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The Effects of Tax and Expenditure Limitation (TEL) Stringency on the Level of State Expenditures in the United States
Natalia Ermasova and Jeffrey M Kulik
This paper analyzes the impact of different types of state tax and expenditure limitations (TELs) on state expenditures. TELs with differing levels of stringency are compared to evaluate the effect of TEL stringency on state expenditures. This study analyzes the effects of state TELs’ stringency on the different types of state government expenditures for all 50 states for the period of 2006-2011. The findings indicate that a more stringent state TEL results in an increase of state spending on administration and corrections. Further, the findings suggest that higher levels of stringency of a state TEL lead to a reduction in total state spending on education. The level of stringency of a state TEL has no significant effect on the level of direct general expenditures, nor on the spending for police, hospitals, highways, and parks.