Are politicians using fines for electoral purposes? Empirical evidence

Abstract

ABSTRACT Local governments have powers to decide on various issues concerning the public services they provide, as well as on how to finance them. We believe that it is important to analyse the existence of Political Budget Cycles, since politicians may misuse this discretionary power by manipulating budget variables for electoral purposes. Specifically, we analyse the impact of electoral cycles on budget forecast deviations in revenues from fines, which are fairly discretionary, in municipalities of over 1,000 inhabitants during the period 2010–2016. Our findings show that revenues from fines are overestimated in all the years, although this overestimation is only significant, and much more pronounced, in the election year. Politicians are aware fines are not well-regarded by citizens, and may negatively affect the election results, so they prescribe a relaxation in the imposition of fines and reduce the revenue budgeted. Other factors that impact on deviations in revenues from fines are the mayor’s political ideology, political competition and population size.