| This dissertation seeks to promote understanding of the critical dimensions of government fiscal behavior from the interdisciplinary rational-choice perspective. A comprehensive panel dataset containing economic, institutional, and fiscal information is constructed on California cities, beginning in the early 1990s, and then analyzed with advanced econometric techniques. This dissertation includes three main self-contained essays (Chapters 2, 3, and 4), an introduction (Chapter 1), and a conclusion (Chapter 5).;Chapter 2 aims to uncover the effect of recession on cities' service contracts, moderated by two sets of institutional variables, i.e., whether the city is the council-manager or the mayor-council form, and whether the city is a general law or charter city. Drawing on the literatures of public finance and management, it is hypothesized that economic recession, the council-manager form, and the charter status all have positive effects on contracting as opposed to economic expansion, the mayor-council form, and the general-law status in that order. The hypotheses are tested on all available California cities over 17 years, from 1993 to 2009. The result indicates that recession decreases contracting in governments with the mayor-council and general-law, but the extent of the decrease is moderated if they adopt either the council-manager or the charter form of government. Finally, recession turns out to increase contracting in governments with both characteristics. This implies that the theoretical expectation of more contracting in the face of recession is based on the premise that government functions under the institutional constellation structurally capable of honoring what average residents want.;Chapter 3 seeks to reveal the fiscal behaviors of local governments influenced by external or internal fiscal conditions and intergovernmental dependence. It attempts to classify 36 city services into collective (public, common-pool) and non-collective (toll, private) goods. Inspired by the scholarship on collective goods, both external (state surplus/deficit) and internal (city surplus/deficit, unreserved fund balance) fiscal conditions are hypothesized to have a positive relationship on the provision of non-collective services. Drawing on the fiscal federalism literature, it is predicted that a growing intergovernmental dependence scales down such provision. Two different types of intergovernmental dependence are expected to produce differential incentive effects. The analysis of all available California cities during 1992-2010 indicates a weakly positive effect of external fiscal conditions but also an unexpected negative effect of internal conditions. This suggests that different dynamics of fiscal conditions exist. It further confirms the predicted inverse association of intergovernmental dependence and the presence of differential incentive effects.;Chapter 4 explores the fiscal effects of term-limits, council-manager form, and charter status. The council-manager and the charter forms of government are hypothesized to maintain positive associations with fiscal performance, while the direction of term-limits is considered open. A rigorous empirical analysis is attempted on around 250 California cities, 1992-2009. The analysis reveals that term-limits are not associated in either direction with fiscal performance. This implies that 1) the positive and negative effects may have canceled each other out or 2) term-limits may not be a fiscal but a political institution. The analysis provides evidence for the beneficial role of the council-manager form regarding fiscal performance. The charter form shows mixed impacts.;This dissertation strengthens the general public administration/management/policy and public budgeting & finance literatures by revealing the dynamics between economic/fiscal/institutional forces and localities. This project produces useful policy recommendations for numerous decision-making instances such as whether a new institution must be adopted or how much intergovernmental dependence would be desirable. The geographical limitation of this project demands subsequent studies beyond California. |
