The Politics of Fiscal Oversight Boards

• In Event: Labor, Taxes, and Fiscal Federalism: American and Cross-national Studies

Abstract

Recent crises in Detroit and Puerto Rico (and Greece) have brought fiscal oversight boards to the forefront. For instance, the Puerto Rican fiscal oversight board was created by the Obama administration to oversee the island’s budgets and fiscal plans, and to restructure its $73 billion debt. The creation of this type of oversight institution is not a new development; for instance, New York and the US Congress created fiscal oversight boards in the mid-1970s and mid-1990s respectively when New York City and Washington DC faced economic hardships.

In spite of these developments, there is a huge gap in the literature as social scientists have not studied fiscal oversight boards in a systematic manner; therefore, we do not have much knowledge about their nature, functions, dynamics, and effects. For instance, scholars have overlooked issues of legitimacy and accountability of these boards, as well as the electoral and intergovernmental games played by local, state, and federal governments when facing a fiscal oversight board.

The objective of this paper is twofold. First, and in light of our limited knowledge on this type of oversight organization, the paper seeks to identify similarities and differences in the type and nature of fiscal control boards, mainly across US localities. Second, the paper will highlight intergovernmental and political dynamics that arise with the introduction of fiscal oversight boards. The questions that drive this part of the paper are grounded in the following tensions—on one hand, oversight boards have the potential to determine a variety of public policies, even if the members of the board are not popularly elected (and accountable to the “people”). On the other hand, ruling governments are simultaneously constrained by the public and the oversight boards. How is the ‘oversight board-government-electorate’ game played? How are disputes solved? What do these solutions say about intergovernmentalism and federalism? The findings presented in this paper will come from analyses of oversight boards in US localities since the 1970s.

Author

• Mariely Lopez-Santana, George Mason University