State Rainy Day Funds and Fiscal Crises: Rainy Day Funds and the 1990–1991 Recession Revisited

The recession of the early 1980s prompted many states to establish budget stabilization (rainy day) funds. Initial examinations of rainy day funds find a limited impact by the funds in alleviating fiscal stress. In this article, we propose an enhanced model of rainy day fund impact. Using data from 48 states for the 1990–1991 recession, our analysis indicates that the presence of a number of structural factors and the maintenance of generally large balances in other funds entering recession helps to alleviate fiscal stress when a state's economy is in recession.     

The Determinants of the Structure of Rainy Day Funds

This article investigates the factors that determine the configuration of budget stabilization funds, also known as rainy day funds, along their two most important dimensions: deposit and withdrawal requirements. These funds are created to accumulate savings in order to reduce the impact of adverse fiscal conditions during downturns. The effectiveness of such funds depends greatly on their institutional structure, and yet most states choose configurations that compromise their efficacy. Using multinomial discrete techniques, and introducing the ordered nature of the requirements in the analysis, the results of this study indicate that political and institutional factors such as the size of the house of the legislature and some strict institutions are associated with weak budget stabilization funds, while economic factors such as the volatility of state tax revenues are associated with stricter funds.     

State Fiscal Strategies for the 1990s: Balancing Budgets in a Recession

The fiscal crunch facing many states in FY 1991 has its rootsin the recession, federal mandates, election-year politics,and rapid growth in spending for Medicaid and corrections. Southernand midwestern states that made drastic cuts in response tothe 1981–1982 recession have fared relatively well, butstates in the Northeast have faced tax increases, layoffs, cutsin services, and prolonged conflict over state budgets. Althoughthe tax revolt has not led to appreciably lower taxes, it hasmade raising taxes more difficult, and has heralded a shiftto "boutique government," which may create further fiscal problemsin the long run. State tax increases and spending cutbacks mayalso delay recovery from the recession.     

The Impact of Budget Stabilization Funds on State General Obligation Bond Ratings

This study examines the impact of budget stabilization funds (BSFs) on state general obligation (GO) bond credit ratings. While a number of past empirical papers have examined the effect of various fiscal institutions on state GO bond ratings; to date, BSFs have been largely ignored in the literature. Model estimates show that neither the choice to have a statutory BSF versus a constitutional BSF or the size of a BSF has any apparent impact on credit ratings. However, weak deposit rules are associated with lower credit ratings while weak withdrawal rules are associated with higher credit ratings.     

The Impact of the Tax Revolt Era State Fiscal Caps: A Research Update

Fiscal caps, the most common form of fiscal limit adopted during the tax revolt era, are again on the agendas of state government. In this article, we evaluate the claims made by cap supporters and opponents by examining the impacts of caps adopted during the tax revolt. Updating Lowery and Cox's (1990) analysis of the impact of state fiscal caps through 1991 using a comparative state, interrupted time-series design, we find some evidence—albeit very weak—that fiscal caps may have modestly reduced the size of government and no evidence that they have been evaded through budget end-runs.     

The Dynamics of Party Preference Change in Britain, 1991–1996

The paper examines individual-level data from the first six waves of the British Household Panel Survey, 1991–96. The analysis shows that changes in party support in this period were significantly affected by two sets of factors that have traditionally been regarded as important sources of changes in voters' political preferences: ideology and personal economic experiences. Ideological change is demonstrated to have much stronger direct effects on party preference than economic factors. However, both objective economic conditions and subjective economic perceptions are shown to have significant effects on ideological change itself, implying that economic factors also exert important indirect effects on voters' partisan preferences. These individual-level findings provide important corroboration for the results of aggregate-level studies, which have consistently found that economic factors—and in particular economic perceptions—play a major role in determining patterns of partisan support.     

Trends in the Fiscal Condition of Cities, 1979–1981

Editor's Note: In the Fall of 1980, the Joint Economic Committee of Congress and the Government Finance Research Center surveyed almost 600 cities—approximately half of which responded—concerning their fiscal condition. This excerpt from the introduction to the Committee's report indicates that most cities expect their financial condition to worsen, The full report is available from the Committee.     

The Electoral Impact of Constituency Campaigning in Britain, 1992–2001

Political parties maintain local organisations and recruit members mainly to fight elections. For most of the post-war period, however, the dominant view among analysts has been that constituency campaigning in British general elections has little or no effect on election outcomes. This view has been challenged over the last ten years or so. Evidence derived from post-election surveys of constituency election agents following the 1992, 1997 and 2001 general elections is used here to show that the intensity of constituency campaigning significantly affects turnout levels and, for Labour and the Liberal Democrats, levels of party support. There is also some evidence that Conservative campaigning affected constituency variations in the party's performance in 2001. The conclusions reached on the basis of aggregate-level analysis are supported by analysis of individual-level data derived from British Election Study surveys. The effects of campaigning are not large, but they are clear and significant – and sufficient to affect the numbers of seats won by the major parties. In the light of this, parties have good reasons to maintain healthy local organisations.     

Public Policy Implications of the Fiscal Year 1989–90 Reduction in California Family Planning Funding

In July 1989, the governor of California reduced funding for the state family planning program by two-thirds, from $36.2 million to $12.1 million. This article describes the family planning program, the events leading to the funding cuts, the impact of the reductions and the actions that led to the restoration of funds in January 1990. An analysis of advocacy efforts and an outline of policy recommendations concludes the discussion.     

Manufactured Responsiveness: The Impact of State Electoral Laws on Unified Party Control of the Presidency and House of Representatives, 1840–1940

The modern history of divided government in America suggests that the framers succeeded in creating a government unresponsive to popular passions. Yet in the nineteenth century the party winning the presidency almost always captured control of the House of Representatives. Why and how could nineteenth century national elections be so responsive that they resemble parliamentary outcomes? We identify electoral institutions present in the states that directly linked congressional elections to presidential coattails. Specifically, we estimate the impact of state ballot laws and the strategic design of congressional districts on presidential coattail voting from 1840 to 1940. We find that presidential elections, as mediated by state electoral laws, strongly account for unified party control of the House and the presidency throughout the nineteenth century.     

The Impact of Decentralization on Subnational Government Fiscal Slack in Indonesia

Since Indonesia began implementing its decentralization program in 2001, subnational unspent balances have grown rapidly and have reached levels that many officials find unreasonably high. But the extent to which subnational government reserves are excessive, in general, is not obvious. A not implausible decrease in the price of oil would reduce transfers to subnationals significantly and, if sustained, could possibly eliminate reserves in a relatively short time. Central government should not take any immediate action to reduce subnational slack resources directly but should instead focus on removing the underlying causes of such.     

Managing Carrots and Sticks: Changes in State Administrators' Perceptions of Cooperative and Coercive Federalism During the 1990s

The so-called devolution revolution was a significant themein American federalism in the 1990s. Opinions on the issue varywidely. Some suggest that "major changes" occurred in intergovernmentalrelations. Others were pessimistic about the occurrence of anydevolution during the decade. We investigated changes in intergovernmentalrelations between the national and state governments in the1990s on the basis of Elazar's approach to American federalisminvolving: (1) administration, (2) cooperation and coercion,and (3) regulation. We used American State Administrator's Project(ASAP) data collected in 1994 and 1998 to access state administrators'perceptions of national fiscal and regulatory impacts on stateagencies. We conclude that state administrators' perceptionof national fiscal and regulatory impacts changed only moderatelyfrom 1994 to 1998, and that evolution rather than revolutiondescribes better the character of state-national intergovernmentalchanges during the 1990s.