Voter initiatives and their impact on states budget balance


This paper examines how voters' initiatives used in 24 states affect state budget balance. The author first uses a qualitative approach to investigate the extent to which ballot initiatives are used and identifies the initiatives that have had significant impacts on state revenues and expenditures. The review shows that the impact of initiatives differs from a state to state. The heavy initiative user states have experienced substantial impact on their budgets. Second, as their impact on state budget is particularly significant during economic downturn, a linear regression analysis is performed to examine the relationship between the use of initiatives and state budget balance measured in terms of the state budget gap as percentage of FY 2010 general fund. The regression analysis shows that the number of expenditure-induced initiatives have a statistically significant effect on state budget gap, while revenue-restrained measures (e.g. number of tax-limiting measures and the use of super majority or popular vote to approve tax increase) only marginally affect the FY 2010 budget gap.


Political Science

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Journal of Public Budgeting, Accounting & Financial Management