Structural deficits and the politics of balancing the budget: the case of missouri fy 2004 budget

Abstract

This paper uses the Missouri Fiscal Year (FY) 2004 budget as a case study to illustrate two aspects of the recent state budgetary problems: its structural budget deficits and the politics involved in balancing a budget. The paper also highlights the dilemma that government faces in meeting constant public demand for services while revenue sources are restrained.

State budget shortfalls and budget balancing strategies during and after the great recession of 2008

“…For the economic recession of the early 1990s, examples of such case studies include California (Savage, 1992), Tennessee (Barney, 1992), and New York (Brecher, Horton & Mead, 1994). Examples for the recession during the early 2000s include Wisconsin (Conant, 2003), Georgia (Lauth, 2002), and Missouri (Qiao, 2006). The focus of these case studies is on the structural imbalance of respective state budgets and on attempts by state governments to address budgetary problems.…”

Is california broke or is its budgeting system broken? empirical examination of the budget affordability, the institutional arrangements, and the growth of deficits in California

“…When it comes to the supposition that legislative party divisions in face of supermajority requirements are major drivers of budget imbalances (Alt & Lowry, 1994, 2000Knight, 2000;Qiao, 2006), the study finds mixed results. Divided government does not show to be a statistical significant predictor of budget imbalances (Sig=.358), but the composition of the State Assembly is a statistically significant factor (Sig=.028).…”

“…The increases in education expenditures, the primary target of citizen mandates, indeed show to be statistically significantly negatively related with the general fund balances. The study still finds only mixed evidence for the argument that "budget gridlocks" (Alt & Lowry, 1994, 2000Cummins, 2012;Qiao, 2006) are the main driver of the budget imbalances. As the representation of Democrats in the State Assembly increases the ability of the legislature to balance the budget seems to improve, but divided government does not show to be a statistically significant factor.…”

“…Empirical studies of the effects of supermajority requirements on taxes indeed indicate that there is a negative effect (Knight, 2000; see also Crain and Miller, 1990;Gradstein, 1999;Kenyon and Benker, 1984). Krugman's (2009) argument, however, extends further and connects the adoption of supermajority requirements, and the consequences of it, to the state political trends (see also Alt and Lowry, 1994;Knight, 2000;Qiao, 2006). Obviously, if it takes two-thirds majority instead of simple majority to pass legislation it would be more difficult to do so, but this is not an insurmountable problem if there is a culture of political bipartisanship (Qiao, 2006, p. 288).…”

“…To examine whether the deteriorating budget balances in California are due to legislative divisions (Alt & Lowry, 1994, 2000Qiao, 2006) and supermajority requirements (Kenyon & Benker, 1984;Knight, 2000) the model includes a variable that measures the party composition of the State Assembly (the number of Democrats in the State Assembly) and two dummy variables that control for (1) divided government (whether the party of the Governor and the party that controls at least one of the houses of the State Assembly were different) and (2) the existence of a supermajority in the State Assembly. A preliminary model controlled for the party composition of the State Senate, but this variable showed to be highly collinear (tolerance level of 0.70 and VIF level of 14.240) with the party composition of the State Assembly, indicating wave changes in the legislature, and was excluded from the final model.…”