Appropriating Vs. Budgeting: A Comparison of Municipal Fiscal Processes

Conceptual and operational differences between the municipal fiscal processes of appropriating and budgeting are examined. Examination is within the framework of Illinois practice, in which some cities prepare an operating budget while others prepare only an appropriation ordinance. The author finds that there are indeed conceptual and operational differences; budgeting is conceptually a more formal and multi-dimensional process than appropriating, and such differences are reflected in the practices of Illinois cities. However, the operational differences are generally of small magnitude. The author recommends that initiation of a budget system be accompanied by programs for infusing fiscal decision making with new concepts and skills.     

Biennial Budgeting by the U.S. Congress

The president's budget is a political document, a prediction and an institution. As a political document, its version of the past and vision of the future are open to criticism. As a prediction, its projections arguable in the light of experience and professional judgment. As an institution, its contribution to the general capacity of government is subject to debate.     

Budgeting for Fiscal Stability over the Business Cycle: A Countercyclical Fiscal Policy and the Multiyear Perspective on Budgeting

This essay is a theoretical exploration of a new budgetary system to cope with fiscal uncertainty and instability. ¹ It examines policies requiring positive year-end balances and infers that annual budget cycles lead to a mismatch between the budget cycle and the continuity of public service provision. The author considers a multiyear perspective on budgeting as a potential solution, with countercyclical fiscal reserves to help ensure stability during fluctuating economic conditions. By adopting budget stabilization funds and keeping sufficient reserves, states can better maintain trend-level public services during recessions. Panel data analysis provides empirical evidence that such funds helped stabilize state general expenditures during downturns. The adoption of countercyclical fiscal policy and budget stabilization funds is a step toward a longer-term perspective on budgeting, thus promoting fiscal stability over the economic cycle.     

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.     

Wealth-Transfer Taxes in U.S. Fiscal Federalism: A Levy Still in Need of Reform

Wealth-transfer taxes are federal and state levies on the valueof estates, inheritances, and gifts. Because the federal governmentallows a limited tax credit, repeal of the federal tax has implicationsfor state governments. This article discusses the economic justificationof taxing wealth transfers and provides data on the importanceof the tax from 1977 to 1997. We measure the degree of variationin the use of the tax among the states and pinpoint those statesfor which death taxation is most important. Wealth-transfertaxation needs reform but, repeal of the federal tax is inappropriate.Instead, the state levies should be abandoned. We conclude byproposing to repeal the state taxes and reduce the federal taxby an amount equivalent to the value of the federal tax-credit.The resulting revenues, however, would not to be garnered bythe federal government but returned as revenue-sharing fundsto the resident state of the decedent.     

Fiscal Decentralization and Provincial-Level Fiscal Disparities in China: A Sino-U.S. Comparative Perspective

Since China's 1994 fiscal reform, increasing concerns have been voiced about fiscal disparities across the country. Can local governments fairly and effectively fulfill basic public services such as primary education, public health, and social welfare? This essay traces the evolution of intergovernmental relations in China since 1978. The fluctuation of provincial level fiscal distribution over time and the underlying factors behind fiscal inequality, as compared to a decentralized American revenue system, are analyzed. The author, Zhirong Jerry Zhao of the University of Minnesota, argues for additional research on alternative measures of local fiscal capacity.     

Introduction: Immigration and U.S. Integration, Policy Reforms, and Economic Change

The economic and political ramifications of immigration will become increasingly evident in the United States during the coming decade, particularly in view of recent immigration policies that guarantee that the magnitude and diversity of the inflow will continue to grow. This symposium presents research that examines the role of immigrants in industrial restructuring and evaluates the effects of the 1986 Immigration Reform and Control Act. The importance of English language skills for economic advancement, and of government-supported training for refugees, are also examined. Together, this body of research directs our attention to the need for a more active public and private sector role in assisting all U.S. workers prepare for the demands of the labor market of the future.     

The Fiscal Impacts of Urban Sprawl: Evidence From U.S. County Areas

This paper examines the fiscal impacts of urban development patterns in the United States. Previous studies have indicated that it is costly to provide public services in areas with low‐density, spatially expansive development, leading to higher per capita expenditures. However, theory would suggest alternate outcomes. This paper examines this question using a panel dataset of U.S. urban county areas and a specification allowing for potential nonlinearity between development patterns and per capita expenditures. Estimates indicate that the spatial extent of development is the most important factor in expenditures; it is less costly to provide public services when development is more compact. Higher density increases per capita expenditures; however, the effects are small.     

The Impact of the Fiscal Crisis on Public Administration Reforms: Comparison of 14 European Countries

Abstract

This study aims to empirically test a widespread assumption that fiscal crises instigate administrative reforms. The empirical analysis relies upon an international comparative study of the responses of 14 European governments to the fiscal crisis of 2008–2013. It is found that fiscal crisis and public administration reforms are not necessarily closely connected. In the majority of cases, the fiscal crisis did not have an instant effect of triggering structural public administration reforms or substantial shifts in existing reform trajectories. The crisis intensified the pressure to reform public administration to some extent, but the European governments’ responses predominantly followed a combination of straightforward cutbacks and incremental change. More substantial reforms were carried out in countries most severely hit by the crisis and/or where administrative reforms were conditioned by international financial assistance.     

Tax and Expenditure Limitations and the Fiscal Response of Local Government: Asymmetric Intra-Local Fiscal Effects

This article empirically investigates the effects of introducing statewide measures to limit the ability of local jurisdictions to raise revenue or make expenditures. It does so in intervals of five years over a 25-year period, using fiscal observations for 31,804 units of local government in 787 metropolitan counties across the contiguous United States. Specifically explored is the effect of tax and expenditure limitations on the variation in revenues and expenditures between general purpose governments and school districts within county areas. Rather than imposing a uniform constraint across jurisdictions, tax and expenditure limitations (TELs) are associated with increased variation across both general purpose and school district revenues and expenditures and, by implication, increased service differentials. Effects are found to be asymmetric, with increased variation greatest within counties comprising the urban core and those with relatively more disadvantaged populations. The implications are that TELs are most constraining on the ability of governments serving economically less prosperous and at risk populations to meet public service needs. Such differential effects are of more than questionable merit and are the result of the application of blunt instruments to what is often an undemonstrated need. The outcome impairs both the efficiency and responsiveness of the local public sector.     

The Continuity of Change: Public Budgeting and Finance Reforms over 70 Years

Fiscal management in the national government remains just as important to public administration in 2007 as it was in 1937. Arthur E. Buck and Harvey C. Mansfield's critique of the fragmentation among congressional, bureaucratic, and presidential interests in budgeting and accountability is a classic for those who argue for stronger presidential power and capacity within American government. This analysis draws the field's attention to what we can learn about the politics of management reform from the successes and limitations of this landmark study—lessons that will serve the field well as it confronts new issues and reform agendas in the future.     

Reform of the Planning,Programming, Budgeting System,and Management Control in the U.S. Department of Defense: Insights from Budget Theory

Resource decision making for the Department of Defense (DOD) is one of the most challenging tasks in all of public financial management. DOD coordinates national security threat assessment, long‐ and intermediate‐range planning and programming with annual budget formulation and execution. Between 2001 and 2004, Defense Secretary Donald Rumsfeld changed the system significantly, simplifying, and synchronizing it with presidential terms of office. We assess Planning, Programming, Budgeting System (PPBS) reform through application of applied budget theory. We review system evolution, document recent reforms, explain why change was necessary, and assess implementation feasibility. Only preliminary evaluation is possible because change implementation will require five or more years.     

Budgeting for Accountability: A Comparative Study of Budget Reforms in the United States during the Progressive Era and in Contemporary China

Budgeting is an important mechanism for ensuring public accountability. How do budget reforms in the United States during the Progressive Era compare to those in contemporary China? Are administrative and legislative budget controls essential to an effective, efficient government? Though the two countries differ in many respects, significant parallels between their budget reforms are evident. In the United States, electoral accountability alone does not guarantee overall government accountability if proper budgetary institutions are absent. China's recent budget reform reveals that it is possible to develop accountability, absent open elections, but with limitations and constraints. Lessons on budgeting and accountability for other developing and transitional countries are drawn from this comparative study.     

U.S.-China Space Cooperation: Balancing Act between the U.S. Congress and President

There are a growing number of U.S. space scientists and managers calling for reinitiating cooperation with China in space. It is well-known that investigations of the U.S. Congress into various allegations involving China have resulted in a series of laws curtailing space cooperation between these two countries. By surveying the concurrent political developments within the United States in the 1980s and 1990s, this article attempts to reveal the domestic compulsions that propelled changes in the U.S. space policy towards China. The fundamental impetus is the power struggle and differences between the U.S. president and Congress in their perception of U.S. economic interests and national security in the context of space technology that strained these relations. Recent U.S. presidents who inherited this situation added to the discourse based on their own perceptions about outer space and China. These perceptions either found congruence with the policy of the U.S. Congress or led to finding ways to circumvent its legal restrictions. Based on these developments, it is concluded that the view of the U.S. president has alternated between necessary, desirable, and objectionable on the issue of U.S.-China space cooperation, and the U.S. Congress has thus shifted from supporting to restricting and then legally banning cooperation.     

The Fiscal Impact of Federal and State Aid to Large U.S. Cities: An Empirical Analysis of Budgetary Response

This article examines four types of aid programs to thirty-nine large U.S. cities federal revenue sharing, federal categorical aid, state general aid, and state categorical aid. The central finding is that there is significant variation in the magnitude of property tax reduction resulting from different types of state general aid. Property tax credits and exemptions are less effective approaches in reducing local property taxes than are state lump-sum aid or city use of piggybacked taxes Categorical state and federal aid mostly fund additional city spending and have small but important stimulative effects on the revenue side These results suggest that differences in the design of aid programs have important implications for their fiscal impact and their effectiveness in reducing property taxes.