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Governments often use multiple policy instruments for pursuing policy goals with mutually reinforcing effects. These effects include supplementation and substitution. This article examines both effects by studying two instruments of state budget stabilization policy: general fund balances and budget stabilization funds. States normally maintain budget surpluses in the general fund. In recent decades, many also created separate budget stabilization funds to guard against economic downturns. Empirical results show that substitution occurs between these instruments. In other words, the influence of the first instrument is partially offset by the second. The second instrument also produces some independent impacts—called supplementation—that increase the overall influence of both instruments. Such selfreinforcement decreases over time, suggesting that multiple policy instruments are most effective in the initial stage of application.

In this paper, the authors use the Bush administration's management grades from the Program Assessment Rating Tool (PART) to evaluate performance budgeting in the federal government-in particular, the role of merit and political considerations in formulating recommendations for 234 programs in the president's fiscal year 2004 budget. PART scores and political support were found to influence budget choices in expected ways, and the impact of management scores on budget decisions diminished as the political component was taken into account. The Bush administration's management scores were positively correlated with proposed budgets for programs housed in traditionally Democratic departments but not in other departments. The federal government's most ambitious effort to use performance budgeting to date shows both the promise and the problems of this endeavor.

The proper functioning of a budgetary system during wartime is crucial for supporting a country’s defense capabilities and fulfilling its essential social functions. This study aims to analyze key indicators of the efficiency and security of Ukraine’s budgetary system in wartime conditions. The research employed methods such as economic and statistical analysis, comparative analysis, and normative and marginal analysis. The results of the study analyzed trends in state budget expenditures and revenues. A separate analysis of the budget deficit showed a significant increase (to more than 20% in 2023), indicating a need for additional financing. The structure of state budget revenues and expenditures has also changed significantly. The share of tax revenues has decreased, while defense spending constitutes about 50% of expenditures. However, the main problem remains the growing external state debt, which has nearly reached 100% of GDP. At the same time, the available gold and foreign exchange reserves can cover only 40% of the debt. Based on the research conducted, recommendations were formulated that can guide government officials in shaping future budgetary and tax policy.

According to the current situation in the world economy connected with the coronavirus pandemic, it is difficult to predict GDP growth. Non-economic factors determine the rate of decline in economies of almost all countries. Accordingly, it is extremely difficult to ensure the stable functioning of financial systems. In this situation, the role of public finance, especially the state budget, significantly increases, given the peculiarities of the formation of different levels’ budgets. This research aims to evaluate state budget structural changes on the example of Ukraine. Based on the linear coefficient and the quadratic coefficient of absolute structural changes, the quadratic coefficient of relative structural changes, and integral coefficients of structural changes the authors analyzed the state of public finance in Ukraine since the formation of the state and local budgets and their optimal use to mitigate the effects of the pandemic on the economy can become one of the factors in maintaining financial stability and developing anti-crisis measures. The forecast values of the growth rate of budget revenues and expenditures confirm that the projected revenue gaps are significantly higher than the projected expenditure gaps. The cost structure of the state budget of Ukraine is characterized as a structure with a low level of differences. The Gatev and Ryabtsev coefficients demonstrate unidirectional dynamics. In contrast, Salai coefficient shows the opposite dynamics, which confirms a lack of stability in the cost structure. From 2008 to 2019, the chain rate of change has a significant variation range.

“Sin taxes” are often viewed as budget saviors, despite their rather small role in state budgets. While states can and do raise revenue from sin taxes, they should be mindful about the limitations of these taxes. The longer-term growth patterns for sin tax revenue often have been weak and limited, absent policy changes such as increased tax rates. Moreover, greater dependence on sin tax revenues can set up odd incentives, as part of the reason for taxing some of these activities is to discourage consumption and use, not to maximize revenue.

Balanced budget requirements (BBRs) affect all aspects of financial operations.Previous studies relied on characterizations that highlight a constitutional-statutory distinction.Hou and Smith (Public Budgeting & Finance 26(3): 22-45, 2006) instead propose a political-technical construct. This article uses probit estimation, six measures of balance, and long panels to test which framework offers more explanatory power. The findings suggest that BBRs matter to varying degrees. Technical requirements exert bigger effects than political ones, the effects are more obvious on narrower than broader measures of balance and in the later phases of the budget cycle, and the political-technical construct offers more explanatory power than the constitutional-statutory distinction.

Plunging tax revenues and soaring social program demand during the Great Recession created state budget shortfalls of historic magnitude. After reviewing states' aggregate reaction to the economic downturn, we conduct an original analysis of the recession's budgetary impact on the states and their policy responses. Economic factors such as falling personal income and home values explain much of the variation in the recession's impact. State budgeting rules and practices conditioned states' experiences, but not always as intended: budget gaps were smaller in states with stricter balanced budget requirements, but larger in states with statutory spending limitations. Personal income tax increases were more likely in states with a Democratic legislature or greater public unionization rates, while midyear spending cuts were smaller in states with larger public sector unions. In sum, we find that while states' objective economic situations determined the bulk of their responses to the Great Recession, political factors determined these responses' shape and form.

Concerns about political biases in state revenue forecasts, as well as insufficient evidence that complex forecasts outperform naive algorithms, have resulted in a nearly universal call for depoliticization of forecasting. This article discusses revenue forecasting in the broader context of the political budget process and highlights the importance of a forecast that is politically accepted—forecast accuracy is irrelevant if the budget process does not respect the forecast as a resource constraint. The authors provide a case illustration in Indiana by showing how the politicized process contributed to forecast acceptance in the state budget over several decades. They also present a counterfactual history of forecast errors that would have been produced by naive algorithms. In addition to showing that the Indiana process would have outperformed the naive approaches, the authors demonstrate that the path of naive forecast errors during recessions would be easily ignored by political actors.

The budget forms the legal basis for government spending, and timely budgets, enacted before the new fiscal year, are an integral part of good governance. This paper examines the causes of late budgets using a unique dataset of budget completion dates for US state governments 1988—2007, constructed from news reports and state budget office surveys. We find 23 percent of state budgets to be late. We show that changing economic circumstances and divided government are the driving forces behind late budgets, which is consistent with a war-of-attrition bargaining model featuring budget baselines and preferences over deviations from such baselines.