Overcoming Fiscal Gridlock: Institutions and Budget Bargaining

We argue that the costs of bargaining failure are important determinants of legislative delay and gridlock. When these costs are high, elected officials have a greater incentive to reach legislative bargains, even if doing so means compromising on their policy objectives. We develop and evaluate this claim in the context of state budgeting, treating late budgets as examples of fiscal gridlock. Specifically, we argue that budgetary gridlock imposes political and private costs on lawmakers, the magnitudes of which are shaped by institutions and features of the political environment. Our expectations are tested and confirmed using an original dataset of the timing of budget adoption for all states over a 46-year period. Though our investigation is set in the context of the states, we show that differences in the costs of bargaining failure can also account for variation in the patterns of budgetary delay across levels of government and (to a lesser extent) variation in fiscal gridlock within the federal government. American political institutions are seemingly designed to produce gridlock. The Madisonian system, in which governmental power is fragmented among competing veto players or branches of government, can frustrate the lawmaking process. Indeed, elected officials often fail to negotiat

Supplement or Supplant? Estimating the Impact of State Lottery Earmarks on Higher Education Funding

In the wake of declining state support for higher education, many state leaders have adopted lottery earmark policies, which designate lottery revenue to higher education budgets as an alternative funding mechanism. However, despite the ubiquity of lottery earmarks for higher education, it remains unclear whether this new source of revenue serves to supplement or supplant state funding for higher education. In this paper, we use a differencein-differences design for the years 1990–2009 to estimate the impact on state appropriations and state financial aid levels of designating lottery earmark funding to higher education. Main findings indicate that lottery earmark policies are associated with a 5 percent increase in higher education appropriations, and a 135 percent increase in merit-based financial aid. However, lottery earmarks are also associated with a decrease in need-based financial aid of approximately 12 percent. These findings have serious distributional implications that should be considered when state lawmakers adopt lottery earmark policies for higher education