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

Rebecca Hendrick and Xiaoyan Hu

Public Budgeting & Finance, 2020, vol. 40, issue 4, 104-127

Abstract: 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.

Date: 2020
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https://doi.org/10.1111/pbaf.12272

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