Abstract
Using data of “member items” in New York State during 2007–2010, we investigate how political factors such as majority party affiliation, tenure of service, and legislative leadership affect the distribution of state earmarked funds. The statistical results suggest that majority party affiliation and tenure of service have significant effects on the total earmarked funding state legislators may receive each year. Senate leaders or members of the Assembly Ways and Means Committee can also secure additional earmarks to fund their community projects. This research fills the gap in literature on subnational earmarking.
Keywords
Introduction
Governments have included earmarks and pork barrel spending in the budgets for as long as can be remembered. Earmarks direct that a specific amount of appropriated funds be spent for particular projects or purposes. In recent decades, there has been considerable attention given to the appropriateness and desirability of earmarks, and there have been a number of studies on political factors in the distribution of congressional earmarks. However, little is known about state-level legislative earmarks. Is state-level earmarked funding distributed in different ways? Or, is the distribution of state legislative earmarks determined by similar political factors as their federal counterparts? Those and other questions will be explored in this study. We examine earmarks in the state of New York where reliable data are available. An advantage of New York data is that earmarks have played a prominent role in recent state legislative leadership changes and in cases of corruption.
Since earmarking raises issues of transparency, accountability, and priority setting, our study will shed light on those important issues with regard to the distribution of state earmarked funds.
Earmarking Process at Federal and State Levels
There are two major types of earmarks: (1) Programmatic earmarks dedicate funds from a specific revenue source for a particular purpose, for example, lottery funds for education. This approach may help with the approval of new revenues and strengthen the funding for specific programs. However, these earmarks may segment funding, preventing efficient allocation. (2) Legislative earmarks, such as member items in the New York State, direct that specific amounts be spent for specific purposes, often associated with a legislator’s district. They may provide constituency support for members’ reelections and help legislative leaders obtain support for policies, projects, or programs. However, by their very nature, they focus resources on local concerns of individual legislators rather than common-purpose or common-good programs. Legislative earmarks also potentially facilitate corruption and may lack transparency.
Congressional and state legislative earmarks share the same “pork barrel” appearance; however, state legislatures may exhibit more moderation with earmarks. Nearly all state budgets are constrained by some form of balanced budget requirement and more than thirty have some form of tax and expenditure limit (TEL), most enacted or strengthened since 1970. These characteristics may discourage state earmarking as compared with the federal budget, which has ordinarily spent into deficit since 1930. In fact, during fiscal year (FY) 2006, federal earmarks and related spending was 1.1 percent of the total federal budget, although the pork barrel share (for FY 2005) was also estimated at 0.77 percent. In contrast, in FY 2006, earmarks in New York claimed about 0.43 percent of the total budget. 1
There are, also, notable institutional and procedural differences in the respective earmarking processes. At the federal level, a member of the Congress evaluates all the earmark requests from the constituents, lobbyists, and interested parties and submits selected requests to the relevant appropriation subcommittee and, when needed, to the relevant authorization subcommittee. The subcommittee staff processes and evaluates the requests and then the subcommittee chair determines whether to fund each specific earmark. The approved projects are identified in the subcommittee’s report. In the conference committee review of the relevant appropriation bill, some new “airdropping” earmarks may be added and included in the conference report. While committee and conference reports that do not change the text of the appropriation are only advisory in nature, they reflect congressional intention and agencies generally comply with them to avoid budgetary retaliation (Savage 2009).
Some recent earmarking rule changes and committee reforms were implemented in the House of Representatives to enhance transparency of and accountability for earmarks. Beginning in 2010, they have banned earmarks to for-profit organizations. Representatives must post earmark requests on their Web sites and certify that they have no personal financial interests in the requested earmarks (Doyle 2011a, 2011b).
At the state level, the legislative fiscal committees play a much weaker role in earmarking process as compared with their counterparts at federal level. In New York, there is a community projects fund that is “in the joint custody of the comptroller and the commissioner of taxation and finance,” which “may have separate accounts designated pursuant to a specific appropriation … or … a written suballocation plan approved in a memorandum of understanding executed by the director of the budget, the secretary of the senate finance committee and the secretary of the assembly ways and means committee.” 2 Unlike the Congressional process, in New York the senate majority leader and temporary president 3 and assembly speaker exercise complete control over the distribution of resources among their membership. They distribute funds to individual members according to a variety of political criteria. After their approval, member items are vetted by the executive budget office, which may refuse funding if the appropriate reports are not filed or there is fault identified in the proposed project. The legislative leadership may include some member items in the budget as separate line items and bundle other items in lump sums known as “007” funds in order to avoid gubernatorial veto (Baskin 2010).
Earmarks may meet a diverse array of local needs and help with reaching budgetary agreement; however, they have become a symbol of waste and a breeding ground of public corruption due to limited transparency and insufficient oversight. Since 2010, at least eight New York lawmakers or their related charities have been investigated, charged, or convicted of pillaging public funds (Kusnetz 2013); these include a senate majority leader. Recently in New York, in the wake of charges, indictments, and prosecutions of state legislators for misuse of earmarked funds, the governor defunded the Community Projects Fund. The governor’s FY 2015 defunding decision was seen as an anticorruption reform. While earmarks are not the same thing as corruption and corruption is not the focus of this study, the events that led to the governor’s anticorruption reform suggest a need to understand New York earmarking practices better.
Literature Review
Although there are many mentions of member-to-project earmarks or “pork,” primarily in the popular press, scholarly research on the topic related to state and local governments in the United States is limited. In contrast, there is extensive literature on earmarking at the U.S. federal level and elsewhere. Political factors that may determine the distribution of earmarked funds include party affiliation, key committee membership, seniority of members, legislative leadership, and so on. Considering the similarities and differences between the federal and state earmarking process, we develop the following hypotheses with regard to the distribution of state-level earmarks.
Majority Party Affiliation
At the national level, majority-party members receive more earmarked dollars (Albouy 2009; Alvarez and Saving 1997; Balla et al. 2002; Bickers and Stein 2000; Lazarus 2009; Lee 2003; Levitt and Snyder 1995). Engstrom and Vanberg (2010) find that members of the majority party do considerably better than equally situated members of the minority in securing earmarks. Moreover, majority party leaders strategically allocate earmarks to help their electorally vulnerable members of Congress and to avoid the blame of pork barrel spending (Lazarus 2009; Stein and Bickers 1994; Balla et al. 2002). Because state and federal party structure is similar, we expect to find similar practices at the state level.
Political Influence
Balla et al. (2002) argue that senior members may have had more opportunities to establish personal relationships that can be used to secure benefits for their districts. Bernhardt et al. (2004) theorize that incumbent politicians with seniority will be able to direct larger funding to their districts. Others identifying the role of seniority in the distribution of congressional earmarks include Boyle and Matheson (2009), Lazarus (2009, 2010), Lee (2003), and Savage (1991).
If congressional members are committee members or majority party leaders, they are likely to receive more earmarks due to their political influence and statutory power. At the state level, legislative committees hold much less statutory power with regard to the approval of earmarks. Instead, legislative leaders are “gatekeepers” who distribute funds to individual legislators (Baskin 2010). Herron and Theodos (2004) also confirm at state level that districts represented by legislative leaders typically receive more earmarked funds.
These hypotheses reflect the similarities and differences between congressional and state earmarking processes. By examining earmarks at the state level, this study may identify differences in earmark distribution associated with differences in these various processes.
State Legislative Earmarks—Member Items in New York
“Member item” is the common New York State term for earmark. Each member of the state legislature may request earmarks to fund “community projects, civic, and public health initiatives in the recipient members’ districts” (NYOpenGovernment.com n.d.). Member items are collectively labeled the Community Projects Fund, which was appropriated US$57 million in FY 2013, US$102 million in FY 2012, and US$96 million in FY 2011 (Openbudget.ny.gov n.d.a, n.d.b). In the view of some observers of New York politics, the funds are distributed unevenly, with leadership and members of the majority party receiving greater shares (Wells 2010).
We obtained the data on member items sponsored by New York state legislators through NYOpenGovernment.com, which is an effort by the Attorney General’s office to promote the right to know and to monitor governmental decision making. 4 The data cover member items for four FYs, including 2007, 2008, 2009, and 2010. The data indicate that a large number of member items were funded each year: 6,392 in 2007, 7,945 in 2008, 9,796 in 2009, and 7,882 in 2010. 5 While both chambers of the New York state legislature secure member items, the 62 senators seem to sponsor more member items than the 150 legislators in the assembly. The annual average numbers of member items sponsored by a senator are 67, 71, 83, and 60 for state FYs 2007, 2008, 2009, and 2010, respectively, whereas the corresponding numbers of member items sponsored by an assembly member are just 14, 24, 31, and 28. The average amounts of state earmarked funds secured by a senator are about US$1.2 million to US$1.3 million a year, as compared with only US$180,000 to US$280,000 a year secured by an assembly member.
Statistical Analysis
The uneven distribution of the funds of member items provides an opportunity to investigate how the hypothesized political factors may affect the distribution of the earmarks. In addition to the data on member items sponsored by New York state legislators, we also obtained data on the members of New York state assembly and senate from The New York Red Book (Neiles 2011). The legislator data cover district served, party affiliation, and years of service as well as leadership and committee assignment of each member.
Descriptive analysis provides some preliminary evidence with regard to the importance of individual political factors such as majority party affiliation, tenure of service, and legislative leadership in the distribution of state earmarked funds. To further investigate how these factors collectively affect earmarking, we conduct regression analysis on a panel data set of 848 observations that includes all 150 assembly members and 62 senators and every year over the four-year period. 6 We model the annual total funding of member items per legislator (in logarithm) as a function of majority party affiliation (1 = affiliated with majority party), tenure of service (number of consecutive years served, in logarithm), and legislative leadership (1 = leader of either chamber). Since the Assembly Ways and Means Committee or Senate’s Finance Committee may still play some limited role in the earmarking process, the model includes a dummy variable for fiscal committee membership (1 = member of either Assembly Ways and Means Committee or Senate’s Finance Committee). Because the senate majority party switched during this period, we also include a dummy of party affiliation (1 = affiliated with Democratic party) as a separate explanatory variable. Some descriptive statistics of the variables are presented in Table 1.
Descriptive Statistics.
One perspective views earmarks as central to responsive government in the belief that citizens and the elected representatives know their own communities’ needs better than government agencies (Baskin 2010). However, evidence from the federal level shows that the impact of demand-side factors such as community demand or need is likely to be quite limited. The limited state-level evidence also confirms no significant effect of district characteristics (Herron and Theodos 2004; Baskin 2010). Although some community-specific factors may have limited effects on earmarking, the demographic and socioeconomic indicators are likely quite stable or constant over a short four-year period. Therefore, we use the fixed-effects model to control for these location-specific factors. 7 In addition, the overall state political environment may affect the availability of funds for member items in a particular year. We therefore also consider using year dummies to control for the time trend or overall impact on earmarking. Shepsle et al. (2009) find that the chamber-specific appropriation processes have significant biases. Consequently, we examine three models, one for the entire legislature and then separately for each chamber.
The panel regression results are shown in Table 2. The two party affiliation variables and tenure of service are statistically significant for the whole state legislature. These results support hypotheses 1 and 2: members of the majority party and more senior members of the legislature receive more member items funding. As for magnitude, a majority party member could secure, on average, about seven times as much earmarked funding a year as a legislator who is not affiliated with the majority party, everything else being equal. 8 In addition, a Democratic legislator could get, on average, about half of the amount of earmarked funds a Republican legislator would receive in a year, everything else being equal. 9 In other words, being affiliated with Republican majority may help its members to get substantially more earmarked funding than Democratic majority can award its members. This effect is substantially the consequence of the difference in practice between the New York State senate, which was Republican for all but one of the years of study, and the assembly, which was Democratic for the entire period. The senate has 62 districts, while the assembly has 150 districts, therefore, the senate allocated roughly two times as much in earmarks to majority party members possibly related to the senate districts that are approximately 2.5 times as large as the assembly districts.
Regression Results.
Note: The dependent variable is the annual total funding of member items (in US$10,000) per legislator (in logarithm). The fixed-effects model (xtreg in Stata) is used. Standard errors are in parentheses.
***Significance level <1 percent.
**Significance level for 5 percent.
*Significance level for 10 percent.
The results also show that seniority plays an important role in getting earmarked funds. One more year of service in the state legislature may help a legislator to get, on average, 21 percent more funding of member items for her district, all else being equal. Tenure of service is important because seniority is a decisive factor in winning legislative leadership positions and appointment to key committees such the Ways and Means Committee in the assembly and the Finance Committee in the senate. This may partially explain why the leadership and fiscal committee membership variables are not statistically significant. 10 The tenure of service variable is modestly correlated with the legislative leadership and fiscal committee membership variables. 11 The estimated effect of the tenure variable may overlap the effects of the leadership and committee membership variables, rending them insignificant. 12
The majority party affiliation and tenure of service remain statistically significant and positive in separate chamber regressions. The estimate of party affiliation is omitted in the assembly regression because the assembly was under the control of Democratic party during the entire period. It is noteworthy that the dummy variable of legislative leadership becomes significant in the senate regression, whereas the dummy variable of fiscal committee membership is significant in the assembly regression. The results lend some empirical support to hypothesis 3 that the members of legislative leadership may receive more legislative earmarks than other members of the legislature particularly in the senate. The results also confirm our expectation that the fiscal committees may play some limited role in the earmarking process at the state level.
These results are consistent with recent New York legislative events. Popular understanding of the recent leadership fights in the senate is that it is partially about access to earmarks, which is consistent with the significant positive coefficient for senate leadership found in this study. In 2009, Pedro Espada Jr. led two successive mid-session changes in the senate leadership through a “coup” in which he and another senator first switched allegiances to the Republican party and then switched back to Democratic, thereby installing Espada as senate majority leader with the control of senate earmarks. In 2012, he was convicted for corruption, which is partly related to the misuse of funds at a nonprofit that obtained New York State earmarks.
The governor’s 2015 budget contains no money for the Community Projects Fund. It is commonly asserted that this change is an anticorruption reform. However, the political variables that are associated with earmarking success—party dominance, longevity, and senate leadership—may be powerful forces. The consequence of eliminating overt earmarks may be the creation of hidden earmarks rather than the abolition of all earmarks. If so, specific cases of abuse may become harder to identify.
Conclusion
Earmarking or the so-called “pork barrel spending” has been a longtime aspect of legislative politics at federal, state, and local levels. The lack of academic interest in subnational earmarking is probably a result of the relatively small size of state and local earmarked funds as compared with their federal counterparts. However, this perception is not quite accurate. As indicated in our study, thousands of projects and tens of millions of dollars have been earmarked every year in the state of New York, totaling between US$60 and US$80 million each year during the period we examine. While this is less than 1 percent of the total state own-source revenue, it remains a significant amount of money in absolute size. Further examination should be devoted to better understand this special way of distributing public funds.
This article examines how some individual-level political factors determine the distribution of state earmarked funds. We investigate how political factors such as majority party affiliation, tenure of service, and legislative leadership affect the distribution of state earmarked funds. The statistical results suggest that majority party affiliation and tenure of service have significant effects on the annual funding of member items individual legislators may receive in the state of New York. The effect of majority party affiliation also depends on which party is in charge. While the legislative leadership and fiscal committee membership do not seem to be significant for the whole legislature, New York State senate leaders or members of Assembly Ways and Means Committee are able to secure additional earmarks to fund their member items.
These findings may seem similar to, although not identical with, findings in the federal environment and corroborate the political nature of earmarking at the state level. However, they are significant in that they corroborate the public understanding of turmoil over party control of the New York State senate. The limited linkage between committee structure and earmarks is very interesting in that the only substantial control over earmarking is the chamber leader (speaker or majority leader). This provides an intriguing suggestion for future examination of corrupt use of earmarks.
Future research will benefit from additional empirical studies on earmarking in other states and at the local level. It would also be beneficial to look into the determinants of the use of earmarks for corruption. State and local governments also provide an opportunity to discover and examine the effects of differing specific earmarking processes.
Footnotes
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors received no financial support for the research, authorship, and/or publication of this article.