Spending allocations during low and high fiscal stress: Priority setters and spending advocates in Danish municipalities, 2008–2015
| Published date | 01 December 2022 |
| Author | Søren K. Foged |
| Date | 01 December 2022 |
| DOI | http://doi.org/10.1111/padm.12759 |
ORIGINAL ARTICLE
Spending allocations during low and high fiscal
stress: Priority setters and spending advocates
in Danish municipalities, 2008–2015
Søren K. Foged
Department of Management and Leadership,
VIVE—The Danish Center for Social Science
Research, Copenhagen, Denmark
Correspondence
Søren K. Foged, VIVE—The Danish Center for
Social Science Research, Herluf Trolles Gade
11, Copenhagen, Denmark.
Email: snkf@vive.dk
Abstract
Are local governments' resources distributed differently
during low as compared to high fiscal stress? Based on a
proposed theoretical framework of public budgeting, focus-
ing on the power relations between priority setters and
spending advocates, two opposing hypotheses on this ques-
tion are formulated. Using regression analysis, the two
hypotheses are tested on the allocation of spending in
seven policy areas of all 98 Danish municipalities from 2008
to 2015, which was a period that saw both a low and a high
degree of fiscal stress. The empirical analysis consistently sup-
ports one of the hypotheses (Hypothesis 1), stating that rising
fiscal stress benefits priority setters' influence on spending
allocations vis-à-vis the influence of spending advocates. This
finding can be interpreted as a pragmatic local government
approach to fiscal stress, where the need for cutbacks is
addressed by curbing the influence of spending advocates and
shielding strategically important policy areas.
1|INTRODUCTION
In her article from 2015, Irene Rubin made the case that the literature on public budgeting is in need of new concepts
and theories to analyze phenomena no longer accounted for by the budget classics (Rubin, 2015). According to
Rubin (2015), the insights of the budget classics (Levine, 1978;Lewis,1952;Schick,1966;Wildavsky,1961)havecontin-
ued to dominate the field, even though a number of societal changes have increased the demand for new concepts and
theories to complement these important contributions. One of the changes highlighted by Rubi n (2015, p. 33)—how
recurrent fiscal stress influences budgeting—is the topic of this article: Specifically, the research question is whether and
how different levels of fiscal stress affect spending allocations in local governments.
Received: 30 July 2020 Revised: 15 May 2021 Accepted: 31 May 2021
DOI: 10.1111/padm.12759
Public Admin. 2022;100:1107–1124. wileyonlinelibrary.com/journal/padm © 2021 John Wiley & Sons Ltd. 1107
The scholarly interest in fiscal stress is not new; the cutback literature of the late 1970s and 1980s having this
as one of its main topics (Behn, 1985; Bozeman & Straussman, 1982; Levine, 1978; Levine et al., 1981). However,
since then a number of societal changes have transformed the conditions of budgeting and also intensified the need
for research on fiscal stress and public budgeting (Bozeman, 2010; Good, 2007; Kim & Warner, 2020; Rubin, 2015).
Recently, the economic implications of the 2007–2009 financial crisis and the 2020–2021 corona pandemic have
intensified this need for research.
In this article, we look at how spending allocations are affected by different levels of fiscal stress in local govern-
ments. The article contributes to the existing budget literature, both theoretically and empirically: Theoretically the
article proposes a model of public budgeting, where different levels of fiscal stress are linked to expectations regard-
ing the budget process and the budget output. By budget output we understand the monetary output of the budget
process, such as the level and distribution of public spending and revenue as well as the balance and the budgetary
discipline (Foged, 2017, p. 21). This article examines one particular aspect of the budgetary output in the form of
local spending allocations across seven policy areas.
With reference to the proposed budget model, the article hypothesizes that an increase in fiscal stress makes
spending allocations more in line with the preferences of centralized priority setters. By centralized priority setters
we mean the dominant coalition of administrators, politicians, and interest groups concerned with the total level of
spending and how policy areas and programs are prioritized. Conversely, when fiscal stress decreases it is hypothe-
sized that budget allocations are comparatively more influenced by spending advocates. By spending advocates we
understand coalitions that seek to increase or maintain funding for specific policy areas and programs.
From an empirical point of view, the article responds to a call for studies that are better able to test the causal
claims inherent in budget theories (Scorsone & Perhoples, 2010) and studies that are comparative and attentive to
changes over time (Bozeman, 2010; Rubin, 2015). Thus, the hypotheses derived from the budget model presented
are tested statistically on the spending allocations of all 98 Danish municipalities between 2008 and 2015. This con-
stitutes a suitable test case since the period from 2008 to 2015 involved both a period of low (2008–2010) and a
period of high fiscal stress (2011–2015). By spending allocations we here understand the public expenditure of
a local government on a set of policy areas and target groups. By the level of fiscal stress we understand the proper-
ties of a local government's environment that determine the ratio between the local government's resources and the
local expenditure need (Hendrick, 2004, p. 82). In line with this definition of fiscal stress, changes in the level of fiscal
stress can be driven by either changes in local resources due to for instance a national economic crisis, and/or
changes in the local expenditure needs due to for instance sociodemographic changes. In this article, the fact that
local resources on average became more plentiful in the period from 2008 to 2010 (low fiscal stress) and less plenti-
ful from 2011–2015 (high fiscal stress) (see also Research Methods section) is exploited.
Where the definition of fiscal stress used in this article focuses on environmental conditions, fiscal stress is in
other empirical studies defined and operationalized in relation to a local government's fiscal structure, that is, financial
choices that local governments have more control over (Hendrick, 2004, p. 82; McDonald III, 2018).
The paper is structured as follows: First, we review the previous literature and in this context highlight the fact
that most studies have dealt with features of the budget process rather than spending allocations. Next, the theoreti-
cal section proposes a model of public budgeting, further developed from Rubin's (2016) original budget model, from
which two hypotheses on spending allocations are derived. After describing the research methods, the empirical
findings are reported and discussed.
2|LITERATURE REVIEW
In answering the research question, the article builds upon on a range of existing studies investigating the relation-
ship between fiscal stress, budgetary processes, and budgetary outputs, such as spending allocations. These studies
are presented below, the main focus being studies on spending allocations in local governments.
1108 FOGED
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