Mayoral Quality and Local Public Finance

• Date: 01 May 2009
• DOI: http://doi.org/10.1111/j.1540-6210.2009.01993.x
• Published date: 01 May 2009
• Author: Claudia N. Avellaneda

Mayoral Quality and Local Public Finance 469

Claudia N. Avellaneda

University of North Carolina at Charlotte

Mayoral Quality and Local Public Finance Fostering Fiscal

Responsibility:

International,

Federal, and Local

Government

Perspectives

Claudia N. Avellaneda is an assistant

professor of political science at the University

of North Carolina at Charlotte. Her research

interest is in comparative politics and

comparative public administration with

a regional focus on Latin America. She

studies the impact of managerial quality on

local governmental performance in terms

of service delivery, public f‌i nance, citizen

participation, and education quality.

E-mail: cavellan@uncc.edu

In most local developing settings, the political leader

and the municipal manager are embodied in the

same f‌i gure, the directly elected mayor.  is research

explores the impact of mayoral quality on local public

f‌i nances in a developing country. Mayoral quality is

operationalized as educational background and job-

related expertise to analyze its impact on two local

f‌i nancial indicators: property tax collection and social

spending per capita.  e mayoral quality thesis is

tested across 40 Colombian municipalities over f‌i ve

years (2000–2004). After considering other political,

economic, and external inf‌l uences, the f‌i ndings reveal

that mayoral quality is associated with greater property

tax collection and more social spending per capita.  is

positive inf‌l uence, however, decreases under external

constraints—such as presence of illegal armed groups.

 is study demonstrates how much inf‌l uence the mayor

can have when circumstances permit.  e f‌i ndings

point to the signif‌i cance of electing qualif‌i ed mayors, as

decentralization may not directly improve subnational

f‌i nance. Instead, through decentralization, qualif‌i ed

mayors contribute to improved local public f‌i nance.

In the more decentralized Latin American

countries, such as Brazil, Ecuador, and Colombia,

between 40 percent and 50 percent of all

government spending occurs at the subnational level.

 rough this f‌i scal decentralization, municipalities

become shapers of the national f‌i scal balance. Indeed,

when faced with f‌i scal and macroeconomic instabil-

ity, central governments blame municipal ities for

their failure to adjust f‌i scally and f‌i nancially. Yet poor

municipal f‌i nance is, in part, attributable to the lack

of guidelines for achieving better results, and this lack

of direction stems from ambiguity about what factors

inf‌l uence local f‌i nance.  is suggests a need to identify

the determinants of local public f‌i nance.

 ere exists considerable literature on the determi-

nants of public f‌i nance (see Alesina and Perotti 1995a,

1995b for surveys). Most studies focus on either

cross-national analyses of developed countries (Von

Hagen 1992) or cross-sectional analyses of U.S. states

(Calcagno and Escaleras 2007; Clingermayer and

Wood 1995; Poterba 1994). Although some stud-

ies have examined the determinants of spending in

developing countries (Alesina et al. 1999; Amorim-

Neto, Blanco, and Borsani 2001; Mejía Acosta and

Coppedge 2001), few have focused on subnational

public f‌i nance (see, e.g., Jones, Sanguinetti, and Tom-

masi 2000; Rumi 2003).  is scarce attention to local

public f‌i nance contrasts with its relevance in some

developing countries, where municipalities possess

autonomy over their revenues.

Limited attention to local public finance in de-

veloping settings has also led scholars to ignore a

potential explanation. The existing explanations

for public finances fit into three categories: politi-

cal, economic, and budgetary institutions. In the

political category, scholars explain public finance

as a function of partisan support (Rubin 2000),

party alternation (Calcagno and Escaleras 2007;

Rumi 2003), divided government (Alt and Lowry

1994; Amorim-Neto 1998; Clingermayer and

Wood 1995), electoral cycles (Ames 1987; Bucha-

nan and Tullock 1962; Nordhaus 1975), electoral

laws (Perotti and Kontopoulos 2002; Stein, Talvi,

and Grisanti 1998; Weingast, Shepsle, and Johnsen

1981), and/or government type (Woldendorp,

Keman, and Budge 1993). In the economic catego-

ry, most of the studies include growth, recessions,

and productivity factors, among others, as determi-

nants of public f‌i nance. Finally, in the category of

budgetary institutions, scholars stress the explanato-

ry power of balance restrictions, budget procedures,

and tax and expenditure limitations. Prior studies,

however, of‌f er inconsistent results.  is may be

partly attributable to the concentration on factors

external to the organization, neglecting a potential

internal variable: managerial quality. Hence, public

management scholarship shows that the quality of

the manager contributes to organizational results

(Lynn 1981, 2003; Meier and O’Toole 2002).

 is research seeks to contribute to the literature by

assessing the impact of managerial quality on local

public f‌i nance in a developing country.  is study’s

thesis is that mayoral quality inf‌l uences local pub-

lic f‌i nance. By focusing on the mayor, this study

blends public management and politics because in

local developing settings, the political leader and the

municipal manager are embodied in the same f‌i gure:

the direct-elected mayor. Mayoral quality is operational-

ized with two indicators: educational background and

job-related expertise.  en it examines their impact

on two local f‌i nancial indicators: social spending and

property tax collection across 40 Colombian munici-

palities over a f‌i ve-year period (2000–2004).

After considering other political, economic, and

external inf‌l uences, the f‌i ndings reveal that mayoral

quality adds to local public f‌i nance. Specif‌i cally, higher

mayoral educational levels are associated with more

social spending per capita and greater property tax

collection per capita.  is positive inf‌l uence, however,

decreases under external municipal constraints—such

as the presence of illegal armed groups.  is study

demonstrates how much inf‌l uence the mayor can have

when circumstances permit.  e implications of this

study point to the signif‌i cance of electing qualif‌i ed

mayors, as decentralization per se may not improve lo-

cal f‌i nance. Hence, decentralization is only the means

through which qualif‌i ed mayors contribute to improve

local public f‌i nance.

 e following section introduces local public f‌i nance

in the Colombian context.  e next section presents

the literature that leads to the hypotheses, followed

by a description of the research design, data, and

methodology.  e f‌i nal section presents the empirical

analysis and discusses the results.

Colombian Municipalities

Unlike the United States’ two forms of local government

—council-manager and mayor-council—and unlike

the United Kingdom’s four forms of local political

leadership—mayoral models (elected mayor with

cabinet and elected mayor with a council manager)

and nonmayoral models (cabinet with leader and

modif‌i ed committee system)—in Colombia, and in

most Latin American countries, there is a unique

local form: a strong, elected mayor.  e Colombian

Constitution of 1991 (Articles 311–21) stipulates

a legislative body that oversees

a directly elected mayor. Since

2004, mayors have been elected

for four-year terms—adding

one year to the previous three-

year period—without immedi-

ate reelection.1  e municipal

council is concurrently elected

for a four-year period and

consists of no fewer than 7 and no more than 21

members.

Colombian mayors perform both political and admin-

istrative functions.  is has led some to call the mayor

the hombre orquesta (one-man band) because he or she

is “in charge of most activities that require a certain

degree of qualif‌i cation” (Fiszbein 1997, 1037). Yet,

unlike U.S. city managers, who perform the administra-

tive functions and are professional public administrators

with extensive training in public policy (Feiock and

Stream 1998), Colombian mayors come with dif‌f erent

professional backgrounds, if any. Once they are elected,

the central government provides mayors with short one-

week training course in public administration that seeks

to complement mayoral education and experience.

Despite their long experience with democracy, Colom-

bian municipalities have enjoyed a greater role in the

political sphere only since 1983 (Law no. 14/83).2 In

1983, Colombia embarked on f‌i scal decentralization,

complemented in 1988 with the f‌i rst mayoral election

to legally adopt political decentralization (Law no.

78/86). Later laws, decrees, and the Constitution of

1991 increased local revenues and transfers from the

central to the local level, to the extent that in 1998,

the share from the national government was already

42.5 percent of local budgets (Dillinger and Webb

1999).  ese increasing local resources came with

responsibilities, such as management of the water

supply, collection of taxes, provision of health and

education, as well as promotion of sports, culture, and

recreation.

 e transfer of these responsibilities, however, came

without specif‌i c guidelines. Starting from scratch,

municipalities must now implement social programs,

and to do so, mayors must plan, create, design,

and manage their organizations. In contrast to the

United States, most Colombian municipal spend-

ing is f‌i nanced with the transfers from the central

government, mainly because it has a greater capacity

to collect taxes—although it is still incompetent, as it

should be receiving 23 billion Colombian pesos more

(Charry 2006).  e Colombian municipalities earn

their monies from f‌i ve sources: royalties, private credit,

their own tax collection, sales of their own assets

and/or service provisions, and transfers from the

General Participation System, or Sistema General

de Participaciones (SGP).3

 e SGP is the main source

for social service provision, and

it, in turn, is formed out of

the central government’s trans-

fers.  e SGP reserves 4 percent

for special assignations,4 and

the remaining 96 percent is

distributed among all the

Starting from scratch,

municipalities must now

implement social programs, and

to do so, mayors must plan,

create, design, and manage their

organizations.

470 Public Administration Review • May | June 2009