STATE BUDGET PERIODICITY - AN ANALYSIS OF THE DETERMINANTS AND THE EFFECT ON STATE SPENDING

Much of the public budgeting literature focuses on the institutional r ules of budgeting and how those rules affect process and outcomes. Thi s study focuses on a particularly rudimentary rule of budgeting: the l ength of the budget period. State budgets are dictated (constitutional ly or statutorily) to recur over one- or two-year intervals. Statistic al analysis of the determinants of state budget periodicity shows that the more states spend, ceteris paribus, the more likely they are to b udget annually. I hypothesize that budget periodicity has the opposite effect on spending: Biennial budget states spend more, ceteris paribu s, than annual budget states spend. Ordinary least squares analysis do es not support the hypothesis, but with instrumental variable methods, biennial budgeting exhibits a positive and statistically significant effect on state spending.