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.     

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.     

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.     

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.     

Needed: A smaller and very different U.S. military

Conclusion How should the Pentagon decide those missions that it will retain in house? Those missions for which it should seek strategic alliances? Those new missions that it will actively seek to develop a competency in? Or those missions that require service competition because they are viewed as critical? Or those missions that have acquired redundancy due to service poaching, and thus can prudently be the target of reductions?The answers to these questions very much depend on the leadership's developing a view of the long-term future that is very different from the past. For example, will the United States be in the business of maintaining stability in troubled Third World regions? If so, what kind of capabilities, what kind of missions, does it see as necessary to conduct effective operations in these conflicts? What can the U.S. military count on from its strategic partnerships with other nations? What competing roles will the U.S. military be asked to play? What resources are available?These are fundamental, first-order questions. But they must all be answered - a credible vision of the business must be established - before restructuring can proceed in a productive manner. This does not imply a definitive prediction of the future; rather, it involves recognizing that the United States is in a period of relatively low danger, high uncertainty and dynamic change. For that reason the defense establishment should restructure to be more flexible, innovative and adaptive. A primary goal should be to exploit rapidly advancing technologies, while meeting (or preferably forestalling) the greatest and most likely challenges to national security. In summary, developing a credible vision of the future security environment, and acting upon it, is essential if the U.S. defense establishment is to avoid the pitfalls of the interwar French military and the IBM of the 1980s, dominant organizations that restructured to be more efficient in a competitive environment that was rapidly passing into history.     

Economic performance and U.S. Senate elections: A comment

This paper investigates the issue of economic performance and U.S. Senate elections analyzed by Bennett and Wiseman (1991) in a work published in this journal. Our study analyzes the electoral margins and election outcomes of U.S. Senate elections using state-level data involving only incumbents up for reelection in the 1976–1990 period (212 elections). The ordinary least squares and logit estimation results suggest that the effects of economic performance variables on incumbent senatorial elections are in general overshadowed by other factors known to be important in determining electoral margins and outcomes. In addition, the empirical results of the entire model are in general consistent with prior findings noted in the public choice and political science literature concerning the analysis of U.S. Senate elections. Therefore, we suggest that the findings raised in our study provide enough theoretical and empirical evidence to raise sufficient doubt regarding the robustness of the results suggested by Bennett and Wiseman (1991), and thus call upon other researchers to study further the relationship between economic performance and voting behavior in U.S. Senate elections.     

Implementing Fiscal Decentralization: A Case Study of a Regional Tax Agency in Italy

As a measure to enhance the fiscal autonomy of the region, in 2006 the Regional Government of Sardinia in Italy decided to establish a tax agency for managing regional taxes on holiday houses and boat and aircraft transit. Based on interviews conducted with the tax agency director and staff, this article traces the trajectory and outcome of events included in the implementation of this part of the regional government's fiscal policy. Drawing from this case, this article theorizes the process of implementing fiscal decentralization by addressing the issue of how fiscal policy decisions affect the management of tax agencies in the start‐up stage. Social mechanisms of learning, brokerage, and actor certification provide important linkages between fiscal policy choices and organizational change. On the whole, the research argument made in this article further contributes to institutionalist and processualist research trends in current research on organization studies and public management.     

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.