Are politicians using fines for electoral purposes? Empirical evidence

ABSTRACT

Local governments have powers to decide on various issues concerning the public services they provide, as well as on how to finance them. We believe that it is important to analyse the existence of Political Budget Cycles, since politicians may misuse this discretionary power by manipulating budget variables for electoral purposes. Specifically, we analyse the impact of electoral cycles on budget forecast deviations in revenues from fines, which are fairly discretionary, in municipalities of over 1,000 inhabitants during the period 2010–2016. Our findings show that revenues from fines are overestimated in all the years, although this overestimation is only significant, and much more pronounced, in the election year. Politicians are aware fines are not well-regarded by citizens, and may negatively affect the election results, so they prescribe a relaxation in the imposition of fines and reduce the revenue budgeted. Other factors that impact on deviations in revenues from fines are the mayor’s political ideology, political competition and population size.

KEYWORDS:

• Budget forecast deviations
• electoral cycles
• public revenues
• fines
• local governments

JEL CLASSIFICATION:

• H72

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Law 7/1985, of 2 April, regulating the Bases of the Local Regime, establishes that municipalities must provide different basic services depending on their population size:

●→ All municipalities: public lighting, cemeteries, waste collection, public cleaning, drinking water supply, sewer system, access to urban areas, road surfacing, and food and drink control.

●→ Municipalities with more than 5,000 inhabitants: public parks, public libraries, market, and waste management.

●→ Municipalities with more than 20,000 inhabitants: civil defence, social work, fire safety, and sports facilities.

●→ Municipalities with more than 50,000 inhabitants: public transport and environment protection.