Do Tax and Expenditure Limits Influence Federal Lobbying by State and Local Governments? Evidence from A Panel Dataset

Abstract

A large body of literature has emerged regarding the overall effects and efficacy of state and local tax and expenditure limits (TELs). Importantly, much of this literature has detailed some of the unintended consequences of those fiscal constraints. This paper adds to that latter strand of the literature by evaluating the relationship between state and local TELs and the prevalence of federal lobbying expenditures by those governmental units constrained by such a limit. With the inclusion of several different measures of state and local TELs, panel data spanning several years, and various specifications, the results indicate that fiscally constrained state and local governments increase federal lobbying efforts, though the result is far less robust for states. Disaggregation of these TELs suggests little association between lobbying and a revenue limit at the state level (though a stronger positive association exists with expenditure limits), while a property tax limit (expenditure limit) is positively (negatively) associated with lobbying expenditures at the municipal level.