A Dynamic Model of State Budget Outcomes under Divided Partisan Government

Abstract

This article analyzes the politics of fiscal adjustment in a bicameral system when parties prefer different scales of taxes and public spending. Data from 33 non-southern American states for the years 1952-1995 show that Democrats nearly everywhere target a larger share of state incomes for the public budget than Republicans, though exact party positions vary from state to state. Republicans react more strongly to budget surpluses by reducing revenues than do Democrats. Unified governments adjust faster than divided ones. A party having unified control can shift fiscal scale one-quarter to one-third of the way toward its ideal share of income within two years. When each party controls a different branch of government, the legislative party shifts fiscal scale in its desired direction; but when each party controls one legislative chamber, there is a smaller shift in the direction preferred by the governor's party.