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.     

State Tax and Expenditure Limitations,Business Climate,and Economic Performance

The influence of state‐level tax and expenditure limitations on economic performance within the framework of the state's business climate is examined using a family of parametric and nonparametric tests of subsample equivalency. An index of tax and expenditure limitation strength or restrictiveness developed by Poulson is used to test for patterns in 84 separate measures of economic performance, business vitality, and development capacity. In general, we find no evidence that tax and expenditure limitations are associated with higher levels of economic performance or business climate. There is limited evidence that tax and expenditure limitations are associated with a poorer business climate and lower economic performance in some cases.     

State Tax and Expenditure Limitations: There is No Story

Out of the troubled economic atmosphere of the late 1970's grew a discontent with government in general and taxation in particular. The tax revolt took hold at the local level and placed limits on the growth of the property tax through celebrated citizen initiatives like Proposition 13 in California. At the national level, uneasiness with the role of government and a sense that taxation was too high culminated in 1980 with the election of Ronald Reagan. The electorate embraced promises of less government and lower taxes. For states, the tax revolt resulted in a number of state tax and expenditures limitations (TELS). Most had several things in common: they were adopted before 1983, they addressed state appropriations, and they were largely a western phenomenon spreading from California. The overall condition of state economies and structure of state tax systems, in combination with the sensitivity of policymakers to anti-tax sentiment, have done more to limit state spending than have imposed restrictions.     

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.     

Tax and Expenditure Limitations,Salary Reductions,and Public Employee Turnover

This study examines the relationship between salary and employee turnover behavior by analyzing a natural experiment created by the New Jersey Superintendent Salary Cap (NJSSC), which caused salary reductions for 25 percent of NJ superintendents in the initial year. I find that an additional $10,000 reduction in base salary due to the NJSSC corresponds to a 16 percent increase in the likelihood of superintendent turnover. This suggests salary expenditures are important public policy levers to retain employees. This study also contributes to prior research on tax and expenditure limitations (TELs) by documenting one of the first TELs placed directly on public employees.     

Predicting and Interpolating State‐Level Polls Using Twitter Textual Data

Spatially or temporally dense polling remains both difficult and expensive using existing survey methods. In response, there have been increasing efforts to approximate various survey measures using social media, but most of these approaches remain methodologically flawed. To remedy these flaws, this article combines 1,200 state‐level polls during the 2012 presidential campaign with over 100 million state‐located political tweets; models the polls as a function of the Twitter text using a new linear regularization feature‐selection method; and shows via out‐of‐sample testing that when properly modeled, the Twitter‐based measures track and to some degree predict opinion polls, and can be extended to unpolled states and potentially substate regions and subday timescales. An examination of the most predictive textual features reveals the topics and events associated with opinion shifts, sheds light on more general theories of partisan difference in attention and information processing, and may be of use for real‐time campaign strategy.     

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.     

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.     

Do State‐Funded Property Tax Exemptions Increase Local Government Inefficiency? An Analysis of New York State's STAR Program

This study tests the effects of a growing form of indirect state aid—state‐supported property tax exemptions—on local government efficiency. We hypothesize that larger exemptions, by lowering the effective tax price paid by local homeowners and thus their incentive to monitor efficiency, will reduce local government efficiency. We test this hypothesis by examining the introduction of New York State's large state‐subsidized property tax exemption program, which began in 1999. We find evidence that, all else constant, the exemptions have reduced efficiency in districts with larger exemptions, but the effects appear to diminish as taxpayers become accustomed to the exemptions.     

Fiscal Slack and Counter‐Cyclical Expenditure Stabilization: A First Look at the Local Level

There is a rich literature on how state governments use slack fiscal resources—most often in the form of rainy day funds and budget stabilization funds—to minimize the effect of economic downturns. This paper presents the first known examination of whether slack resources have the same counter‐cyclical effects at the local level. It uses a panel data set to determine whether one particular form of local fiscal slack, general fund balance, stabilizes current annual expenditures among a sample of 103 Minnesota cities from 1990 to 2000. The findings suggest different fund balance portions have marginal but nonetheless important effects on expenditures.     

Controlling Nonconventional Expenditure: Tax Expenditures and Loans

Tax expenditures, credits and guarantees, and other nonconventional expenditures are prominent features of the public finances of the United States and other industrialized democracies. While reliable data on these practices have generally been available only for a decade or less, there is reason to believe that these types of transactions now constitute a larger share of total public expenditure than they did in the past. This article discusses the concepts arid implications of two types of nonconventional expenditures—tax expendituures and loans—as well as recent efforts to bring them within the scope of the budget process. The article deals mostly with American practices, but it also draws on the experiences of other democratic countries.     

State‐Funded College Scholarships: General Definitions and Characteristics

State‐funded scholarship programs are transforming the way citizens and policymakers think about higher education. Advocates see these programs as a remedy to problems facing the state workforce such as “brain drain” and “unequal opportunity” for a sound education. Opponents see low retention rates and the number of already‐privileged students receiving benefits as signs that these programs are not reaching their maximum potential. This article traces the development of state‐funded college scholarships from earlier need‐based programs to current merit‐based programs and outlines current debates on policy effectiveness. Currently, 14 states have a state‐funded scholarship program. Differences between programs revolve around the political and economic circumstances of each state.     

Political Control and Managerial Survival in State‐Owned Enterprises

This article explores the impact of political determinants on the survival of managers in state‐owned enterprises (SOEs). Drawing on theories of bureaucratic delegation, it is argued that preference divergence between principals and agents as well as among principals is a major driver of managerial turnover. More specifically, the partisan affiliation of SOE‐managers with the government, the opposition, or individual ministers can serve to explain the length of their tenure. The analysis employs Cox proportional hazard regressions to test these hypotheses on an original data set of 1,671 managers serving in 87 public corporations in Austria between 1995 and 2010, thus presenting one of the first large‐n analyses of political appointments in a parliamentary system. The results strongly support the proposition that partisan affiliation drives managerial survival.