Partisan Priorities under Fiscal Constraints in Canadian Provinces

Abstract

Fiscal federalism, aging, and rising health care costs are constraining Canadian provinces’ fiscal room to maneuver. Can provincial government partisanship influence policy choices when governments face fiscal pressures? This article studies the impact of fiscal pressures on provincial governments’ expenditure priorities, conditional on government partisanship. It argues that policy feedback and the preferences of the governing party’s core constituency determine expenditure priorities. Using a compositional dependent-variable analysis, it models budget policy choices in Canadian provinces from 1981 to 2018. When provinces undergo different types of fiscal pressures, the proportion of health care expenditures increases, while “other” government expenditures, which are the programs that are not classified as health care, education, or social spending, are retrenched. While governments’ ideology does not modify the crowding out of “other” expenditures by health care, left-wing governments prioritize social expenditures, while right-wing governments retrench them.