Coping with Poverty: The Impact of Fiscal Austerity on the Local Budgetary Process in Norway

In: Scandinavian political studies, Band 16, Heft 1, S. 49-71

Abstract

This article examines the impact of public sector austerity on the budgetary process in local government. We initially propose that resource squeeze influences the criteria of resource allocation. More specifically, we suggest that austerity tends to generate a greater emphasis on performance‐based criteria such as cost‐benefit assessments, while arguments relating to production costs, previous commitments and relative standards of service supply tend to carry less weight. A regression model is developed to test these hypotheses. Response variables, drawn from a survey conducted among Norwegian local government officials, measure the success of a menu of arguments which justify increased appropriations, and we examine whether austerity affects the perceived success of these arguments. Consistent with previous studies, we find no impact of stress on decision‐making behavior in local government. We do not believe that this result can be dismissed as merely a by‐product of our research design. This conclusion leaves us with at least two possible interpretations. One suggests that austerity affects the criteria of resource allocation if, and only if, decision‐makers perceive the squeeze to exert a persistent and inescapable pressure which requires a fundamental redefinition of managerial style. This has hardly been the case in Norwegian local government. The other interpretation suggests that the criteria for resource allocation in fact remain unchanged, even in situations when austerity is believed to be persistent. Inertia can be caused by (a) the disproportional disutility attributed to budgetary cut‐backs compared to the benefits of appropriation increases, (b) the propensity to attribute austerity to "external" rather than "internal" causes, and (c), problems related to aggregating individual preferences and criteria into a coherent organizational policy of resource allocation.