Richard R. Barnett

An incremental budgeting model of local public expenditure setting in the presence of piecewise linear budget constraints

This Paper develops and tests an incremental budgeting model of local government expenditure decisions using data on British local government. The model introduces two distinctive feautures into the incremental budegeting literature. Firstly, it takes explicit account of the availability of an independent source of revenue for jurisdictions (in this example, a local property tax). And secondly it shows how it is possible to develop satisfactory emperical models when budget constraints are only piecewise linear. The model is shown to perform well, both in explaining within-year variability in budgeting decisions, and in predicting subsequent budgets under revised budget constraints.

An Assessment of the Regional Impact of the Introduction of a Community Charge (or Poll Tax) in England

BARNETT R. R., LEVAGGI R. and SMITH P. (1990) An assessment of the regional impact of the introduction of a community charge (or poll tax) in England, Reg. Studies 24, 289–297. In 1990 the system of local government finance in England will be changed dramatically, with the reforms including the introduction of a community charge, or poll tax, to replace the existing system of domestic property taxation. The reforms will result in major changes to the financial incentives operating on local government. This paper concentrates on the regional implications, using models of local government behaviour under the existing system to predict the likely expenditure responses to the reforms of the major local authorities. Estimates of regional welfare gains and losses for the domestic sector are also computed. The findings indicate large disparities between regions in the consequences of the reforms, drawing particularly strong distinctions between northern regions and the rest of the country. BARNETT R. R., LEVAGGI...

The (non) equivalence theorem when there are matching grants as well as lump sum grants

In developing their influential equivalence theorem Bradford and Oates (1971) implicitly assume that there is a lump sum grant only. This paper explores whether the equivalence result continues to hold when the lump sum grant is part of a program of grants-in-aid which includes a matching grant. It is shown that the equivalence results as stated by Bradford and Oates does not hold in these more general circumstances; however, a much weaker equivalence result does hold. This finding is important because there has been a tendency in the empirical literature to assume that the equivalence result holds under quite general circumstances. It is also shown here that the combined use of lump sum and matching grants can produce a reverse flypaper effect.

Optimizing the level of grant support for local government: An application of a behavioral model☆

Abstract The United Kingdom government has over the last decade undertaken an unprecedented campaign designed to reduce the level of current expenditure in local authorities. The campaign has patently failed, not least because of a failure adequately to research many of the measures introduced during the 1980s. A major reform of local government finance has now been implemented, which includes the replacement of the local domestic property tax by a community charge, or poll tax. This paper shows how, using behavioural models of local authority budgeting developed under the old system of local government finance, it might be possible for the government to approach an optimal policy in the implementation of the reforms.

Even Some Lump-Sum Grants Can Stimulate More Than others

In this paper, it is shown that the institutional context within which lump-sum grants are given can be an important determinant of local (or state) government expenditure responses to such grants. By using the system of local government finance that operated in England until 1990 as a case study, it was shown that the two lump-sum components of the grant system can be predicted to stimulate substantially different expenditure effects. And this is so despite the fact that both of the grants are unconditional lump-sum grants. A model was developed and tested in which the differential expenditure effects are explicitly taken into account and this modelling exercise stands up well when tested against the empirical evidence.

Fair local taxation

Fairness was one of the main criteria set out by the Government as a test against which a local tax should be judged. The Governments argument was that, at the local level, taxes should reflect the benefits received from public expenditure, rather than be related to ability to pay. This paper examines fairness in local taxation and finds some support for relating local taxes to benefits received. However, this conclusion relies on a division of policy‐making responsibilities between central and local government, which is contradicted by the continuation of education expenditure as a local government responsibility. Had the Government been more radical in its review of local government, the paper argues that it may have found a more durable solution to the local taxation problem.