THE LONG-TERM CONSEQUENCES OF STATE BUDGET BALANCING DECISIONS
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Date
2023-05
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[Bloomington, Ind.] : Indiana University
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Abstract
The theme of the research questions investigated in the following pages relates to the challenges state policy makers face in complying with balanced budget requirements amid periods of fiscal imbalance. If a certain budget balancing tactic is pursued, such as a budget maneuver, reduced appropriations for snap back agencies, or employee furloughs, what result should policy makers expect in subsequent years other than a current-period balanced budget? Conventional wisdom suggests budget maneuvers threaten long-term structural balance because they transfer resources from the future to the present by non-transparent means. However, the incidence of maneuver use remains poorly understood due in part to their difficulty to observe. The research presented in Chapter 1 draws from a uniquely collected dataset of budget maneuvers implemented by states during the Great Recession. Drawing on the regional economic resiliency literature, the findings do not show a significant relationship between postGreat Recession budget outcomes and maneuver use. The results also indicate that states pursuing targeted or across-the-board cuts to balance their recession-era budgets were relatively more likely to realize post-recession budget growth than states whose post-recession budget growth stagnated. The research presented in Chapter 2 tests the relationship between state health department employee turnover, retention, and performance in response to an emergency: the COVID vaccination campaign of 2021. Results show that recent health department turnover rates are a more substantive predictor than retention of experienced employees. Estimates indicate a one percentage point increase in employee turnover rates reduce the two-dose adult vaccine take-up viii rate by about 0.5 percentage points, a result largely driven by high vaccination rates among senior citizens. How sensitive are public employees to an exogenous wage shock? In the third chapter, I implement a novel dataset containing the employee records of all California state employees from 1998-2021 to investigate how state employees responded to its mandatory furlough program implemented in 2009. Furloughed employees are about five percent more likely to quit their jobs after exposure to the furlough. Further, the same-year separation elasticity for public employees is about 0.35, an estimate that implies some degree of monopsony power over public sector workers. Therefore, furloughs may be a sensible short-run tactic to reduce expenditures during a budgetary crisis.
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Thesis (Ph.D.) - Indiana University, School of Public and Environmental Affairs, 2023
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public budgeting, public health, employee furloughs
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Doctoral Dissertation