A single-state budget directs billions of taxpayer dollars to carry out various political and policy goals. Governors as chief executives have the fiscal responsibility to construct budgets, the political desire to create public policy, and the institutional means to achieve these goals. They seek out opportunities to make substantial changes in public policy provided to them by interest groups. Different interest group environments across policy issues thereby motivate gubernatorial intervention with distinct short- and long-term rewards. Nearly three decades of data from all American states substantiates these claims and shows real consequences: Policy issues and their corresponding budgets that experience short-term shocks grow more slowly over time. American governors change the fiscal landscape of a state when they are motivated to intervene in a policy domain and are enticed by interest groups to use their institutional powers.

Here, we elucidate the motives of policymaking through the lens of budget politics in the states. This chapter describes the priorities of state spending and how these spending patterns across ten budget domains evolve in all fifty states between 1984 and 2010. This chapter connects these patterns to the distribution of costs and benefits: Different policy areas offer distinct short- and long-term rewards. Importantly, we show that domains that see large short-term gains tend to find diminished budgetary growth over time. Hence, political actors need to trade off short-term and long-term rewards. Our findings make apparent that the dynamics of policy issues motivate political action.

American governors have specific means – veto and agenda-setting powers – for shaping public budgets. Governors face competing managerial and political pressures when constructing a budget: forces of legislatures, agencies, and parties that demand changes in individual categories contending with the need to deliver the budget as a whole. In addition to managing these competing interests, governors also have their own preferences they wish to express in the budget. This chapter shows how the institutional strength of governors affects their ability to reign in competing demands. Our quantitative analysis shows that governors with stronger powers can make large cuts and raises in budgets even larger: a finding we term “bottoming-out” and “topping-off.” This mechanism has significant consequences for the budget as a whole: Disruptions in spending lead to slower long-term budget growth overall. Hence, executive power leads to less stable policymaking, particularly in instable interest group environments.

Interest groups are critical actors in American policymaking providing support or opposition to policy changes. This chapter investigates the opportunities that interest group constellations create for policymakers involved in public budgeting. We develop and empirically assess the impact of three interest group environments: capture (stable competition among very few groups over time), instability (variegated competition among a changing set of groups), and deadlock (stable competition among many groups over time). We match interest group data to expenditures for all states. Capture and deadlock environments see steady changes in spending on particular issues, while instable interest group constellations result in volatile budgeting oscillating between short-term gains and losses. Therefore, these patterns of policy changes associated with interest group competition provide different opportunities for policymakers.

In this chapter, we bring together motives (issues), means (gubernatorial powers), and opportunities (interest group compositions) using qualitative case studies of four states across several years: two with strong governors (New York and West Virginia) and two with weak governors (North Carolina and Vermont). The size of the budgets in these states varies, but they entail three subcategories that correspond with capture [corrections], instability [hospitals], and deadlock [welfare]. An investigation of twelve policy stories provide evidence for the mechanisms connecting governors and interest groups in periods of budgetary change. The policy stories cover similar temporal periods (2002–2004 and 2008–2010) controlling for national political context. We show that – large or small states – governors attempt to use their powers in all policy domains, but are met with much greater resistance in capture and deadlock categories.

Governors are motivated to change public policy in response to issues and have powers that influence the shape and direction of budgets; however, interest groups are ultimately providing opportunities for action. We conclude with some broad recommendations for institutional and political tinkering in the American states. Specifically, we argue that policymakers can embrace the inevitability of interest group involvement in policymaking and be more thoughtful about the way they structure policies. This process enables diversity – by which we mean more groups with difference and alternative policy concerns – in representation. In addition, we argue that decentralization of gubernatorial power over the budget to alternative institutions could facilitate budgets that are more responsive to problems.