Optimal Government Budgeting Contingency Reserve Funds

During recent years, more state and local governments have made provisions in their budgets for establishing and maintaining contingency reserve funds. A recent study by the National Conference of State Legislatures(NCSL) found that over half of all states now have such funds. The basic purpose of these contingency reserve funds, also referred to as "rainy day" funds, is to insulate governmental budgets from unexpected fiscal disruptions brought about by such factors as unanticipated revenue shortfalls and expenditure overruns. What have received less attention, however, are the criteria which governments need to use in deciding whether to establish such contingency reserves in the first place, and if so, how large these reserves should optimally be. This article explores these two issues, using the State of California as an illustrative case study     

Local leaders and the distribution of central government funds: Evidence from 18 European democracies

This article looks at the relationship between the political affiliation of local leaders and the distribution of government funds with the help of a new dataset on local elections from 18 European countries between 2000 and 2013. It finds that central governments are more likely to target regions with high density of local councils affiliated with the parties in government only under certain institutional arrangements. The relationship exists where local councils enjoy little power and thus are less able to claim credit for the funds independent of the central government. The relationship is also present where local leaders are involved in the selection of candidates for national office.     

The Implementation and Utilization of Stabilization Funds by Local Governments in Massachusetts

This paper examines the management of stabilization funds by local governments in Massachusetts. It assesses the implementation and funding of stabilization funds and explores how they were utilized to respond to a midyear reduction in state aid. We find that stabilization funds correlate weakly with unreserved general fund balances. We also construct multiple regression models to predict stabilization and general fund balances. We surmise that communities have either implicit or explicit financial management strategies in which slack resources play more than countercyclical roles. Further research is needed to determine the role of stabilization funds in local government financial management strategies.     

中国地方财政稳定机制研究

传统财政理论认为,中央政府是稳定政策唯一合适的承担者,然而,Gramlich得出地方政府的财政政策至少在短期内是有效的结论,并提倡地方政府实施稳定的财政政策。本文利用1995—2008年中国30个省、市、自治区(西藏除外)的财政收支面板数据和GDP面板数据,运用固定效应模型和Prais-Winsten PCSE方法实证分析了地方财政收支行为与宏观经济波动的关系,得出在宏观经济处于繁荣阶段时,地方财政收支违反了"逆周期"操作规则,是"顺周期"的结论。认为,地方政府职能转变不到位,财政纪律松弛,财政约束缺失,以及《预算法》的缺陷是导致"顺周期"的原因。为此,本文最后提出了通过建立地方财政预算稳定基金和中期预算制度,修订预算法等相关措施来构建中国地方财政稳定机制的设想。     

Public Service Professionalism for Performance Measurement and Evaluation

For over fifty years, efforts have been made to measure the results of government activities. Most recently, performance measurement and evaluation have been key components of government reforms in many countries in reaction to loss of confidence in governments and budget stringency. Emphasis is on measuring outcomes or results within a general framework of strategic planning and objective setting, and in a context of devolution, managerial decentralization, and privatization. While it seems reasonable that governments should justify their use of public funds by demonstrating the effectiveness of their programs and activities, performance measurement in practice is by no means straightforward and demands considerable thought in its design and implementation.     

Municipal Debt Issues in Foreign Markets: Managing Currency and Interest Rate Risk

Since the mid-1980s, there has been an acceleration of state and local government interest in the taxable bond market as a source of capital. This has resulted from, among other factors, restrictions imposed on economic and industrial development loan programs resulting from the passage of the Tax Reform Act of 1986. Increased state and local government involvement in the taxable bond markets has increased competition for such capital between the public and the private sectors. In turn, the developing capital competition has expanded into overseas securities markets. Private sector corporations have frequently accessed foreign capital markets to take advantage of lower interest rates and reduced financing costs. By contrast, state and local governments have accessed such markets only recently. This article discusses the policy issues considered by a state or local government entity when it decides to borrow funds in foreign markets and discusses the issues involved in managing currency and interest rate risk when issuing municipal bonds in foreign markets. It includes a review of the hedging techniques used by the Kentucky Development Finance Authority (KDFA) to protect against changes in the Yen/Dollar exchange relationship on a recent Samurai bond issue sold by KDFA as an example of such a transaction.     

ROAD GRANTS, INTERGOVERNMENTAL COMPETITION AND THE BENEFITS OF DUPLICATION

Abstract: This article argues that direct commonwealth involvement in road funding and road policy has benefited the states and local government. Although inefficiencies and friction are evident as a result of joint funding, the benefits of multiple accountability outweigh the costs. A competitive dynamic underlies the involvement of all three levels of government, producing outcomes that no single government dominates, but which reflect in part the responses of each to their respective constituencies. The commonwealth has been driven to more intrusive forms of intervention as existing controls failed to achieve the commonwealth's objectives, and to expanding its financial contributions to counter the diversion of funds by state governments. Its commitment to funding the road program is likely to be highest when its specific purpose grants can be identified closely with the provision of roads in particular regions and localities. In sum, joint funding of the road program produces a system that is responsive to competing conceptions and interests, and the commonwealth's "voluntary vacancy" from all but "national" roads is on balance likely to be detrimental to the program.     

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.     

THE INFLUENCE OF E‐GOVERNMENT ON ADMINISTRATIVE DISCRETION: THE CASE OF LOCAL GOVERNMENTS IN EGYPT

One important but often understudied area of research in public administration is the effect of e‐government on administrative discretion. This article examines e‐government factors that influence administrative discretion through a survey of local governments. The focus of this study is on Egyptian local governments, which are using e‐government to modernise public service delivery. Through a survey of administrative officials in these governments, this study found evidence that e‐government factors of collaboration and organisational change influenced administrative discretion. Other common factors noted in the literature such as size of the local government and demand by citizens for e‐government did not register an effect on administrative discretion. The results of this study imply that local governments should do more to enhance e‐government to reduce administrative discretion, especially in the area of increasing collaboration. Copyright © 2011 John Wiley & Sons, Ltd.     

Local government in Europe: Retrenchment,restructuring and British exceptionalism

This article compares the strategy of British governments towards elected local government following the onset of fiscal stress in the mid‐1970s with those of two other western European countries with a unitary system of government: France and Sweden. The conclusion reached is that, notwithstanding different national configurations of central‐local government relations and the distinctiveness of the British strategy, there are similar policy and institutional outcomes in each case. In so far as such outcomes are taking place irrespective of the party political or ideological complexion of governments, they are consistent with a neo‐Fordist interpretation of local government restructuring.     

Beyond Truth and Integrity in State Budgeting: Why State Governments Use Budget Balancing Maneuvers (or Gimmicks)?

This study investigates the influence of political, structural, economic, and other factors on state governments’ use of maneuvers to balance budgets and eliminate deficits from FY 15 to FY 18. Budget maneuvers are unsound and nonsustainable strategies, such as using borrowed funds to finance operations and underfunding pensions. These practices were documented and graded by The Volcker Alliance for all states and years in collaboration with faculty and students at multiple universities. Consistent with prior research that uses an adaptation framework to explain the strategies government officials use to balance budgets, this research finds that state financial condition has the strongest effect or one of the strongest effects on states’ use of such budget gimmicks.     

三方互动：规范我国地方政府间竞争的思考

在我国当前的制度环境下,地方政府在竞争中可以采取4种策略:约束“掠夺之手”、减少公共品的供给、将危机转嫁给不具流动性的要素、树立壁垒干预市场。规范地方政府间竞争应当避免地方政府采用第3、4种策略。为限制地方政府树立壁垒干预市场,从中央层面来看,需要建立全国统一大市场,推行以公平为基础的政策、制度化中央与地方的权力分配;从地方层面来看,需要转变地方政府职能,加强地方公共财政建设,构建地方特色;从社会层面来看,为限制地方政府转嫁竞争危机,需要充分发挥居民在地方政府间竞争中的裁决作用,发挥民营经济的力量以及发挥第三部门的力量。     

以地方政府改革创新论行政管理体制改革——2009年地方政府改革典型调研分析

在对12个省市进行调研的基础上,分析·地方政府行政改革创新举措的现状,总结了其中的成绩,分析了出现的普遍性问题.问题主要为改革理论研究不足,改革系统化程度有限、透明度不高、创新空间不足、法制化程度低、没有触及政府职能的核心领域.针对这些问题,指出在宏大的行政管理体制改革进程中,需要进行全面的理论研究,进行系统的规划,中央政府在实践中应通过政策制定强化分类指导,激励地方政府寻求突破.     

Isolated counties,administrative monitoring,and the misuse of public funds in China

This article empirically investigates the effects of administrative monitoring on the misuse of funds by local governments and provides a representative model of fiscal decentralization with political centralization, where administrative monitoring relies on the top‐down hierarchy of the bureaucratic system in China based on a unique data set from audit programs. We show a double effect between distance and monitoring in local China. The incentive for misusing public funds can be strengthened if the county (a) is governed by a leader whose tenure is longer than 3 years, (b) is governed by a politician from outside the county, or (c) receives more transfer payments. These findings suggest that the administrative monitoring of local governments can be vital to remedying the misuse of public funds.     

The Effects of Cash Management Assistance by States to Local Governments

In 1985 North Carolina's Local Government Commission (LGC) began a program to evaluate the percentage portfolios of the funds invested and the diversity of the investment governments and public authorities. The LGC established state's local five evaluation criteria and notified the governments and authorities of deviations from the five investment norms. This article discusses what was reported to the LGC and changes in invested funds occuring after LGC's evaluation. Principal findings include: cities over 10,000 population and counties in general are investing a high percentage of their funds; small-sized cities and public authorities tend to avoid the higher yielding, but more complex to purchase, instruments: and most governments and authorities experienced a considerable increase in the percentage of funds invested after review by the LGC. Based on the marked increases in funds invested, other states should consider helping local governments and public authorities with cash management.     

The Lure of New Jobs: How Framing Impacts Perceptions of Local Subsidies for Sports Teams

Municipalities often use public funds to support private projects in pursuit of economic growth or improved quality of life. How does the framing of municipal subsidies impact public support for such funding? We examine the case of government-funded minor league baseball stadiums to address this question. Using nationally representative survey data, we find respondents are much more likely to support funding for stadiums when told that baseball will bring jobs and improve the local economy, compared to other frames. Local governments may therefore rely on positive, economic frames to gain public support, despite a lack of evidence that sports stadiums deliver net economic benefits.     

Determinants and Evaluation of Local Energy‐Efficiency Initiatives from the American Recovery and Reinvestment Act

This article examines variation in local‐level energy‐efficiency grants and corresponding initiatives from the American Reinvestment and Recovery Act (ARRA) in the United States. The analysis is based upon a hurdle model of counts of energy‐efficiency grants received by 348 local governments that received these grants from 2009 to 2013, as well as 348 matched local governments that did not receive such funds. City‐level characteristics including amount of federal financial support, per capita income, signaling of preferences for sustainability policies, manufacturing, and political influences are shown to be empirically important determinants of variation in local energy‐efficiency initiatives. The evidence suggests that all else held equal, the $21.8 billion in ARRA funds expended with the intent of increasing local energy‐efficiency programs and policies successfully led to this end.     

Voluntary Narrative Disclosures by Local Governments: A Comparative Analysis of the Textual Complexity of Mayoral and Chairpersons' Letters in Annual Reports

Research on local government annual reports has been limited, particularly in relation to report narratives. This study aims to determine whether characteristics of narratives vary between the reports of local governments and listed companies. After considering the nature of the potential report audiences it was predicted that, if writers consider their audience, local government report narratives would be easier to read, less likely to be obfuscated, and use fewer passive sentences than those in corporate reports. The results suggest that mayoral letters exhibit higher reading ease and are less likely to be obfuscated than their corporate counterparts but they are also shorter and contain more passive constructions, making conclusions about readability and understandability ambiguous. This research acquaints readers with important aspects to consider when preparing or evaluating narrative reports.     

Assessing the Financial Impact of Natural Disasters on Local Governments

In recent decades, the increase in the frequency and the severity of natural disasters has posed growing challenges to governments’ disaster response activities. Disasters can have a considerable financial impact on local governments, but this impact has not been systematically analyzed. This study assesses disaster impact using 17 years of panel data (between 1996 and 2012) from the city and county governments in New York state. The research examines many aspects of local governments’ financial conditions, including liquidity, fund balance, and debt. It tests whether governments’ financial conditions are affected by disasters and whether fiscal institutions moderate disasters’ impacts. The results show that a local government's unreserved fund balance and disaster reserve significantly affect its financial condition, while financial condition indicators are not significantly impacted by natural disasters when the fiscal institution variables are controlled.     

The Effects of E-Government on Trust and Confidence in Government

Trust in government has been declining for more than three decades now. E-government has been proposed as a way to increase citizen trust in government and improve citizen evaluations of government generally. Using two-stage models to analyze recent Pew survey data, this research explores the relationship between e-government use, attitudes about e-government, and trust in government. There is a statistically significant relationship between trust and use of a local government Web site, as well as other positive assessments of federal and local governments. The evidence suggests that e-government can increase process-based trust by improving interactions with citizens and perceptions of responsiveness. The findings are theoretically important for reconciling the conflicting research on the effects of e-government and for understanding variations by level of government. Citizen attitudes toward government, including trust, are core concerns for democratic governance and public administration.