Saints, Stalwarts, and Slackers: State Financial Contributions to Welfare Reform

Considerable literature finds that spending levels are important predictors of poverty rates, both in the American states and in western European nations. Those jurisdictions with the most generous support programs generally have lower poverty rates. This article examines state Temporary Assistance for Needy Families (TANF) spending levels in relation to national norms, the spending ability of the state as predicted by their total taxable revenue base, and the state's poverty rate. The analysis shows enormous variation in state per capita TANF spending, with many states spending far less than the national mean and their fiscal capacity. Most of the low-spending states have the fiscal ability to fund more vigorous programs but at optimal levels; some would still fall below the national mean. In return for improved funding, these states would be candidates for increased federal assistance. A few states with a high poverty rate and usually with large numbers of poor citizens are generous spenders, indicating that funding is one component of effective programs.     

Federal Aid and Rural County Highway Spending: A Review of the 1980

The Reagan/Bush Administrations cut back federal support for state and local governments during the 1980s, causing total real resources available to finance local roads and bridges to increase very slowly between 1977 and 1989. The effect of federal aid on spending for infrastructure has been subject to debate for many years. Some studies have indicated that federal aid is stimulative, while others report that federal aid substitutes for local resources. This article examines the effect of state and federal aid on county highway spending. The analysis demonstrates that, in 1987, federal aid was stimulative but state aid was not. In light of changes brought about by the Surface Transportation Efficiency Act of 1991 (ISTEA), we can expect federal aid to have a stronger relationship with local highway spending.     

Competitive Pressures and the Emergence of Mothers' Aid Programs in the United States

Do states compete in providing (or not providing) welfare services? Do competitive pressures shape state welfare program adoption? Even though interstate competition is viewed by some to be a ubiquitous feature of the American federal system and welfare state, there is mixed evidence as to whether such pressures have influenced cash assistance policy in the United States. Although evidence exists of competitive pressures in contemporary welfare program decisions, such pressures have not been found in examinations of early state welfare programs. To reconcile this seeming contradiction, I examine the impact of neighboring state behavior on the emergence of state Mothers’ Aid cash assistance programs during the early part of the twentieth century. Linking theory of intergovernmental competition to program diffusion, I argue that competitive pressures may play a greater role as programs evolve past the circumstances of initial adoption to decisions about program maintenance. Contrary to previous research, I find that state decisions regarding Mothers’ Aid were responsive to similar decisions in neighboring states. Further, there is evidence that women's political organizations were important to Mothers’ Aid adoption but not to how states subsequently structured those programs.     

Policy Interaction in the Provision of Unemployment Insurance and Low-Income Assistance by State Governments

In this paper we investigate empirical relationships between Unemployment Insurance (UI) and welfare policies using a unique database covering 48 states annually from 1973 through 1989. We first document substantial variation across states in UI program outcomes. Having established that UI is so variable, we explore the simultaneous interaction between UI and Aid to Families with Dependent Children (AFDC), Medicaid, and total state and local welfare spending. Our econometric results indicate substitution between the two cash assistance programs, AFDC and UI, by state governments. On the other hand, states that operate relatively generous UI programs also tend to allocate more resources to Medicaid and other in-kind, low-income assistance programs.     

Performance Goal Achievement in Fiscal Federalism: The Influence of State Partisan Environments and Regulatory Regimes

With tight budgets and hyper‐partisan interactions within and between the states and federal government, attention is being paid to the implementation of federal programs. This is particularly important because, as the recently implemented American Recovery and Reinvestment Act suggests, state administrators are often the implementers of federal policy. This study integrates the fiscal federalism literature with that on implementation and bureaucratic response to examine the effect that within‐state factors have on the degree of performance goal achievement in federally funded, state implemented programs. The findings suggest that, when implementing federal programs, state administrators face conflicting political incentive structures and policy‐specific capacity and capability deficits that influence their motivation and ability to achieve performance goals.     

Infrastructure shortfall in the United Kingdom: the private finance initiative and government policy

Investment infrastructure is essential for long term economic growth, sustainable regional economic development, and the quality of urban life. Yet the available evidence suggests a significant shortfall in current UK government investment on infrastructure, and a long term pattern of low investment compared to other European countries. Given the pre-occupation of the Labour government with managing expenditures within the parameters set by the previous government, and the vulnerability of any government to financial markets' valuation of current spending plans in relation to interest rates and currency exchange rates, there is little likelihood of major new public spending on infrastructure in the near future. In this context, the Private Finance Initiative (PFI) is very important for the government's plans to make up the shortfall. Although inherited from the previous Conservative government, the PFI has powerful advocates within the Labour government. The PFI is the formal mechanism by which government departments, agencies and instrumentalities, like the National Heath Service, utilise private sector investment capital and, in particular, pension fund assets, to revitalise public services. This paper sets out the institutional history of the PFI, beginning with the Thatcher government's Ryrie Rules, the efforts of the Major Conservative government to make it a viable operational practice, and the reasons why the new government supports PFI and has made significant moves to improve its effectiveness. Still we are sceptical about the future of the PFI. We show that the PFI has foundered upon fundamentally flawed design and the politicians' obsession with control of public sector spending. Notwithstanding recent `reforms', PFI may only succeed if the PFI process is decentralised and linked explicitly with regional development programmes. In any event, given the difficulties posed by the PFI process for private investors, perhaps different institutional responses to infrastructure shortfall should be contemplated, including the introduction of traded infrastructure bonds.     

Constraints on Local Welfare Discretion in an Era of Second‐Order Devolution

Under devolution, state and local governments are expected to use the greater authority granted to them to design new and innovative programs that are tailored to local needs. Existing research on the devolution of welfare programs has reported substantial variation in the policies adopted by states in the wake of welfare reform. However, under second‐order devolution, local governments also gained discretion over welfare services. Some have argued that, while devolution should increase flexibility, local governments face constraints that limit their functional discretion. Using California as an example, I assess whether there is variation in the service priorities adopted by local governments and whether these priorities translate to frontline practices. I show differences in the service priorities of local governments; however, these priorities are not associated with differences in sanctioning or time‐limit exemptions. Thus, while local governments may formally adopt different priorities, state and federal policy choices, as well as client characteristics, may restrict priorities from translating into differences in caseworker behavior.     

THE LONG-RUN ECONOMIC IMPACTS OF FEDERAL,STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.     

The Politics of an Emergent Global Regime for Controlling Tax Competition

This article probes what I call the emergent global regime for controlling tax competition. Since at least the early 1990s, states have perceived that competition for investment, whether through direct subsidies or tax incentives, threatens to undermine the fiscal underpinnings of the modern state, particularly in terms of its provision of social welfare programs. As states have provided financial or fiscal subsidies to capital (especially mobile capital), they have had to compensate through some combination of imposing higher levels of taxation on other actors, running higher deficits, and cutting spending. Each has shown itself to have substantial problems, and the response of states has now come full circle: to reconsider the competition for investment that causes the fiscal problems in the first place.     

With a Little Help from Our Feds: Understanding State Immigration Enforcement Policy Adoption in American Federalism

Since 2001, state governments have adopted 287(g) cooperative immigration enforcement agreements with the federal government that authorize their law enforcement personnel to assist in detaining violators of civil federal immigration law. Employing a theoretical framework drawn from theories of policy adoption, intergovernmental relations, and immigration research, we test which state‐level political, sociodemographic, geographic, and economic determinants influence states to enter into such a cooperative agreement. In addition to finding that the partisanship of a state's governor, a state's effort on public welfare, and an increase in a state's percentage of Hispanics are related to the adoption of a cooperative immigration enforcement policy, we found evidence of “steam valve federalism” working not at the state level as Spiro (1997) first theorized but at the local level. When a state's localities adopt immigration enforcement agreements with the federal government, the state itself is far less likely to adopt their own. Understanding the reasons states would adopt this type of policy sheds light on current trends in state immigration policy and their effect on future state/federal intergovernmental relations.     

Special Interest Capture of Regulatory Agencies: A Ten‐Year Analysis of Voting Behavior on Regional Fishery Management Councils

This article tests capture theory by analyzing voting behavior on U.S. Regional Fishery Management Councils. Some seats on the councils are reserved for state and federal agency representatives; others, for political appointees. The political appointees primarily represent special interests (specifically, commercial and recreational fishing interests); a smaller number of appointees represent public interests. We use logistic regression to model the vote of state and federal agency representatives on the councils as a function of the votes of commercial interests, recreational interests, and public interests. We find evidence that some state agencies are captured by special interests from their states, but not systematic evidence across all states. We find that state agency representatives voted with commercial interests from their own state in five of the sixteen states in our sample; with recreational interests in three states; and with both special interests in two states. These ten states support the capture hypothesis; the other six states do not. We find no evidence that federal agencies were captured on the councils. We conclude that the gubernatorial‐driven appointment process leads to capture at the state level by promoting voting blocs among state agency representatives and special interests from those states. Federal agency representatives, by contrast, are better able to maintain their distance from state‐level politics on the councils, and thereby enhance their ability to vote independently on fishery management measures.     

Moderating Local Capacity: Exploring EO 12372's Intergovernmental Review Effects on Federal Grant Awards

This article asks whether the Reagan Executive Order (EO) 12372 matters for intergovernmental fiscal relations today. To address this question, federal grant receipts from programs that are, and programs that are not, covered by EO 12372 are compared by examining the differential effects of political and local administrative capacity on each. Grant receipts are examined by coding federal grant award data from 1993 to 2003 using Catalog of Federal Domestic Assistance reference numbers. In the case state, Kentucky, Area Development Districts are the regional functionaries for the state single point of contact clearinghouse, by virtue of which status they review proposals for federal funding originating in, or affecting, their districts. Since federal award decisions take clearinghouse information into account on grant programs covered by EO 12372, differences in the effects of local capacity on receipt of grants covered and not covered by the EO are expected. Methodology used in this post‐only analysis is pooled cross‐sectional time series analysis with panel corrected standard errors. Results focus attention on the differential effects of government administrative and political capacity as they apply to federal grants covered, and not covered, by the EO.     

URBAN RIOTS AND THE GROWTH OF STATE WELFARE EXPENDITURES

This article examines the relationship between urban riots and increases in state welfare spending in the 1960s. It finds little evidence of a direct relationship between rioting and state welfare spending increases from own funds; but it does provide evidence that state welfare spending increases from federal funds were related to the level of urban rioting. Possible explanations for this pattern of findings are discussed and directions for further research are suggested.     

Rethinking State Rail Policy

In the last two decades, many states established rail promotion programs in an effort to limit the contraction of their railroad networks. Now federal funds for rail projects are nearly exhausted, and states must decide whether to expand considerably their levels of internal funding for short line investments. Such a decision requires a careful articulation of policy goals, combined with sound cost-benefit techniques. Research shows, however, that states often fail to evaluate the full range of costs and benefits when considering rail investments. Instead, the economic development benefits of local rail service frequently are overstated, while the potential for rail investments to meet broader transportation planning needs is neglected. This paper evaluates the rationale behind state intervention in the rail industry, discusses the tendency of states to focus on economic development to the exclusion of other benefit categories, and presents summary results from an analysis of an investment project in North Carolina. The paper suggests that state funding for rail projects is more likely to be justified based on intermodal substitution benefits generated by local rail service, rather than the railroads' potential to increase jobs.     

Locational disadvantage and the spatial distribution of government expenditure on urban infrastructure and services in metropolitan Sydney (1988–2015)

Provision of public services by state governments rather than municipalities is considered an important urban governance factor preventing deeper levels of socio‐spatial inequality in Australian cities. The paper examines the spatial patterns of investment by the New South Wales state government in a wide range of services and infrastructure in metropolitan Sydney over 28 budget years from 1988/89 to 2015/16. We examined the relationship between volume and type of investment in infrastructure and services, and considered a local area's socioeconomic characteristics, distance from the central business district, and designation as a strategic site in metropolitan plans. Despite an overall redistributive approach favouring relatively disadvantaged areas, the most disadvantaged suburbs in metropolitan Sydney had significantly lower levels of investment. When funding was directed to the most disadvantaged suburbs, it was often in the form of new social housing development, reinforcing both the concentration of poverty and disadvantage in resource access. The findings suggest that this is a case of under‐investment by the state government in areas already populated by disadvantaged communities rather than a market‐driven process whereby disadvantaged households move into poorly resourced neighbourhoods.     

The Impact of Program Design on Enrollment in State Children's Health Insurance Programs

The success of State Children's Health Insurance Programs (SCHIP) in expanding insurance coverage among low‐income children varies considerably across states. Scholars have looked to different program characteristics to explain this variation, but have arrived at disparate conclusions regarding the impact of one of the most significant design choices—the decision to create a new program or to pursue increased child health insurance rates through an expansion of the existing Medicaid program. This study suggests that understanding the impact of programmatic choices requires a more careful consideration of the mechanisms through which these different program designs might influence enrollment than has been offered in previous research. Employing a multilevel governance framework, it suggests that there is a hitherto unexplored indirect impact, where design choices influence administrative behavior, which in turn influences enrollment success in SCHIP programs. It is important to understand the effect of administrative design choices because this is one of the key areas in which states exercise discretion in the implementation of many federal programs.     

Geographic and Network Neighbors: Spillover Effects of Telecommunications Infrastructure

This paper tests for spatial spillover effects of state-level telecommunications infrastructure investment on state output, using panel data for 48 U.S. states from 1970 through 1997. As information and communication technologies support more industrial locational freedom, states may use telecommunications infrastructure investment as a competitive tool for attracting factors of production. In a production-function framework, this effect would manifest itself as a negative output spillover effect from telecommunications infrastructure investment. Findings indicate that a state benefits from its own telecommunications infrastructure, but telecommunications investment by other states has a negative impact on its output growth path, and proximity amplifies this negative spillover effect.     

Matching Rates and Mandates: Federalism and Children's Medicaid Enrollment

An important focus of the federalism literature has been on analyzing the responses of lower levels of government to the financial incentives of intergovernmental grant programs. But grant conditions and mandates are also important features of grant programs, and these have received considerably less attention in the literature. This article examines the implementation of federal Medicaid mandates during the 1980s and 1990s to explicitly compare the relative responses of the states to matching rate incentives and statutory mandates. Using individual-level information on program enrollment to measure policy implementation, the results indicate that the federal mandates led to large changes in children's Medicaid enrollment. In contrast, the effects of the federal matching rate were much more limited. Moreover, the statutory mandates not only raised the average level of enrollment but also reduced the degree of policy variation across the states. While the current pattern of federal Medicaid matching payments reduces policy variation to some extent, these effects are modest compared to the impacts of the mandates. Mandates are a more powerful instrument for national policymakers than the comparatively weak fiscal incentives provided by matching rates.     

THE DEBT/TAX CHOICE IN THE FINANCING OF STATE AND LOCAL CAPITAL EXPENDITURES*

ABSTRACT. State and local governments commonly finance investment in public capital by issuing bonds and by using current revenues. This paper presents a model of state and local governments' reliance on borrowing in which the optimal share of debt in the financing of capital investment depends on the relative costs of tax and debt finance. Equations are derived and estimated for spending on public capital and the share of debt in the financing of that spending. The results reveal that the level of private incomes plays an important role in both the capital investment and financial decisions of the jurisdiction. Even after controlling for Sunbelt-Snowbelt differences in incomes, grants, outstanding debt and certain demographic factors, the results indicate that state and local governments located in the Snowbelt rely more heavily on bond issues to finance capital investment. Finally, the estimated invariance of the level of state and local capital investment to the share of debt in the financing of the investment suggests that investment decisions are not greatly affected by factors influencing the willingness to issue bonds.     

The Spending-Service Connection

This research tests the relationship between state and local spending for health and hospitals, a set of health service measures, and three final policy outcomes—low birthweight infants, infant mortality, and child deaths. The analysis includes several proxies for service demand—state resources, percentage of single-teen births, and percentage of the population without health insurance. The multiple regression equations also incorporate a measure of federal spending on health and an indicator of state spending for Medicaid. This first stage of the analysis can account for only a limited amount of variation in per capita state and local health and hospital spending. Health expenditures, however, are prominently related to health workers per 10,000 population, while hospital spending buys hospital beds. The final step in the analysis uses path models. The results show that neither spending nor the intermediate-level health outputs (including a measure of prenatal care) are significantly related to the final three outcome variables. Single-teen births is the dominant influence in the final equations.