Date of Graduation

1997

Document Type

Dissertation/Thesis

Abstract

We have seen policy makers in the American states reevaluate and reestablish their taxing and spending priorities throughout the past thirty years. Over the same period, we have also seen the birth and demise of incrementalism as a comprehensive theory of budgetary politics. Yet, no new comprehensive theory of budgetary politics has emerged to replace incrementalism. The current study attempts to help fill the theoretical void in the literature on budgetary politics by providing a new and different way of modeling budgetary outcomes. First, a definition of the budget is provided that shows budgets are best described as interrelated systems. Second, a simple model is developed that allows us to describe changes in State taxing and spending priorities from 1960 to 1992. Tax and expenditure data from the American states, published by the Bureau of the Census, are analyzed in a pooled cross sectional time series analysis. First, a model was specified where a tradeoff variable is regressed against lagged values of itself to model the error process and provide a structural description of the equation. Significant parameter estimates for the lagged endogenous variables provide evidence of deterministic behavior. A second analysis is performed where a trend variable is added to the equation to classify the tradeoff behavior as short term or long term. Results from the estimation procedures clearly indicated that the changes in state budgetary outcomes are the result of systematic processes. Second, long term tradeoffs occurred across the various tax and spending categories. In general, the findings are consistent with macro-budgetary theory. Over the time series, spending priorities were traded among various sectors of the budget. In some instances, the available revenue stream appeared to be used to support changes in spending priorities or redesign the structure of the available pool of revenues. Therefore, the theory and analysis indicates that tax policy decisions should be directly incorporated into theories about budgetary politics.

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