Local Government Responses to Fiscal Stress: Evidence from the Public Education Sector

This article investigates local government responses to fiscal stress through the lens of the K–12 public education sector, examining two major policy options available to school districts for managing fiscal hardship: (1) cutting costs, especially through layoffs, and (2) raising revenues locally through voter referenda. The article employs district‐level administrative and survey data from California and Indiana to examine whether school districts exhibit features of a rational or natural system—in which their behaviors largely reflect fiscal pressures only—or whether they exhibit features of an open system in which nonfinancial factors also shape responses. In Indiana, district fiscal characteristics explain differences in cost‐cutting and revenue‐raising behaviors; there is little empirical evidence that school districts exhibit features of an open system. In California, both fiscal and environmental attributes, including poverty characteristics, average student achievement levels, and the enrollment of English learner students, explain school district behaviors.     

The Effects of Political and Fiscal Incentives on Local Government Behavior: An Analysis of Fiscal Slack in China

This study examines the determinants of fiscal slack from the perspective of Chinese local government officials. Given China's rapid economic growth over the past 30-plus years, Chinese local governments reportedly hold huge slack resources that attract public scrutiny. In an effort to improve their fiscal performance, some localities recently established budget stabilization funds, following a top-down initiative. However, it remains unclear to what extent fiscal slack has accumulated and which factors affect slack resource levels of Chinese local governments. By employing a panel dataset (249 prefecture-level cities, 1999–2009), this study finds that political and fiscal factors exert significant influence over local officials’ decisions about slack resource levels. The findings of the study bear implications for establishing fiscal rules and improving the performance of sub-national governments in China and other countries.     

Preventing Local Government Fiscal Crises: The North Carolina Approach

Some local governments face fiscal challenges due to mismanagement and declining economies. In particular, manufacturing states like Michigan and Ohio have been hard hit by the effects of international competition. To prevent fiscal distress from becoming a crisis, states exercise oversight over local government fiscal management. The three bond rating agencies consider the North Carolina oversight system a model. This paper discusses the North Carolina oversight system, including audit review, technical assistance, debt issuance, and power to take over the financial operations of distressed local units.     

地方政府绩效评价的扩散:面向广东省的事件史分析

以1999—2016年广东省各市县政府绩效评价的扩散为例,运用基于二元Logistic回归的事件史分析(EHA)法,探寻地方政府绩效评价的扩散机制。研究发现,广东省各市县政府绩效评价的扩散在时间上呈现S形,并且可以分为四个阶段——起始阶段、稳定增长阶段、快速增长阶段和下降阶段;政府绩效评价是在以强制机制为主、以学习机制与竞争机制以及模仿机制为辅的共同影响下得以逐步扩散。同时,强制机制、学习机制和模仿机制的时间滞后效应显著。因此,为推动地方政府绩效评价工作的持续发展和水平提升,中央政府应该加大指导和督查力度,并鼓励各地开展经验交流和学习,开展地方特色创新;加强新闻报道和宣传,同步营造争先创优、提绩创效的舆论氛围。     

Before There Was Enron,There Was Orange County: A Study of Local Government Financial‐Oversight Committees

Recent financial scandals in some of America's largest corporations have prompted popular speculation that a similar crisis may occur within the public sector and, therefore, that government and nonprofit organizations should be required to adopt financial oversight practices similar to those that are mandated of publicly‐traded corporations in the Sarbanes‐Oxley Act of 2002. One of those mandated practices—the use of financial‐oversight committees—is already a common practice in public organizations, though little is known about its effectiveness. This study uses a national sample of local governments to examine whether financial‐oversight committees improve financial control and strengthen stakeholder confidence in financial reporting. The findings provide preliminary support for the use of financial‐oversight committees as an effective tool to improve financial accountability in local government.     

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.     

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 Impact of Political Factors on Local Government Decentralisation

ABSTRACT

The process of local decentralisation of public services delivery has attracted research attention because of the wide range of factors that induce governments to make this decision. Nonetheless, most such studies have focused on economic and financial aspects, ignoring the impact of political factors. The scarce previous research about political factors is the motivation for this study. We used panel data models based on 153 Spanish municipalities with populations over 50,000 for the period 1999–2007. The process of decentralisation is disaggregated according to the legal form of the entities: corporations and foundations. Our results show that more corporatisation processes are carried out in environments where political competition is lower and the party in power enjoyed greater support in the last elections. Additionally, decentralisation processes usually take place in the years immediately following elections, especially through foundations. Furthermore, both forms of decentralisation are more likely to be initiated by right-wing politicians.     

经济开放对地方财政收入规模及结构的影响实证分析

使用中国1999—2007年度省级面板数据,实证分析了经济开放对地方财政收入规模和内部相对结构变化的作用。研究表明:贸易开放度的提高显著增加了地方个人所得税、行为税、财产税和非税收入,整体上也引起地方财政总收入的增加;并使地方财政收入中个人所得税、财产税和非税收入比重上升,城建税收入比重下降。投资开放的提升显著增加了地方营业税、个人所得税、行为税、非税及预算外收入,同时减少了地方增值税和企业所得税收入,总体上对地方财政收入有负效应;并提高了地方财政收入中营业税、个人所得税、行为税、财产税、非税收入及预算外收入的比重。由于外资和外贸对经济及税基的作用差异、现行分税制、地方各项财政收入自身特征、地方政府基于多元目标为促进外资投资呈现出的策略行为等,使经济开放对地方各项财政收入规模及其相对结构的影响具有复杂和非一致性。     

Coping with Poverty: The Impact of Fiscal Austerity on the Local Budgetary Process in Norway

This article examines the impact of public sector austerity on the budgetary process in local government. We initially propose that resource squeeze influences the criteria of resource allocation. More specifically, we suggest that austerity tends to generate a greater emphasis on performance-based criteria such as cost-benefit assessments, while arguments relating to production costs, previous commitments and relative standards of service supply tend to carry less weight. A regression model is developed to test these hypotheses. Response variables, drawn from a survey conducted among Norwegian local government officials, measure the success of a menu of arguments which justify increased appropriations, and we examine whether austerity affects the perceived success of these arguments. Consistent with previous studies, we find no impact of stress on decision-making behavior in local government. We do not believe that this result can be dismissed as merely a by-product of our research design. This conclusion leaves us with at least two possible interpretations. One suggests that austerity affects the criteria of resource allocation if, and only if, decision-makers perceive the squeeze to exert a persistent and inescapable pressure which requires a fundamental redefinition of managerial style. This has hardly been the case in Norwegian local government. The other interpretation suggests that the criteria for resource allocation in fact remain unchanged, even in situations when austerity is believed to be persistent. Inertia can be caused by (a) the disproportional disutility attributed to budgetary cut-backs compared to the benefits of appropriation increases, (b) the propensity to attribute austerity to "external" rather than "internal" causes, and (c), problems related to aggregating individual preferences and criteria into a coherent organizational policy of resource allocation.     

The Impact of Management Capacity on Government Innovation in Korea: An Empirical Study

ABSTRACT

A common assertion within public management is that management capacity drives policy outcomes. This study tests that argument, focusing on an important policy outcome—innovation. Data were drawn from the Korean government to examine the impact of government's management capacity for the adoption and implementation of innovation. The results confirm that both managerial behaviors and structures are drivers of government innovation. The adoption and implementation of innovative projects require full-scale management capacity, encompassing innovative leadership, a quality workforce, appropriate structures/systems, and the ability to manage external influences. These results suggest that public management capacity drives innovation in government by changing managerial behaviors and structures. Implications of these results for managing government innovation are discussed.     

治理结构多元化：地方政府机构改革的新思路

通过对当代中国地方政府机构改革的一些典型个案进行分析,发现其陷入困境的深层次原因在于强调国家统一管理而导致的地方治理结构单一化。当代中国的地方治理结构单一化是历史遗传和传统体制的产物,与转轨时期纵向政府间关系中存在的压力型体制也有着内在的关联。随着改革的深入,地方治理结构单一化的弊端逐渐显现出来。但是,从美国和英国等西方发达国家的实践来看,地方治理结构多元化与国家的统一管理并不矛盾。因此,在已有的地方政府机构改革的思路基础上,实现地方治理结构多元化应该成为继续推进当代中国地方政府机构改革的新思路。     

The Impact of Fiscal Illusion on Housing Values: An Australian Test of the Debt Illusion Hypothesis

The debt illusion hypothesis holds that taxpayers may underestimate the present discounted value of future tax liabilities under debt finance. The empirical question arises as to whether debt illusion at the local government level can affect housing values. This proposition is evaluated by investigating whether local fiscal variables are fully capitalized into housing values by means of a pooled time-series, cross-sectional analysis of twenty-seven metropolitan municipalities in Sydney, Australia, for the period 1989 to 1991. The results indicate that municipal debt is under-capitalized into housing values and, accordingly, suggests that local government expenditure may be systematically biased upwards.     

论县级政府行政改革的战略选择

改革战略的正确选择是县级政府行政改革实现历史性突破的前提。未来的县级政府行政改革必须走出纯粹的组织变革层面,进入组织变革、职能变革与政治变革三重良性互动的全面变革时代。在中央与地方、政府与党委的纵横关系中,增加县级政府在行政改革中的自主性和县域公共利益的代表性,依据县域特殊性寻求政府职能与机构的合理性,变革权力结构,形成政府与社会良好合作的善治格局,是新时期县级政府改革与发展的战略选择。     

Negative Externality of Fiscal Problems: Dissecting the Contagion Effect of Municipal Bankruptcy

The fiscal decision of one local government may spill over to other localities, and such externality could justify and inform policy making by a higher‐level government. Theories of municipal bond market contagion postulate that once a local government files for bankruptcy, localities sharing similar characteristics will be perceived negatively by creditors and charged a higher interest rate. In this article, empirical examination of the second‐largest municipal bankruptcy in American history shows no support for general contagion based on geographic proximity. That is, nearby localities did not pay a higher interest rate after the bankruptcy. However, case‐specific contagion formed around borrower‐ and bond‐specific characteristics contributing to the bankruptcy: general‐purpose borrowers and general‐obligation bonds experienced increased borrowing costs after the bankruptcy. These findings have implications for states considering granting authorizations for municipal bankruptcy or providing financial assistance to struggling localities, as well as for local governments planning to access the municipal bond market.     

试论地方政府的创新管理

政府的创新管理是当今全球化时代的一个世界性课题。对我国地方政府来说,地方政府的管理创新是整个地方政府管理系统的整体优化和更新。其中,重塑政府管理理念是前提,优化政府职能和创新是核心,转变管理方式是关键。只有对系统相关要素进行整体创新,才能提升地方政府管理的整体功效。     

Reporting on the Control Structures of Local Government Under the Single Audit Act of 1984

One of the major objectives of the Single Audit Act of 1984 (SAA) is to improve the financial management of local governments (Public Law 98–502, 98 Stat.2327). The purpose of this study is to examine how local governments have responded to the SAA and to provide some evidence concerning the extent to which the SAA is accomplishing its stated objectives. This study examines what auditors have reported with respect to the control structures of local governments and considers the extent to which control structures changed over the first four reporting years under the SAA. Differences in the frequency of reported weaknesses are examined across the four years and between types of government-counties and cities-and types of auditors- large and small public accounting firms and state auditors. The study also considers the extent to which reported weaknesses were corrected. The research findings reveal that auditors reported considerably more control weaknesses in counties than in cities, and the frequency of control weaknesses reported declined significantly over the first four reporting years under the SAA for city governments but remained relatively constant for county governments. In addition, there were significant differences in the frequency of control weaknesses reported related to the type of auditor.