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Why Is Central Regulation of Local Spending Decisions So Pervasive? Evidence From a Case Study
Author(s) -
Carlsen Fredrik
Publication year - 1995
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/1540-5850.01030
Subject(s) - discretion , block grant , local government , public economics , order (exchange) , fiscal federalism , economics , federalism , central government , ideal (ethics) , government spending , decentralization , public administration , political science , finance , law , market economy , politics , welfare
While the “classical” theory of fiscal federalism argues that local authorities should have substantial discretion to set the local budgetary mix, surveys show that central regulation of local spending decisions is pervasive. Norway provides an ideal setting for studying spending regulations. An attempt to decentralize fiscal choice to the local levels, the block grant reform, has been reversed in recent years. This article presents a case study of the interaction between a county and the national government from 1986, when the reform was implemented, to 1992. The study concludes that the government introduced new regulations to prevent local authorities from distorting spending decisions in order to elicit higher grants.