Do Institutions Matter? The Impact of Budget Expertise on State Fiscal Responsibility

Abstract

Do governmental institutions constrain state actors? I investigate this question by examining the relationship between the design of state legislative fiscal offices and the health of state budgets. These budgetary bodies serve a supporting role for legislatures, designed to advance sound fiscal policy and sustainable public finance. With an original data set encompassing all state legislative budgetary bodies from 1963-2014, I estimate the causal effects of nonpartisan fiscal offices on budget surpluses with a generalized difference-in-differences estimator. My results show that the presence of these fiscal offices within legislatures do not affect a state’s fiscal well-being. This result holds even when legislative fiscal offices are relatively empowered in the budget process, raising doubts about how state lawmakers use nonpartisan budgetary information in funding the government.