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.     

Coming Apart: Fiscal and Budgetary Policy Processes in the Johnson Administration

Budgeting in the 1980s seems very different from budgeting in the 1960s. The differences have more to do with economic conditions than with the techniques of budgeting. In the article published below, David C. Mowery and Mark S. Kamlet present their interpretation of how budgeting was transformed during the Johnson administration. The editors of this journal, both of whom have conducted research on the Johnson administration, do not share the point of view expressed in this article, but believe that the readers of Public Budgeting and Finance should be provided a diverse range of viewpoints. The editors invite comment on this article and expect to publish articles presenting different interpretations in subsequent issues of the journal.     

Fiscal Centralization in the American States: Increasing Similarity and Persisting Diversity

This study examines the hypothesis that the states are generallybecoming more similar in the area of state-local fiscal centralization.The results support this argument, but the evidence indicateslittle change in recent eras. This greater similarity is generallya result of the decentralized states becoming more like thecentralized states. This convergence is taking place aroundincreasing levels of centralization. Amidst these patterns,individual states are still exhibiting diverse patterns of change,often quite different from the general patterns found.     

Fiscal Centralization in the American States: Findings From Another Perspective

Studies of the determinants of fiscal centralization have produced conflicting results. The difficulty may lie in reliance on cross-section analyses and their presumptions of the sources and nature of change. Studies of the current relative positions of political units ignore historical factors which may have "pushed" units away from some sort of normal position. An historical analysis of the American states demonstrates these points.     

Politics Can Limit Policy Opportunism in Fiscal Institutions: Evidence from Official General Fund Revenue Forecasts in the American States

Governments make policy decisions in the same areas in quite different institutions. Some assign policymaking responsibility to institutions designed to be insulated from myopic partisan and electoral pressures and others do not. In this study, we claim that differences in political context and institutional design constrain the policy choices governments make. Testable propositions based on an analysis of varying electoral incentives and time horizons created by these different contexts are empirically tested using panel data on official general fund revenue forecasts in the American states, 1987 to 2008. The empirical evidence reveals that executive branch agencies and independent commissions produce more conservative forecasts than legislatures with one important exception. Executive branch revenue forecasts in states with gubernatorial term limits are indistinguishable from legislative branch forecasts. Further, we find that legislative branch forecasts are more conservative in the presence of divided partisan legislatures than unified party government. In turn, this implies that entrusting policymaking authority to either the executive branch or an independent commission may only be consequential when the political system itself fails to check legislative excesses or executive myopia.     

Fiscal Capacity and Tax Effort of the American States: Trends and Issues

The author examines the historic context of state taxing power and fiscal capacity, and the current efforts of the U.S. Advisory Commission on Intergovernmental Relations to measure fiscal capacity and tax effort using a Representative Tax System (RTS). The two most commonly used methods of distributing federal aid to states are population and personal income, both incomplete measures of fiscal capacity. RTS estimates how much revenue each state and its localities would raise if it levied the national average tax rate for commonly used state and local taxes. The author considers the strengths and weakness of RTS as a measure of fiscal capacity and examines state rankings and trends since 1975.     

The Obama Administration and United States Trade Policy

For all the focus on economic issues in the wake of the crisis of 2008 the Obama administration has remained ambiguous about a central component of economic policy. As both candidate and President, Obama has sent mixed messages about trade policy. This ambiguity reflects wider uncertainty within the Democratic Party about global trading relationships and this paper explores and assesses the reasons for this uncertainty. A large part of the answer lies in the disparate sources of support for the Democrats. That is, the party has courted support from interest groups and core groups of voters that have widely divergent views about the value of trade liberalisation.     

Institutions, Policy Innovation, and E-Government in the American States

Examining the rankings of American states in one fast‐growing policy area, e‐government, states with the most sophisticated and comprehensive policies varied over a five‐year period. What factors account for change in digital government policy innovation over time? Using time‐series analysis and 50‐state data, the authors find that state institutional capacity is important for continued innovation. They also find an association between reinvention in state governments and the institutionalization of information technology, suggesting a more general orientation toward government reform and modernization. Although state wealth and education were not significant in previous studies, they emerge as predictors of later innovation. The theoretical contribution of this study is to better understand the dynamic character of innovation over time and the role of institutions. The link between reinvention and e‐government raises the possibility that the modernization of state institutions generally facilitates innovation.     

Judicial Decisions and Policy

This symposium debates the impact of High Court decisions by questioning whether the High Court has the constitutional and legislative authority (and possibly the moral right) to decide policy issues and determine the rights of citizens. Arguments on the role of the High Court vary from views that the High Court provides a sphere in which political interests may be lobbied to notions that its role is solely to interpret the Australian Constitution. However, what occurs when the political aspirations of government are in conflict with the decisions of the High Court? Should the High Court adapt judicial decisions to changing social views, or consider the implications of their decisions on the executive and legislature? What is the constitutional role of the High Court? These questions are explored in detail in the following articles.     

A New Measure of Policy Spending Priorities in the American States

In this paper, we develop and test a general measure of policyexpenditures in the American states. Our approach is to constructa spatial proximity model of yearly state program spending.The empirical analysis reveals that state spending patternsvary along a clear and readily-interpretable unidimensionalcontinuum which differentiates policies that provide particularizedbenefits to needy constituencies from policies that providebroader collective goods. Based upon standard evaluative criteria,the variable created from our model possesses some highly desirablecharacteristics. And, it compares favorably to other measuresof state policy activity. The net result is a yearly score foreach state which summarizes that state's spending across allmajor program areas. More generally, we believe that our variablecan be interpreted as valid and reliable representational measurementof state policy priorities. In this capacity, it could occupyan important position within models of state politics. Author's note: Many colleagues provided useful feedback on earlierversions of this paper. We particularly appreciate the excellentcomments and suggestions from Robert Erikson, Richard Fording,Kim Hill, David Lowery, Andrea McAtee, and George Rabinowitz.We would also like to thank Daniel Lewis and William Myers fortheir assistance with the data collection. The yearly statepolicy priority scores obtained from the unfolding analysis,along with the data used to create the scores, the SAS macroto carry out the unfolding procedure, and all other supplemental materialsare available on the authors’ web sites: http://polisci.msu.edu/jacobyand http://polisci.msu.edu/schneider. All these materials arealso available on the Political Analysis Web site.     

States on Steroids: The Intergovernmental Odyssey of American Climate Policy

Climate change has conventionally been framed as an issue that would be addressed by an international regime established through negotiation among nation‐states. The experience of policy development in the decade following the signing of the Kyoto Protocol indicates that climate change also needs to be examined as a challenge of multilevel governance. The increasingly central role of state governments in American climate policy formation squares with recent experience in other Western democracies that share authority across governmental levels. This paper examines the American experience, considering factors that have contributed to a state‐centric policy process and using that body of experience to assess competing strategic choices faced by individual states based on their mix of emission trends and policy adoption rates. In turn, the collective state experience allows for consideration of the varied political feasibility of competing climate policy tools that remain under active review in subnational, national, and international contexts. The paper concludes with a set of scenarios that explore different ways in which a state‐centric system may be integrated with expanding involvement at the national level.     

Carbon Taxation and Policy Labeling: Experience from American States and Canadian Provinces

A vast economics literature embraces taxation of the carbon content of fossil fuels as the superior policy approach for reducing greenhouse gas emissions. However, experience around the world suggests that carbon taxes face exceedingly difficult political hurdles. Federal experience in the United States and in Canada confirms this pattern. This article reviews sub‐federal policy development among American states and Canadian provinces, a great many of which have pursued climate policy development. With one major exception, explicit carbon taxation appears to remain a political nonstarter. At the same time, states and provinces have been placing indirect carbon prices on fossil fuel use through a wide range of policies. These tend to strategically alter labeling, avoiding the terms of “tax” and “carbon” in imposing costs. The article offers a framework for considering such strategies and examines common design features, including direct linkage between cost imposition and fund usage to build political support.     

Reconsidering The Counter-Mobilization Hypothesis: Health Policy Lobbying In The American States

Despite its widespread use since the concept was introduced by David Truman (1951. The Governmental Process. New York: Alfred A. Knopf), counter-mobilization by organized interests has remained theoretically ambiguous and rarely studied empirically. We more fully develop the concept of short-term counter-mobilization, distinguish it from long-term counter-mobilization, specify the conditions under which we might observe short-term counter-mobilization, and test the resulting hypotheses with data on health care lobby registrations in the American states during the late 1990s. We find little evidence of short-term counter-mobilization among health interest organizations, which leads us to more fully consider several null hypotheses about the limits of strategic behavior on the part of organized interests.An earlier version of this paper was prepared for presentation at the Annual Meeting of the Midwest Political Science Association, Chicago, April 2004. This research was supported by a Robert Wood Johnson Foundation Investigator Award in Health Policy Research (ID#047727).     

Pension Reform and the Fiscal Policy Stance

The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the postreform payroll tax and private system contribution rates. Its impact also depends on the difference between the rate of interest on implicit and that on explicit public debt, among other influences. Pension privatization, if not offset by fiscal consolidation, can loosen the fiscal stance in some circumstances.     

Attitude Change and Policy Decisions: The Case of Norwegian Alcohol Policy

In a democracy, political decisions ought to be based on public opinion. In practice, however, the mechanisms connecting voter preferences and public policy are complex, and it appears that public opinion may be partly policy-shaping and partly shaped by policy. In this article, some of these mechanisms are discussed. The article presents, first, three models of public reactions to policy decisions. These models are then applied in an analysis of the liberal trends in Norwegian alcohol policy as well as attitudes towards this policy. The results are consistent with a "consumer model", where citizens evaluate public policy according to their preferences, as well as a "support model", where they tend to follow and support decisions made by political leaders. A "discontent model", where implementation brings about less acceptance of a policy, is not supported by the data.