Spending allocations during low and high fiscal stress: Priority setters and spending advocates in Danish municipalities, 2008–2015

Are local governments' resources distributed differently during low as compared to high fiscal stress? Based on a proposed theoretical framework of public budgeting, focusing on the power relations between priority setters and spending advocates, two opposing hypotheses on this question are formulated. Using regression analysis, the two hypotheses are tested on the allocation of spending in seven policy areas of all 98 Danish municipalities from 2008 to 2015, which was a period that saw both a low and a high degree of fiscal stress. The empirical analysis consistently supports one of the hypotheses (Hypothesis 1), stating that rising fiscal stress benefits priority setters' influence on spending allocations vis-à-vis the influence of spending advocates. This finding can be interpreted as a pragmatic local government approach to fiscal stress, where the need for cutbacks is addressed by curbing the influence of spending advocates and shielding strategically important policy areas.