Association for Public Policy Analysis & Management

Should public policy be decided directly by government officials elected by citizens, or should policymaking powers be delegated to appointed bureaucrat-experts? For more than a century, this fundamental question has animated scholarly debates in both public administration and political science. On one side of the debate are those who argue that government responsiveness to the preferences of citizens lies at the heart of democratic governance. Politicians determine the government’s course of action, and bureaucrats are accountable to their political principals for the faithful implementation of public policies. On the other side of the debate are those who warn how easily the responsiveness of elected officials can degenerate into “policy pandering”. Delegation of decision-making authority to appointed bureaucrats can minimize the negative effects of political opportunism. Insulated from the demands of voters, bureaucrats can rely on expert knowledge gained through specialized training to choose socially beneficial policies.

This study revisits this long-standing debate in the context of how the choice of municipal government form influences fiscal outcomes in cities. Form determines the actors that are allowed to participate in policy making, and how decision-making authority is distributed among these participants. The two basic forms are mayor-council and council-manager governments. Because both forms have elected councils, the feature that fundamentally distinguishes the two is the assignment of executive authority between an elected mayor and an appointed manager. In the classic mayor-council form, the council exercises legislative powers but the mayor—who is directly elected by voters—performs executive functions including setting the general policy agenda and directing policy administration. In the council-manager form, both legislative and executive powers are exercised by the city council. The council appoints a professional executive—the city manager—who works with the council to develop and implement the city’s policy agenda and manage the daily business of government. Neither the mayor nor city manager has de jure authority over budget adoption because the council alone, in either the mayor-council or council-manager form, approves budgets. Nonetheless, the mayor or city manager exercises significant de facto influence on budgetary policymaking through their involvement in budget formulation and implementation.

More specifically, this study examines how the choice between an elected chief executive and appointed manager influences municipal budgetary solvency. Budgetary solvency refers to the ability of a government to generate revenues to meet its service and financial obligations in a fiscal year. This study focuses on more than 600 municipal governments with a population of 50,000 or more. It employs multiple measures of government form, and uses data from multi-year audited financial reports to assess city budgetary solvency from 2006 to 2013. The results of the econometric analysis, including various robustness tests, indicate that bureaucratic insulation rather than political responsiveness improves city budgetary solvency. Specifically, council-manager cities tend to have higher government-wide operating surpluses, net inflow of revenues, and unrestricted reserves compared with mayor-council cities.