The impact of government structure on local public expenditures

Though the relationship between local government structure and expenditure has received considerable attention, there is little consensus as to how the features of representative government affect local expenditure. An exception is city council size, which has consistently been found to be positively related to spending. Previous results rely on cross-sectional estimation which may be subject to omitted variable bias. This paper analyzes three components of municipal governments—the form of government, the size of the city council, and the election method of city councilors. Once fixed effects estimation is employed, the positive relationship between city council size and expenditure disappears.     

Punctuations and agendas: A new look at local government budget expenditures

Punctuated equilibrium theory (PET) is an agenda‐based theory that offers a theoretical foundation for large budget shifts. PET emphasizes that the static, incremental nature of agendas is occasionally interrupted by punctuations. These punctuations indicate shifts in priority among the agenda items, and with those agenda shifts come trade‐offs. This article expands the discussion of punctuated budgets to the level of local government by determining that local government expenditures have the characteristics espoused by the punctuated equilibrium theory. The article also determines the frequency of punctuations and the probability for future punctuations. The findings show that some budget functions and policy types are more prone to punctuations and, therefore, have a less stable agenda. The practical significance of extending PET to local government budgeting is the implication on planning, forecasting, and the agenda‐setting process. © 2003 by the Association for Public Policy Analysis and Management.     

The impact of globalization on the composition of government expenditures: Evidence from panel data

According to the disciplining hypothesis, globalization restrains governments by inducing increased budgetary pressure. As a consequence, governments may attempt to curtail the welfare state, which is often seen as a drag on international competitiveness, by reducing especially their expenditures on transfers and subsidies. This globalization-induced welfare state retrenchment is potentially mitigated by citizens’ preferences to be compensated for the risks of globalization (“compensation hypothesis”). Employing two different datasets and various measures of globalization, we analyze whether globalization has indeed influenced the composition of government expenditures. For a sample of 60 countries, we examine the development of four broad expenditure categories for the period 1971–2001: capital expenditures, expenditures for goods and services, interest payments, and subsidies and other current transfers. A second dataset provides a much more detailed classification: public expenditures, expenditures for defence, order, economic affairs, environment, housing, health, recreation, education, and social expenditures. However, this second data set is only available since 1990—and only for OECD countries. Our results show that globalization did not influence the composition of government expenditures in a notable way.     

Competitive Tendering and Outsourcing — Initiatives and Methods

Public debate about the use of competitive tendering and contracting (CTC) by governments largely revolves around whether this process actually does lead to better outcomes compared with direct public provision, and whether the formal separation between service specification and delivery enhances or undermines the achievement of policy goals. Over the last decade debate about CTC in Australia has tended to move away from a narrow focus on ideology, towards a broader discussion about how this process can be best managed. The various reviews of CTC currently underway provide an ongoing opportunity for individuals and groups to express their views and highlight their experiences with CTC. These reviews will provide further guidance about how this process can be best managed in the interests of the Australian community.     

Political fragmentation, party ideology and public expenditures

In this paper we propose an original model of competition for effective political power between majority and opposition coalitions. The model indicates that the electoral margin of the majority and the fragmentation of both coalitions are key variables that determine their effective political power. We estimate the model in the case of the French départements. Our econometric results support the model and show that the per capita social expenditures in the French départements depend on the effective political power of the majority.     

Public expenditures and the risk of social dominance

Public Choice - Based on the observation of an unabated trend towards higher social spending-to-GDP ratios in advanced countries, the study analyzes the risk of social dominance, a situation in...     

A forecasting model for state expenditures

In this study, the median voter model is applied to the problem of predicting state public expenditures in four major categories: human services, elementary and secondary education, higher education, and health services. Demand functions for public services are derived within a formal utility-maximizing model. The resulting model is estimated using time-series data for a representative state and the model is used to predict state spending for fiscal year 1985. The results of the estimation are consistent with the predictions of the median voter model and the forecasts correspond closely to those made by the State Bureau of the Budget. In contrast, a naive autoregressive model of state spending performs poorly.     

Tax and direct expenditures: Perspectives on prepayment proposals

Abstract

If the government were committed to replenishing the inventory of project‐based assisted housing units when losses occurred, owners’ prepayment rights, with prepayment penalties, would be a desirable feature of the program. Additional unsub‐sidized housing units would be created every time a prepayment occurred, the freed‐up subsidies and insurance commitments would support a replacement low‐income unit, and prepayment penalty income could be used to offset mortgage insurance losses and thereby reduce the cost of mortgage insurance.

Under the much less than ideal conditions now prevailing, with no replacement project‐based housing available and no buy out arrangements in place, federal policy must attempt to limit prepayment by the owners of subsidized projects over the next few years.

An approach to establishing a “maximum price” that the government should be prepared to pay to induce each prepayment‐eligible building owner not to prepay is presented.     

Presidential campaign expenditures: Evidence on allocations and effects

This paper analyzes the impact of presidential campaign spending on election results. Analyses of expenditures and voting are often plagued by simultaneity between campaign spending and expected vote share. However, game-theoretic models of resource-allocation decisions made by a central actor (i.e., a presidential campaign) suggest that candidates will spend more in close races and in races likely to be pivotal. We provide empirical support for this theory; using Federal Communications Commission data from the 1972 presidential election, we find that expenditures were higher in states where the election was expected to be closer and in states likely to be pivotal. We use these two factors as instruments in a two-stage least squares model to estimate the effect of spending on votes. We find that, contrary to previous theory and research, presidential campaign spending significantly increases a candidate's vote share.     

Vox Populi? Oregon Tax and Expenditure Limitation Initiatives

This article provides a brief history of tax and expenditure limitation initiatives in Oregon, along with a narrative of contemporary events. Largely as a consequence of the initiative's increased role in the formulation of Oregon's fiscal policy, state and local taxes paid by Oregon households declined from 7.4 percent of income in 1989 to 6.8 percent in 2003; state revenue, which is heavily dependent upon personal income taxes, has become increasingly income elastic; and state and local governments now rely on user fees to an almost unprecedented degree.