Project description:
Local budget transparency (LBT) implies having insight into complete, accurate, timely and understandable information about local budgets (
Ott, Bronić, Petrušić and Stanić, 2018). All citizens pay taxes into local government (LG) budgets and use LG services, and LBT is, therefore, important to them all. Access to information and fiscal/budget transparency can also be considered a human right, since there is a basic right to know what the government is doing and why (
Kaufmann and Bellver, 2005).
In recent years, fiscal/budget transparency has become a buzzword, especially at the level of international organizations (notably: the UN, IMF, World Bank, IBP, IFAC, PEFA and GIFT), which argue that it brings numerous benefits to citizens and societies. Accordingly, fiscal/budget transparency has also become one of the major themes of contemporary research in political economy and public administration (
Alt, 2019). Generally, an underlying assumption is that transparency produces public participation and accountability, but in what way fiscal/budget transparency affects accountability and improves the quality of governance is still poorly understood (
Kaufmann and Bellver, 2005). This is especially true for the LG level where little research has been conducted.
One of the likely main reasons for the dearth of research on the impacts of LBT is the lack of data for longer time series. Thanks to our previous Croatian Science Foundation (HRZZ) project
Understanding, monitoring and analysing local government budget transparency: Case study of Croatia and Slovenia – Open local budget index (OLBI), the IPF has measured LBT annually since 2015 in all 576 LGs in Croatia, and it continued up to 2023 in this new HRZZ project. To our knowledge, no other researchers have been continually measuring LBT over this long period, thus the availability of such a long time series (up to almost ten years) on LBT gave us the unique opportunity to investigate the long-term political and socio-economic impacts of LBT and to fill this gap in the existing knowledge and literature.
Since our previous HRZZ research project OLBI, which was aimed at measuring and defining LBT determinants, resulted in increased LBT in Croatia, our interest in this project was focused more on analysing what the impacts/consequences of such increased LBT are, i.e. whether LBT affects LG in the sense of:
- election outcomes (e.g. do voters vote for local incumbent leaders who achieve higher levels of LBT, and consequently whether higher levels of LBT have a negative impact on the re-election of an incumbent local leader who has created budget deficit in the (pre)election period),
- voter turnout (e.g. do local government units with higher transparency levels record higher voter turnout),
- deficit (e.g. are incumbents less prone to generating deficit when LG budgets are more transparent),
- debt accumulation (e.g. are incumbents less prone to debt accumulation when LG budgets are more transparent), and
- budget credibility (e.g. the difference in the level of expenditures planned at the beginning of a fiscal year and the outturns at the end of the fiscal year).
Since at the time of this research there has been no long-term research on the impacts of LBT, we hope that this study would help demonstrate that LBT is necessary and that it has important political and socio-economic impacts. We also hope to offer practical recommendations to LGs and the national government for providing more efficient public services to citizens and identify gaps in knowledge for a longer-term research agenda. Such findings could enable better budgetary and local policies, greater citizen participation in local budget processes, and raise awareness of the importance of continued efforts on improving budgetary transparency and literacy.
Program: Croatian Science Foundation research projects