Abstract
This chapter analyzes the expenditure side of the budget, with an emphasis on expenditures rather than on services. It provides six explanations for expenditures: Baumol’s Disease, availability of revenues, demographic changes, economic development projects, debt, and the governance system. It discusses the importance of governance decisions, intergovernmental mandates, and skinny budgets. It includes a discussion of the Tiebout model as well as macro-economic effects and the role of environmental justice of expenditure decisions. The chapter also presents a litany of interrelationships among the variables, including, for example, tax increment financing, tax and expenditure limitations, pensions, equity concerns, and the importance of the economic base of the jurisdiction.
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Notes
- 1.
Figure 4.2 was divided into taxes and other revenue sources.
- 2.
However, Triplett and Bosworth (2003) find that there have been increases in the productivity of service industries, although they do not specifically study local budgets.
- 3.
There is some variation when particular services are examined. Police and fire elasticities range from −0.19 to −0.92; Parks and recreation range from −0.19 to −1.00 and Public Works ranges from −0.92 to −1.00 (Inman, 1979).
- 4.
Note that these are federal salary and benefits. Local governments vary a great deal and are difficult to generalize.
- 5.
The demographic influence on expenditures (which is also a macro component) has already been discussed.
- 6.
For a long list of these tools, see Salamon (2002).
- 7.
See Campbell et al. (2015).
- 8.
This analysis does not address forecasting court decisions which also can have a major impact on expenditures.
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Chapman, J. (2022). The Expenditure Module. In: The Local Budget as a Complex System. Palgrave Studies in Public Debt, Spending, and Revenue. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-94903-7_4
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