A Study Of Executive Budget-Balancing Decisions

Abstract

This article illustrates how chief executives approach deficit plan design. A decision model is developed that lays out the deficit-closing options and their cumulative impact on the multiple competing goals of minimizing political loss while maintaining long-term fiscal balance. The article analyzes the deficit-closing plans of New York City mayors from fiscal year 1981 to fiscal year 2004. The authors classify the nature of the deficit-closing options employed each year and the constraints associated with each option and investigate the political loss associated with alternative decisions. The findings suggest that in any given year, an attempt is made to achieve a balance between the long-term gains of structural budget balance and the loss of political support. Even in election years some semblance of balance is normally maintained, however, there is an attempt to hold down the total size of the deficit, thus reducing loss of political support.