Power to the People?: The Initiative Process and Fiscal Discipline in City Governments
(Forthcoming) Jimenez, Benedict S., Power to the People?: The Initiative Process and Fiscal Discipline in City Governments. Urban Affairs Review. Published online before print as DOI 10.1177/1078087418756534
42 Pages Posted: 30 Jul 2019 Last revised: 5 Nov 2019
Date Written: 2018
Does giving citizens the power to decide budget policies improve fiscal discipline in the local public sector? This study examines the effects of local initiatives on city budgetary solvency or the ability of city governments to generate revenues to meet their service and financial obligations in a fiscal year. Budgetary imbalance in the public sector has been blamed on self-interested bureaucrats and elected officials who desire budgets that are higher than that preferred by the median voter. The initiative gives citizens the power to directly decide budget issues. Research shows that voters are more fiscally conservative than government officials, which suggests that fiscal discipline will improve if citizens exercise greater control over budgeting. Using data from audited financial reports for midsized and large cities from 2006 to 2012, the empirical analysis indicates that initiative cities have weaker budgetary solvency compared with non-initiative cities.
Keywords: Direct Democracy, Citizen Initiative, City Budgetary Solvency, Great Recession
JEL Classification: H70
Suggested Citation: Suggested Citation