Wiley: Public Budgeting & Finance: Table of Contents

Dynamic Effects of Public Expenditure: The Challenge of Multi‐Level Governance Systems

Jens Blom‐Hansen, Kurt Houlberg, Søren Serritzlew — Mon, 08 Jun 2026 05:19:10 -0700

ABSTRACT

The public economy literature shows that dynamic effects of public expenditure vary across programs, giving governments incentives to allocate spending with precision. However, this may be difficult in multi-level governance, where centrally funded expenditure is implemented locally. While largely ignored in the dynamic effects literature, this problem is central to fiscal federalism research. We draw on these insights to argue that it is difficult for central government to control expenditure at the local level. Empirically, we study intergovernmental grants in Denmark and find that local governments spend only part of the funds as intended. We discuss implications for future research.

Refinancing Federal Loans to Support Transportation Infrastructure: Lessons From the COVID‐19 Pandemic

Muhammet Mustafa Sever, Jonathan L. Gifford, Carter B. Casady — Mon, 25 May 2026 05:52:08 -0700

Abstract

The COVID-19 pandemic exposed critical vulnerabilities in U.S. transportation infrastructure, resulting in widespread project delays, suspensions, and cancellations. In response, borrowers turned to refinancing to mitigate revenue shortfalls and benefit from historically low interest rates. This paper analyzes the surge in refinancing activity between 2020 and 2022, focusing on transportation infrastructure projects that secured more favorable loan terms during this period of disruption. It evaluates refinancing decisions using established public finance criteria to assess fiscal and policy implications. The findings illuminate the incentives shaping borrower and lender behavior and consider refinancing as a strategic fiscal instrument under economic stress.

Learning From 25 Years of Changes in Business Tax Policy

Jason DeBacker, Aerfate Haimiti — Mon, 25 May 2026 00:00:00 -0700

Abstract

This paper summarizes the significant changes to the taxation of business income in the United States over the last 25 years and how the resulting policy variation has helped inform research on business taxation. The survey of research on the topic covers investment incentives, international taxation, corporate financial policy, issues with pass-through businesses, compliance, enforcement, and other related topics.

Does Gender Budgeting Benefit Only Women? A Well‐Being Perspective

Marjorie De la Cruz, Yoon‐Jung Choi, Milena I. Neshkova — Thu, 14 May 2026 04:51:21 -0700

Abstract

Gender budgeting (GB) is a social innovation that integrates gender awareness into budgetary decision-making. This study builds on existing well-being frameworks to conceptualize GB as an undervalued yet powerful tool for achieving human development across social groups. Using the event study method to leverage the differential timing of GB adoption across 46 countries between 2000 and 2022, we compare its impact on the human development of women and men. The results reveal that GB not only positively impacts women but also benefits men, suggesting that promoting gender equality does not come at the expense of any group's well-being.

An Analysis of Proactive State Monitoring of Local Government Debt Issuance

Justina Jose — Wed, 06 May 2026 11:05:12 -0700

Abstract

Debt monitoring rules are a type of fiscal rule that allows states to proactively oversee their local government borrowing. This study examines how these rules impact local borrowing costs using a mixed-methods approach. It reviews state codes to classify debt monitoring features and creates a rigor index to measure state involvement. The study then assesses how variation in state involvement influences borrowing costs. The results indicate that debt monitoring rules involving early and substantive state involvement, particularly those that facilitate timely information exchange and state engagement, are associated with lower borrowing costs, while passive monitoring has little effect.

Resilience as a Fiscal Input: County Financial Condition in an Open Systems Framework

Jungmin Hwang, Junghwa Choi, Sojin Jang, Craig S. Maher — Mon, 04 May 2026 22:46:36 -0700

Abstract

This study explores how community resilience shapes local fiscal health by integrating the Baseline Resilience Indicators for Communities (BRIC) into an open-systems framework of public finance. Using financial data from U.S. counties for fiscal years 2016 and 2021, we examined whether the six BRIC domains explain variation in operating performance, fiscal reserves, and debt levels. We found that economic and social resilience were positively associated with higher fiscal reserves, while housing infrastructure and civic engagement reduced them. This challenges a monotonic relationship between community resilience and county fiscal health, revealing trade-off dynamics and the context-dependent nature underlying it.

Intergovernmental Grants, Fiscal Autonomy, and Local Budgeting: Evidence of Reference Dependence From Korea

Kyungmin Yoo, Sangheon Kim, Kwang Bin Bae — Sun, 03 May 2026 05:20:53 -0700

Abstract

This study employs a panel threshold regression to examine how own-source revenues and unconditional grants affect internal expenditures of Korean local governments. Guided by mental accounting theory, we argue that revenue sources create distinct “accounts,” shaping expenditure choices. Results reveal two thresholds (0.310% and 0.401%) beyond which the effect of own-source revenues on internal spending declines sharply, while the grant effect remains stable. This loss-averse pattern suggests that excessive reliance on unconditional transfers can weaken fiscal autonomy, highlighting the need to redesign intergovernmental grants to mitigate inefficiencies.

Regulation or Revenue? The Role of Selective Taxes in Housing Policy

Sian Mughan, Akheil Singla, Anthony Howell — Mon, 27 Apr 2026 05:08:12 -0700

ABSTRACT

Housing affordability challenges have led governments to adopt selective taxes to curb speculative demand and raise revenue. We study two such taxes in New South Wales, Australia, targeting foreign residential property buyers: the foreign purchaser duty (FPD), a one-time transaction tax, and the foreign land duty surcharge (FLDS), an annual land tax. Using a variety of empirical approaches, we show that doubling the FPD rate reduced foreign purchases but cut FPD revenue by nearly 150%. In contrast, a higher FLDS rate boosted revenues without affecting ownership or sales. Policy makers thus should specify policy objectives and select tax instruments accordingly.

The Power of Renewal: Status Quo Bias Impacts Voter Approval of School Spending Referendums

Corey Lang, Rachel Ricchio — Wed, 22 Apr 2026 23:15:11 -0700

Abstract

Status quo bias often impacts decisions about private goods and is hypothesized to influence voter choice. This paper offers a clean, direct, real-world test of status quo bias's effect on voter support for school spending. We take advantage of a unique Minnesota rule that requires ballot language to disclose and distinguish between new and renewed property tax impacts of referendums. Using a novel dataset of 922 Minnesota school referendums from 2008 to 2023, we find that referendums that renew existing taxes receive 13.0–15.2 percentage points more support than referendums proposing new taxes, despite equivalent financial implications. This suggests that roughly 15% of voters are swayed by the status quo and rely on this simple cue instead of careful cost and benefit assessment. Heterogeneity analysis suggests that status quo bias is substantially weaker in high income or more educated districts.

The Inverted U‐Shaped Puzzle: Natural Disaster Experiences and Government Emergency Budgeting in China

Ting Liu, Luya Liu — Fri, 10 Apr 2026 00:59:40 -0700

ABSTRACT

This study empirically examines the inverted U-shaped relationship between natural disaster experiences and the government reserve fund rate using panel data from 31 Chinese provinces between 2015 and 2021. It identifies the threshold at which provincial governments learn from their past experience. This pattern may originate from the institutional rigidity in China's emergency finance system and shifting intergovernmental fiscal responsibilities via moral hazard. Our analysis uncovers this complex relationship by examining the institutional determinants of provincial budgetary decisions, providing an empirical basis for optimizing emergency fiscal systems and designing evidence-based fiscal policies.

Financial Myopia in Closed Systems: How State Financial Monitoring Systems Can Ignore Local Constraints

David J. Schwegman, Eric J. Brunner, Jinhai Yu, Xin Chen — Tue, 07 Apr 2026 00:00:00 -0700

Abstract

We examine how closed-system state financial monitoring can misrepresent local fiscal health by ignoring broader legal and regulatory contexts. Using Texas as a case study, we show that school districts financing debt with renewable energy revenues are penalized under the state's monitoring system due to higher debt-per-pupil levels despite responding rationally to state incentives. This case illustrates a form of financial myopia, where rational financial behaviors are penalized under a monitoring system. We provide causal evidence of this dynamic and argue for an open-systems approach to fiscal monitoring that recognizes the legal and fiscal environments shaping local financial decisions.

Lessons on State and Local Income Taxes From the Twenty‐First Century and Challenges for the Future

David R. Agrawal — Sun, 05 Apr 2026 20:59:13 -0700

Abstract

I survey recent research on subnational income tax policy, arguing that a defining feature is geography. Geographic boundaries limit the power of subnational governments to tax people and activities. The article discusses where income should be taxed and the effects of these tax rules on the interjurisdictional mobility of people and jobs. I examine how mobility can heighten tax competition and limit the ability of subnational governments to engage in redistribution. I discuss how telework will influence the income tax by decoupling the locations of the employee and employer. Important areas for future research for the coming decades are highlighted.

Better VAT for Both Explicit and Implicit Financial Fees

Guillermo Peña — Mon, 30 Mar 2026 19:59:44 -0700

Abstract

Recently, several countries have initiated reforms on their VAT regimes to include financial services, following the emergence of various methods for taxing both implicit and explicit fees. This article provides a theoretical and empirical analysis of these reforms. While exempting financial services from VAT, or taxing only Explicit Fees and Commissions (EFCs), tends to generate excessive income and private consumption, the comprehensive taxation of both implicit and explicit fees within Financial and Insurance Services (FIS) leads to more sustainable outcomes. Specifically, this approach enhances the price visibility of public services, thereby fostering a reduction in public expenditure.

Beyond Boilerplate: Analyzing the Dynamics of MD&A Content in State Financial Reports

Hyoeun Kim, Mikhail Ivonchyk — Tue, 10 Mar 2026 23:35:46 -0700

ABSTRACT

For over two decades, state and local government financial reports have included MD&A to provide qualitative insights complementing financial statements. However, concerns exist about its generality and lack of year-specific details, with limited research on MD&A content changes. Using computational text analysis, this study measures MD&A similarity over time for all US states (2003–2022) and examines its determinants. Results show that cash and budgetary indicators do not drive revisions, while long-term solvency changes lead to modest increases. State auditor competence is also linked to larger revisions, highlighting the role of administrative expertise in MD&A preparation.

Fiscal Effects of Firearm Taxes in California and Colorado

Joseph G. Eisenhauer — Tue, 10 Mar 2026 23:35:46 -0700

ABSTRACT

California and Colorado recently enacted ad valorem excise taxes on firearms and ammunition, earmarking the tax revenues for public safety and victim services. But revenue collections in California have fallen far short of initial projections, and Colorado's revenue forecasts may also prove to be overestimates. This note explores the reasons for the shortfall and applies recent elasticity estimates to a model of sales revenue, thereby generating more realistic forecasts of excise and sales tax revenues. State-level price elasticities in California are also estimated by comparing sales in the periods immediately before and after the implementation of the excise tax.

Addressing Retiree Health Care Costs

Robert Bifulco, Iuliia Shybalkina — Tue, 10 Mar 2026 23:35:46 -0700

ABSTRACT

State and local governments face substantial unfunded liabilities from other post-employment benefits (OPEB), primarily retiree health care. While pension policies provide useful lessons, OPEB presents distinct challenges: it is minimally prefunded, more legally flexible, and highly sensitive to rising health care costs. This article examines strategies to address escalating retiree health care costs, including benefit adjustments, higher retiree contributions, full prefunding, and partial prefunding approaches. Our analysis shows that, except in districts with steeply declining revenues, combining moderate benefit changes with partial prefunding can stabilize costs for most districts, though implementing such measures will require navigating politically challenging trade-offs.

Demographic Change and Citizen Support for and Perceptions of Local Government

Eric J. Brunner, David J. Schwegman, Bill Simonsen — Tue, 10 Mar 2026 23:35:46 -0700

ABSTRACT

Research suggests that increased racial and ethnic diversity can result in under-provisioning of public services. The United States is increasingly diverse, and the Hispanic community is one of the fastest growing racial-ethnic groups. Using both a descriptive approach, as well as an instrumental variable strategy to address concerns around endogenous sorting into communities, we find that the higher the growth of the share of Hispanic individuals in a school district, the less non-Hispanic White individuals trust their school district and the less willing they are to pay increased taxes. We also find divergent preferences among Hispanics compared to non-Hispanic Whites.

The Effect of Fiscal Decentralization on Tax Compliance Time: Evidence From the World Bank Doing Business Project

Nguyen Doan — Tue, 10 Mar 2026 23:35:46 -0700

ABSTRACT

This paper investigates the impact of fiscal decentralization on tax compliance time. I postulate that fiscal decentralization is a means of inducing better targeting of public services and enhancing the efficiency of public service delivery because local governments respond to incentives to perform better and compete to attract a mobile tax base. This, in turn, reduces the level of tax administration burden, that is, businesses need less time to comply with taxes. Using panel data for 79 countries from 2006 to 2020, I find that fiscal decentralization is negatively associated with tax compliance time, particularly in developing countries.

Issue Information

Tue, 10 Mar 2026 23:35:46 -0700

Public Budgeting &Finance, Volume 46, Issue 1, Page 1-2, Spring 2026.

From Opportunity to Constraint: Structural Inequities in Public Pension Fund Investing

Odd J. Stalebrink — Mon, 02 Mar 2026 00:00:00 -0800

Abstract

This study examines how structural features shape participation in private equity across U.S. state and local public pension systems. Using panel data from the Boston College Public Plans Database the analysis introduces the concept of structural asymmetries to explain persistent differences in access to illiquid investment strategies. Descriptive evidence shows that private equity participation expanded unevenly over time, with larger systems increasing exposure more rapidly after the Great Recession. Fixed-effects models indicate that fund size and liquidity capacity are the most consistent determinants of participation, while fiduciary discipline and actuarial assumptions exhibit limited explanatory power once structural constraints are considered.

A Framework for Sales Tax Base Expansion: Food Taxation in North Carolina and Applications for Other States

Whitney Afonso, Alex Combs — Wed, 18 Feb 2026 00:12:30 -0800

Abstract

The review of sales tax exemptions represents a significant undertaking for states across the United States. This analysis introduces a set of tax policy criteria to evaluate these exemptions in response to prevalent stakeholder considerations. We implement these criteria in the context of North Carolina's exemption of unprepared food from the sales tax base, outlining a specific methodology for each. In addition, we leverage a distinctive feature of North Carolina's tax revenue data to generate projections for other states using a machine learning approach. By repealing their food sales tax exemptions, our calculations suggest that states could increase revenue by approximately 12 percent or, if revenue neutrality were pursued, decrease their general sales tax rate by an average of 0.62 percentage points. These results align closely with our North Carolina analysis. We also find that repealing the food exemption would decrease revenue volatility in North Carolina, and, under a revenue-neutral approach, result in a progressive change in tax burdens for the lowest-income households once accounting for government food assistance. One notable downside to repealing food exemptions is the potential revenue loss for local governments that currently tax food—a challenge that could be mitigated through intergovernmental transfers.

Other People's Money: Political Embeddedness on Pension Boards, Alternative Assets and Investment Fees

Jeffrey C. Diebold, Cody R. Taylor — Wed, 18 Feb 2026 00:10:32 -0800

Abstract

State-administered pension plans report paying roughly $20 billion each year in fees to external asset managers, much of it for high-cost, high-risk “alternative” assets such as private equity and hedge funds. These outcomes involve trillions in pension investments that affect the retirement security of millions of public sector workers and the budgets of every U.S. state. Yet, a consistent finding in the finance literature is that these managers tend to underperform broad market indices after accounting for fees. Politically appointed members of pension boards may nonetheless rationally favor these strategies, given the short-term political incentives of those who appoint them. Drawing on the “political embeddedness” framework, this study assesses whether and how the share of politically appointed members on pension boards influences asset allocation and fees. Using panel data for 66 state-administered plans from 2019–2022, combined with fee data from annual reports, we estimate plan-level fixed effects models to examine investments in alternative assets and fees paid by pension systems. We find that, among boards with statutory authority over asset allocation, adding one political appointee (≈10 percentage points) is associated with a 1.2 percentage point increase in alternative asset allocations and a 5–7 percent increase in total fees, even after adjusting for asset composition. These results align with the short-term incentives of political appointees and underscore how board governance shapes investment outcomes. The prevalence of missing fee data—especially for alternative assets—further highlights the need for greater transparency in fee reporting.

US Federal Budgets and Federal Employee Job Satisfaction

Nathan Favero, Carla Flink, Tingli Qu — Fri, 13 Feb 2026 04:15:44 -0800

Abstract

Researchers have long studied how organizational budgets relate to performance, but how do employees themselves experience the effects of budgetary decisions? Given widespread attention to political dysfunction in US federal budgeting, conventional wisdom holds that employees are negatively affected by budgetary uncertainty (volatility, delays, and stop-gap measures). We test how budget size and uncertainty are associated with US federal employee attitudes using survey and archival data from 2005 to 2020. Results provide some evidence that employee job satisfaction improves with enhanced funds, but there is little to no support for the notion that budgetary uncertainty influences federal employees' job satisfaction.

Bonds on the Ballot: What Voters (Don't) Know About Debt Financing and Why It Matters

Shanna Pearson‐Merkowitz, Joshua J. Dyck, Edward L. Lascher Jr., Corey Lang — Mon, 09 Feb 2026 00:00:00 -0800

Abstract

American subnational governments commonly require voters to approve bond proposals, reflecting historical concerns about legislative shortsightedness. Yet voters need an understanding of how bond financing works to make choices consistent with preferences. Existing literature makes it unclear whether voters have such knowledge. Using original survey data, we find only about half of voters can identify how bonds are financed. An experiment shows that simple cues can change voter preferences for using bonds or taxes. These findings cast doubt on whether bond elections reveal true preferences and suggest there may be better means to prevent poor bond decisions.

The Redistributive Effects of Federal Medicaid Outlays Across Counties: Evidence From the ACA

Laura Montenovo, Kosali Simon, Coady Wing — Fri, 06 Feb 2026 00:00:00 -0800

ABSTRACT

We examine how Medicaid expansion under the Affordable Care Act reshaped federal transfer inflows to counties using state Medicaid expansions between 2014 and 2017. We show that the ACA expansion increased federal Medicaid transfers by $361 per capita in expansion counties. Using our estimates, we forecast that non-expansion counties would gain $554 per capita if they expanded Medicaid. These transfers flow to counties with lower tax capacity and lower gross income. Our findings suggest that Medicaid expansion was a health policy intervention that also functioned as a budgetary mechanism reshaping federal to local transfers and fiscal smoothing across US counties.

The Evolving Role of 21st Century Municipal Financial Advisors

Daniel G. Garrett, Baridhi Malakar — Fri, 30 Jan 2026 01:45:01 -0800

ABSTRACT

We describe the evolution of the market for municipal financial advice since the year 2000 and present new empirical facts. Using SEC municipal advisor filings, we show that the number of operating advisors has decreased over time. We document that withdrawals—either exits, reorganizations, or mergers—are concentrated among smaller firms and those charging noncontingent fees. Using bond issuance data, we document that the use of advisors is increasing broadly over time and that advisor relationships are sticky. We relate the presence of advisors to several phenomena: changing structural complexity, changing disclosure complexity, and the timing of redemption behavior.

County‐Level Property Tax Rate Competition

Kyle A. Kopplin — Mon, 26 Jan 2026 05:19:57 -0800

ABSTRACT

This paper estimates heterogeneous strategic responses to nominal property tax rates set by contiguous counties in large U.S. cities between 2010 and 2019. Horizontal fiscal competition has been understudied in the United States due to the difficulty resolving endogeneity. This investigation adds to the empirical literature with three descriptive findings about metropolitan counties. First, suburban counties mimic property tax rates more than urban counties. Second, suburban counties are more likely to mimic regardless of where the influence comes from. Third, more competition lowers property tax rates, but suburban counties still mimic their neighbors more than urban counties.

The Disciplining Impact of Local Fiscal Rules in the EU

Beate Jochimsen, Christian Raffer — Mon, 26 Jan 2026 00:00:00 -0800

Abstract

Although research highlights the discipline-enhancing effect of fiscal rules at the national level, little is known about their impact on local budgets. We employ a dynamic fiscal reaction function within an LSDVC framework to explore the relevance of different local fiscal rules in the EU using a panel dataset of 26 European countries over a 26-year period (1997–2022). Our findings suggest that debt rules and expenditure rules have a positive relation with budget discipline on the local level. Thus, the mere existence of a DR is less relevant compared to its strength. Consequently, rule design should receive greater attention.

The Role of Auditing Institutions in Advancing Fiscal Transparency: An Empirical Assessment of Global Practice

Qianlei Deng, Jingyuan Xu, Xiaohu Wang — Mon, 29 Dec 2025 02:17:33 -0800

Abstract

Fiscal transparency, a key element of good governance, is shaped by auditing, which compels bureaucracies to disclose information for accountability. However, the mechanisms through which auditing impacts transparency remain unclear. This study examines how auditing enhances fiscal transparency through various accountability pressures. Using a global panel dataset, it finds that auditing significantly improves fiscal transparency, though its impact varies in countries at different economic development levels, highlighting the importance of having mature auditing institutions. The findings offer a comparative perspective on auditing′s role in fiscal transparency and provide practical insights for policymakers to strengthen transparency and accountability.

A Comparative Analysis of Budget Forecasting Methods: A Systematic Literature Review Covering the 1983–2024 Period

Berat Kara, Hasan Şengüler — Wed, 26 Nov 2025 02:57:19 -0800

ABSTRACT

This study systematically analyzes 69 peer-reviewed works comparing budget forecasting methods. It explores methodological evolution, geographic distribution, and evaluation trends. Four phases of development are identified: statistical methods, diversification, machine learning, and deep learning. A division emerges between traditional and next-generation techniques. Geographically, 43% of studies focus on the United States, while developing economies remain underrepresented. In evaluation, MAPE, RMSE, and MAE dominate, with directional errors largely neglected. Findings show that optimal method choice depends on context, supporting a pluralistic, context-sensitive approach rather than universal reliance on a single forecasting method.

Stochastic Simulation Model for Forecasting Index‐Linked Public Expenditure

Miia Rissanen, Jyrki Savolainen, Mikael Collan — Sun, 23 Nov 2025 19:44:53 -0800

Abstract

This paper introduces a system dynamics (SD) model for analyzing public sector cost growth, where costs are tied to indices. The SD model isolates the effects of automatic indexation, providing probabilistic projections of expenditure growth. It enables testing of alternative indexation strategies and cost-reduction measures. Findings show how automatic indexation can accelerate spending during inflation spikes, emphasizing the need for risk- and uncertainty-aware fiscal analysis. Using the Finnish welfare system as an illustrative case, the model output is examined in terms of its value for economic policy planning, providing insights for academics and policymakers.

How do US States Approach Multi‐Year Expenditure Forecasting?

Christelle Khalaf, Deborah A. Carroll, Thao Pham — Fri, 14 Nov 2025 00:00:00 -0800

Abstract

In the United States, 30 states publish multi-year expenditure forecasts, while the remaining exhibit variation in their financial planning practices. Building on the literature examining budget forecasts, this study provides insights from interviews with eight states selected using a typology from a cluster analysis. The findings indicate that states view multi-year expenditure forecasting as a tool to guide budgetary decisions with a focus on maintenance, facilitate compliance with statutory requirements, and enable communication with stakeholders. Consistently, the uncertainty introduced by Medicaid was cited as a challenge to forecasting. Additional challenges stem from political maneuvering and the subjective nature of forecasting.

Empirical Evidence on the Effectiveness of IMF Fiscal and Debt Policy Interventions

Baah Aye Kusi, Kwame Owusu Asante, Gloria Dzeha — Tue, 21 Oct 2025 23:38:35 -0700

Abstract

This study investigates how fiscal balance affects government debt under IMF and non-IMF policy arrangements in 20+ African economies from 2004 to 2020, using dynamic GMM estimation to control endogeneity. Fiscal balance reduces debt in IMF and non-IMF contexts, with a stronger economic effect under IMF-supported periods, especially during longer program tenures. The findings support neoclassical and institutional economics, highlighting credible governance and sustained reforms. Policymakers should strengthen domestic fiscal systems and consider long-term fiscal engagements aligned with national development goals.