The Austerity State by McBride Stephen;Evans Bryan M.;

Author:McBride, Stephen;Evans, Bryan M.;
Language: eng
Format: epub
Publisher: University of Toronto Press

United States

Lacking the degree of economic integration that is found in Europe, the situation in North America is different. Nevertheless, long-standing efforts to constitutionalize fiscal policy can be found, especially at the state level in the United States, and provincial level in Canada.

In the United States there is no constitutional balanced budget provision at the federal level, though there have been several attempts to begin constitutional change that would bring this about. In both 1995 and 1997, proposals to initiate the constitutional amendment process fell one Senate vote short of the number that would have initiated the amendment process (Philipps 1996, 683). There was, however, a 1997 Balanced Budget Act (revised as the Balanced Budget Refinement Act in 1999) at the US federal level (Younis and Forgione 2009, 57).

At the state level, balanced budget legislation is legally binding, and restrictive mechanisms apply to the “executive preparation, legislative approval, and implementation stages of the budget cycle” (Hou and Smith 2009, 659). These clearly predate the current focus on austerity and signify the extent to which excluding fiscal discretion has been a part of liberal and neoliberal approaches over the long term. Every state but Vermont has either statutory or constitutional balanced budget legislation (NCSL 2010). At the US state level, such legislation takes three forms: (1) the governor must submit a balanced budget; (2) the legislature must pass a balanced budget; (3) a government cannot carry over a deficit (thirty-eight states) (NCSL 2010, 3). Enforcement mechanisms for balanced budget legislation (BBL) vary, with twenty-two of forty-nine states claiming such a mechanism (3). Most states have a constitutional or statutory limitation on the issuance of general obligation debt (“guaranteed by all government funds and the government’s ability to raise taxes”) (Kennedy and Robbins 2003, 12). Sixteen states allow this to be amended by a referendum or supermajority vote, while a few prohibit incurring general obligation debt (12; NCSL 2010, 9). Some states hold certain officials liable for imbalances, while others (Alabama and Oklahoma) require mandatory reductions in expenditures to keep budgets in balance (4).

There are three general enforcement provisions among the states: (1) the state constitution allows for appropriations if the treasury lacks money to pay for them; (2) deficits are avoided by reducing unexpended agency allotments, even if it is necessary to defer or suspend statutory obligations; (3) the state constitution requires that the governor continually survey expenditures and implement necessary changes if revenues and reserves will not meet budget requirements (NCSL 2010, 9). At least sixteen states require voter approval of “general obligation debt” through constitutional amendments (9). The most important force, however, is discursive and political: the expectation that budgets will be balanced has proved to be a stronger force than actual BBL (9). The combination of popular support and political salience make amendments unlikely in states that have only statutory BBL (ibid.; Mullins and Wallin 2004). Constitutionalized fiscal rules can be amended only by referendum (NCSL 2014). BBL at the US state level is entrenched insofar as state

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