Practice and Theory: The Diffusion of State Legislative Budget Reform

Abstract

We question why some state legislatures responded to public discourse promptly while other state legislatures resist change. We use the choice of performance-based budgeting (PBB) to set the stage in answering this compelling question. We employ a logit model as a discrete event history analysis (EHA). We use the EHA to determine how and what variables influence the probability of an organization’s qualitative change (or “event”) at a given point in time. In this study, the organizations are states, and the event to be analyzed is the enactment of PBB law. Our data set is a modified panel of 50 states between the years 1993 and 2008. We study the factors that would influence state legislators to pass PBB laws across the nation. While our empirical result shows that political preferences are not statistically significant factors for states to pass PBB law, state legislators seem to favor the factors associated with the financial management explanation to adopt PBB. Also, the factors of path dependence and mimicking influence states to adopt PBB. Keywords: Performance-Based Budgeting, Event History Analysis, Budgetary Rule Choice