarette taxation in the US states between 1971 and 2006. It is argued that diffusion influences emanating from the tax policies of other states have an effect that is conditional upon the government ideology in a focal state. Specifically, it is shown that only those state governments that are not positioned on the far right end of an ideology continuum use an environment of high cigarette taxes to pursue their fiscal and health policy goals. At the same time, interventionist ideology can only be effective if it operates within a favorable policy environment. I argue that casting policy diffusion as conditional allows for empirically more accurate and theoretically richer models.     

Policy Diffusion: The Issue‐Definition Stage

We put forward a new approach to studying issue definition within the context of policy diffusion. Most studies of policy diffusion—which is the process by which policymaking in one government affects policymaking in other governments—have focused on policy adoptions. We shift the focus to an important but neglected aspect of this process: the issue‐definition stage. We use topic models to estimate how policies are framed during this stage and how these frames are predicted by prior policy adoptions. Focusing on smoking restriction in U.S. states, our analysis draws upon an original data set of over 52,000 paragraphs from newspapers covering 49 states between 1996 and 2013. We find that frames regarding the policy's concrete implications are predicted by prior adoptions in other states, whereas frames regarding its normative justifications are not. Our approach and findings open the way for a new perspective to studying policy diffusion in many different areas.     

Territorial Representation and the Opinion–Policy Linkage: Evidence from the European Union

A key feature of federal systems is the representation of subnational units by “territorial representatives” in policymaking at the federal level. How do such arrangements influence the linkage between public opinion and policy outputs? I argue that policymaking under territorial representation should be systematically skewed toward opinion in those states where citizens care about a policy issue and have a uniform view on it. This claim is tested using a novel data set of policy change in the European Union (EU), covering 211 policy issues and 6,506 observations of opinion–policy dyads. Results show that measures weighting opinion across member states by how much national citizens care about an issue are better predictors of policy change than EU‐wide mean opinion. Moreover, congruence between state‐level opinion and EU‐level policy becomes more likely, the more salient and clear‐cut opinion in a member state is. These findings refine our understanding of the opinion–policy linkage under territorial representation.     

Partisan politics,welfare states,and environmental policy outputs in the OECD countries, 1975–2005

Building on the burgeoning literature on the association between the welfare state and the environmental state, this study empirically examines how the politics of the former has affected the development of the latter. We suggest that the size of the welfare state shapes the calculus of environmental policy costs by partisan governments. A generous welfare state lowers the costs perceived by the left‐wing government, as large redistributive spending allows the government to mitigate the adverse impact of the new environmental policy on its core supporters, industrial workers. A generous welfare state also implies diminished marginal political returns from additional welfare commitment by the left‐wing government, which lowers the opportunity costs of environmental policy expansion. To the contrary, because of lower overall regulatory and taxation pressure, a small welfare state reduces the costs of environmental policy expansion as perceived by a right‐wing government. Our theoretical narrative is supported in a dynamic panel data analysis of environmental policy outputs in 25 Organisation for Economic Co‐operation and Development member states during the period 1975–2005.     

The European Politics of Book Pricing

Scholars are increasingly concerned with the phenomenon by which successive policy areas in Europe become 'communitarised' - by which we mean that the sector's governance increasingly takes place at the supranational level. As was the case for the environment or the telecommunications sector, no formal competence on book policy, and more generally on cultural policy, appeared in the original treaty, and hence I seek to explain why and how the communitarisation of the policy debate on book prices took place. On the one hand, the European Court of Justice and the Commission, which benefited from the complicity of subnational private actors, were making use of their judicial and regulatory powers in order to liberalise the book sector. On the other hand, member states which felt that their policy traditions were challenged by European intervention tried to shift the decision-making process back to an intergovernmental mode in an attempt to impose an alternative policy solution, treating books as a special product. The main argument that is put forward in this article is that once the locus of the decision-making process had shifted de facto towards the EU level, the diversity of actors' preferences, decision rules and the nature of the status quo made it impossible for the tenants of dirigiste solutions to impose their policy preferences.     

Government, Interest Groups and Policy Change

Much of the British and European literature on the role of interest groups in the policy process focuses on their participation in policy networks of various types. Possibly reflecting the original development of the policy community and policy network 'models' in the late 1970s, these approaches tend to emphasize stability and continuity – of both networks and policies. However, the 1980s and 1990s have witnessed much policy change and instability in most Western European states. In particular, some governments have adopted a more impositional policy style, and interest groups have learned to exploit the opportunities presented by a policy process which is increasingly characterized by multiple opportunity structures. This is especially the case following Europeanization of many policy sectors within the fifteen EU member states. The article focuses on the possible causes of policy change, including the importance of state power; changes in the behaviour of interest groups as they adjust to and exploit the opportunities presented by multi-arena policy-making; the impact of new policy fashions, reflecting knowledge and ideas which can act as a virus-like threat to existing policy communities.