Does General Fund Balance Stabilize Municipal Expenditure? Evidence from Large American Cities

Yonghong Wu and Yu Shi

International Journal of Public Administration, 2021, vol. 44, issue 5, 420-429

Abstract: Municipal governments in the U.S. tend to build and maintain substantial general fund balances to ensure expenditure stability and long-term financial sustainability. It is important to understand how municipal fund balances help stabilize municipal spending. This article examines the annual municipal general fund expenditure gap between 1996 and 2011. Using data from 100 large cities, the empirical evidence does not support the stabilizing effect of the unreserved fund balance on general fund expenditure. Furthermore, the undesignated portion of the unreserved fund balance helps stabilize municipal general fund expenditure during upturn years, whereas the designated portion plays a procyclical role. This article also finds that more restrictive local tax and expenditure limits lessen municipal expenditure gap during bad fiscal years and that residents with conservative ideology tend to support countercyclical fiscal policies at the local level.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/01900692.2020.1728772 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:lpadxx:v:44:y:2021:i:5:p:420-429

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/lpad20

DOI: 10.1080/01900692.2020.1728772

Access Statistics for this article

International Journal of Public Administration is currently edited by Ali Farazmand

More articles in International Journal of Public Administration from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().