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.     

Economic Effects of State‐Level Tax and Expenditure Limitations

As a result of devolution, state governments have taken on greater responsibility for financing and providing public services. Increasingly, states have adopted state‐level tax and expenditure limitations (TELs) to manage the growth and size of state budgets. The adoption of TELs is supported by claims that they have a positive effect on state economies, although such claims lack empirical evidence and have been contested by several scholars. Despite the ongoing debate about validating the actual economic effects of state‐level TELs, there is a lack of empirical assessments of their effects. The empirical results of this article indicate that the presence of state‐level TELs has a negative effect on the level of employment but no effect on the state's personal income per capita. The presence of state‐level TELs has no effect on either the growth of personal income per capita or the growth of employment.     

The Effect of Tax and Expenditure Limitations on Revenue Volatility: Evidence from Colorado

Much of the research on tax and expenditure limitations (TELs) focuses on the impact that limits have on the size of the public sector or the distribution of expenditures at the state and local levels. While these results shed light on the extent to which TELs succeed in reducing government spending, they do not have much to say about the impact of TELs on government budgeting or financial planning, despite the fact that voters support TELs in the hope of reducing government inefficiency (Courant, Gramlich, and Rubinfeld 1980; Ladd and Wilson 1982). This paper examines the effect of TELs on the stability of government revenues; sound tax policy entails controlling the volatility of revenues in order to plan more effectively for the future. Using panel data from Colorado's Division of Local Government as well as the Census Bureau's Annual Survey of State and Local Government Finances, this paper examines the impact of Colorado's 1992 Taxpayer's Bill of Rights (TABOR) on local government finances. Results from difference‐in‐difference estimation suggest that TELs increase revenue and expenditure volatility.     

Constitutional Tax and Expenditure Limitation in Colorado: The Impact on Municipal Governments

Tax and expenditure limitations (TELs) have become a pervasive influence on local government fiscal affairs. Explanations for the spread of TELs suggest that voters thought local government was growing more than needed. Thus, TELs were intended to constrain growth and reduce the size of local governments. This article's purpose was to determine the impact of two separate kinds of TELs, one a property tax measure, and the other a comprehensive revenue and expenditure limit, upon the growth of municipal governments in Colorado. Using a panel data set on municipal budgets (1975–1996), the article demonstrates three major points: 1) the effectiveness of a TEL in achieving reductions in local government revenue and spending growth depends upon the nature of the TEL; 2) the comprehensive TEL did effectively constrain growth and reduce local government reliance on the property tax, despite the local options for exemption; and 3) TELs do not have uniform impacts among governments of different population.     

How and when do presidents influence the duration of coalition bargaining in semi‐presidential systems?

How and when do presidents influence the government formation process in semi‐presidential systems? Presidents have both a formal role and vested interest in the formation of the cabinet, yet their influence has been overlooked in studies of the duration of government formation. In this article, it is argued that the president's influence over government formation can be explained by his or her perceived legitimacy to act in the bargaining process and their partisanship. In this first case, it is argued that the legitimacy to act derives from a president's constitutional powers and more powerful presidents simplify cabinet bargaining, leading to shorter government formation periods. In the second case, it is proposed that presidents and their parties have overlapping preferences. Therefore, when the president's party holds greater bargaining power in government formation negotiations, the bargaining process is less uncertain and less complex. Thus, government formation processes will be shorter. Using survival models and data from 26 European democracies, both propositions are confirmed by the analysis. The results enhance our understanding of the dynamics of cabinet bargaining processes and contribute to the wider study of semi‐presidentialism and executive‐legislative relations. One broader implication of these results is that the president's party affiliation is an important motivation for them as political actors; this contrasts with some previous studies which conceive of presidents as non‐partisan actors.     

Institutional technology and economic growth

An endogenous model of constitutional changes and economic growth links the temporal decline in private market returns when technology is constant with the returns to rule changes realized in a political market. There is a steady state constitutional setting in which all rule changes have been incorporated that is analytically equivalent to the neoclassical steady state. As in the neoclassical model, private-sector technological progress postpones the steady state. To the extent the original constitutional setting promotes innovation, the evolutionary process toward the steady state is delayed. The model yields a theory of revolution based on forces leading to the adoption of inefficient changes in the constitutional setting.     

论宪政约束下的电子政府模式

随着数字技术、信息技术和网络技术的发展,电子政府正在成为一场政府改革运动.本文认为,电子政府建设使信息控制权成为影响宪政结构的权力因素,同时对公民也提出了更高的素质要求,影响了公民权利平等;要使电子政府服务于宪政,服从于宪政对国家权力的安排和公民平等的基本原则,就需要对信息控制权进行宪政规划,对政府的边界进行改造,这在我国电子政府建设初期,尤其重要.     

Hung Parliaments and the Need for Clearer Rules of Government Formation

The general elections of 2017 and 2010 produced hung parliaments in which no single party could command an overall majority; in May 2015 the UK only narrowly avoided that outcome. When a parliament is hung, more than one potential government can be viable, and the constitutional rules that determine who has the first right to form the government can thus have a decisive influence on which government forms. In the past, the UK has applied several potentially contradictory rules (based on conventions and principles), which do not all follow an equally democratic logic. This status quo is problematic because it can generate political controversy and uncertainty, in addition to jeopardising the Monarch's role in the government formation process. A reform that enables parliament to elect the leader who will be tasked with the formation of the next government would resolve these problems and provide constitutional clarity.     

Strengthening Local Government Leadership and Performance: Reexamining and Updating the Winter Commission Goals

The Winter Commission report of 1993 stressed cities with the mayor‐council form of government and emphasized removing barriers to executive authority in large cities. In order to assess and update the report, it is important to recognize that a majority of cities with populations over 100,000 use the council‐manager form, in which restrictions on the executive and fragmented authority are unlikely to be present because of the constitutional principles on which the form is based. There has been progress toward improved leadership in both forms of government and substantial management change, including the incorporation of reinventing government and e‐government practices, and large counties are more likely to have an elected or appointed executive. An emerging issue not considered by the commission but in line with its purpose is the increasing challenge of governing expanding metropolitan and megapolitan regions.     

Structure of State‐Level Tax and Expenditure Limits

While much consideration has been given to the approval process, base classification, and codification of tax and expenditure limits (or TELs), these factors tell us nothing about how they actually work. This study focuses exclusively on the technical elements of these limits and finds how states estimate their limits have over time eroded their potency. More specifically, if a state resets or rebases its limit annually by using actual revenues or expenditures for the preceding year, the limit will trend closely with actual revenues or expenditures, effectively restricting growth in spending as prescribed by law. However, if the law requires a state to estimate its limit using the appropriation limit for the preceding year instead of actual revenues or expenditures, that is, without rebasing, the limit will reflect cumulative changes to the base when it was first approved. Over time, the TEL cap is significantly above the states revenues or expenditures as it remains unaffected by the state's underlying fiscal and economic environment.     

Tax and Expenditure Limitations and State and Local Fiscal Structure: An Empirical Assessment

The tax and expenditure limitation (TEL) "movement" of the 1970s and 1980s can be characterized in part as a struggle between local autonomy and state control. Undeniable shifts have occurred over the same period in state and local revenue systems and functional responsibilities. This article places these shifts within the context of this movement, using pooled, cross-sectional, time-series techniques for the period between 1970 and 1990, in an effort to assess its impacts. Findings suggest that TELs have resulted in increased centralization, lessened local responsiveness, increased use of local non-tax sources of revenue, and a sector less accommodating to the needs of dependent populations. TELs may have also had dubious effects on both the allocative efficiency and equity of the state and local public sector.     

What Makes Popular Government Self‐reinforcing?

This article explores the ongoing debate on whether popular government is a continually improving or a continually deteriorating constitutional principle in Scandinavian politics. In particular, three recent articles that address this question are reviewed. One puts an almost entirely positive light on developments in Denmark. By contrast, the authors of the articles on Sweden and Norway are less inclined to see any parallel between economic growth, a sustainable welfare state and good public finances, on the one hand, and improved popular government, on the other. The aim here is to bring some clarity into this paradoxical picture by distinguishing between popular government as such and the prerequisites for popular government's long-term legitimacy. What makes popular government self-reinforcing, this article concludes, is the underlying, more fruitful question to pose. This query should be brought into the open and answered.     

The Portuguese 2005 legislative election: Return to the left

According to the ‘decline of parliaments’ thesis that dominates the literature, the executive branch has increased its powers vis-à-vis the legislature. However, at the same time most studies indicate that the parliaments in the Nordic region are on average stronger than their counterparts in central and southern European countries. This article examines the validity of the ‘decline of parliaments’ thesis in the context of Finland, a country where recent constitutional reforms have strengthened parliamentarism by reducing the powers of the president and empowering the government and the parliament. Analysing the constitutional balance of power between state organs, the interaction between the government and the opposition, and the ability of the parliament to hold the cabinet accountable, this article argues that despite its stronger constitutional position, the Eduskunta faces considerable difficulties in controlling the government.     

Fiscal Management Implications of the TABOR Bind

Following a wave of state-adopted tax and expenditure limitations (TELs), in 1992 the state of Colorado amended its constitution with the strictest TEL to date. Called the Taxpayer Bill of Rights and known as TABOR, the amendment has limited the size and scope of Colorado governments. Praised as a restraint on unbridled government growth in good economic times, TABOR reared its highly restrictive head as the state economy turned downward. The central issue explored is how binding tax and expenditure limitations affect the state's ability to weather economic recessions and employ sound fiscal management practices. As in most institutional arrangements, the devil is in the details. The analysis presented here reveals that binding limitations create perverse incentives for budgetary actors to earmark, privatize, and shift responsibilities to other jurisdictions, which ultimately combine to reduce the state government's ability to perform and to maintain sound fiscal management practices.     

Bringing the Constitution Back In: Political Science and the State

At one time the study of politics centred on the state but for much of this century the emphasis has been on political behaviour and policy-making with governmental decisions explained as a response to societal forces. In the last decade or so, state-centric theorists have sought to bring the state back, arguing that it is more autonomous than society-centred theorists have suggested. I record the retreat of the state in the Anglo-American study of politics and the related rise of a particular kind of political science, going on to outline the more recent growth of a 'new institutionalism' which places the state at the very centre of political science. Bringing the state back in to the study of British politics must necessarily involve bringing the constitution back in but in ways that avoid the limitations of the constitutional approach and a narrow legalism.     

The Decline of the Legislative Veto: Federal/State Comparisons and Interactions

Legislative veto systems originated in the 1930s. Their numberincreased steadily until the early 1980s and then declined significantly.The decline of the legislative veto is attributable primarilyto decisions by a number of state supreme courts between 1980and 1984, and by the U.S. Supreme Court in 1983. Almost allcourt decisions have held the legislative veto to be an unconstitutionalviolation of the separation of powers. In addition, most proposalsto authorize the legislative veto by state constitutional amendmenthave been rejected by voters. There has also been a decreasein legislators' enthusiasm for the legislative veto, even instates where it has not been declared unconstitutional. Legislatorshave found other ways to control administrative agencies. Inexamining the decline of the legislative veto, one finds thatthe federal government exercised little influence over the states,the states exercised still less influence over the federal government,but the states did significantly influence one another.     

The “growth tax” in the United States

By providing public goods, including law and order, national defense, and income redistribution that expands the gains from exchange (the scope and membership of the constitutional agreement), government expenditures act as a positive externality on the growth rate. Beyond that level, taxes act as a negative externality. In this paper a simple model is formulated and the optimal (growth-maximizing) tax rate found. Empirical estimation finds it to be in the range of 21.5–22.9 percent. The effect of taxation beyond this level is a cumulative loss of about $30 trillion (1972 dollars) in GNP over the period 1949–89.     

Defining Executive Power: Constitutional Reform for Grown-ups

Australia is well endowed with constitutions. It has seven, one for the commonwealth and each of the six states, and nine if the documents establishing self-government for the Australian Capital Territory and the Northern Territory are included. This gives plenty of scope for constitutional reform: that is, changing the most important rules which specify how a political community is governed. In the event, public debate over constitutional reform in Australia has been sporadic and concentrated on a narrow range of issues. Perhaps this is as it should be. Constitutions should reflect broad public acceptance of the basic rules governing the operation of government, and if the system is running smoothly, there is little reason for change. Only when events occur that demonstrate that there are shortcomings in the structure of government should constitutional reform be considered.     

Toward Making a Proper Space for the Individual in the Ethiopian Constitution

A symbolic, normative, and institutional investigation of the 1995 Ethiopian Constitution reveals that the individual is displaced and locked in the periphery as much of the socio-economic and political ecology of the state is occupied by Nations, Nationalities and Peoples (NNPs). The Constitution presents and makes NNPs authors, sovereigns and constitutional adjudicators by adopting a corporate conception of group rights. As this corporate conception of group rights permeate and structure the organization of the Ethiopian state and government, the individual is relegated in the constitutional order. In order to make the transition to constitutional democracy sustainable, it is argued that the Constitution should accommodate and ensure individual autonomy by adopting a collective conception of group rights. This offers both the normative basis and institutional safeguards to strike a proper equilibrium between group rights and individual rights.     

Portugal's semi-presidentialism (re)considered: An assessment of the president's role in the policy process, 1976–2006

This article analyses the policy-making role of Portugal's heads of state in the period 1976–2006. Not only is Portugal rarely studied in the English language comparative literature, but there is no consensus concerning the proper definition of the country's system of government, whether it is semi-presidential or parliamentary. This article presents new data on the Portuguese president's role in the following areas: cabinet appointment and dismissal; parliamentary dissolution; ministerial appointments; referral of legislative bills to judicial review; veto powers; and agenda-setting through going-public tactics. It is concluded that the president's role in the policy process has never been irrelevant. While the 1982 constitutional reform did eliminate the possibility of undisguised presidential government, presidents have continued to be important in policy making, particularly due to use of their veto and dissolution powers. Therefore, the article argues that Portugal has remained solidly semi-presidential.