How Effective is the Power to Veto? Evidence from the Gubernatorial Line Item Veto

Abstract

How effective is the gubernatorial line item veto power? Many questions remain on how this tool is, and may be, used in different political scenarios and whether or not it has an effect on state budgets and fiscal balances. The purpose of this paper is to examine these questions. We use a rich disaggregated dataset to test the effect of the gubernatorial line item veto on state budgets. We control for political attributes such as the political affiliation of the governor and legislature, minority status of the governor and the ability of the legislature to override a line item veto. Our results suggest that line item veto power has no effect on spending, revenue or fiscal balance.

Keywords: Veto power, US states, Governors

JEL Classification: D78, E62, H72