SPEA hosts academic conference on public finance

Guest post courtesy of IU Newsroom intern Annie Brackemyre

America’s public finance system is struggling under the weight of bankrupted major cities, exorbitant health care spending and rising costs for programs like Social Security, experts say. The politics behind collecting revenue has changed, too. Local governments are now competing with each other to win over an increasingly mobile tax base.

The School of Public and Environmental Affairs at IU Bloomington is hosting a public finance conference to tackle just these issues. Federal, State, and Local Budgets in Jeopardy: A Conference on America’s Fiscal Futurebegan Thursday and will end Saturday. It features nine scholars presenting research on topics ranging from the fiscal implications of an aging population to “clean hands in public finance policy.” Research submissions were accepted from all disciplines, including policy and administration, law, political science and economics.

Denvil Duncan

Denvil Duncan

Research presented so far has focused on local and federal budgets as well as short-term and long-term projections, all in an effort to evaluate the current American fiscal system and consider what difficulties future budgets will face. Paul Posner, a professor in the George Mason University School of Policy, Government and International Affairs, presented the keynote address “Fiscal Austerity and the Eclipse of Fend-for-Yourself-Federalism.”

“The budget process will evolve over time to represent the preferences of current stakeholders,” said SPEA professor Denvil Duncan while presenting his paper “Does the Federal Budget Process Matter for Fiscal Sustainability?

Duncan explained that fiscal restraint and budgetary incrementalism — the idea that the most important predictor of the next budget is the prior budget — come in and out of favor as new waves of politicians come and go from Washington. These changes in stakeholder preferences mean that budgetary theories are time-specific, and frameworks used to describe budgets are usually only relevant to the time that they were designed.

Joseph Cordes, a professor at the Regulatory Studies Center at George Washington University, zeroed in on local budgets, asking what the most effective fiscal planning strategies are for local U.S. governments in his paper “Multi-Year Projections and Fiscal Planning in Local Government: Does It Work and What Affects Its Effectiveness?

With several hundred local governments filing for bankruptcy protection since 1980, research by Cordes and the Government Finance Officers Association suggests multi-year budgeting might be the answer to long-term fiscal stability. Cordes concludes that balanced budget requirements and revenue and tax limitations lead to significantly improved fiscal results.

Copies of all of the presented research can be found on SPEA’s public finance conference website. The conference concludes at noon Saturday.

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