Institute of Governmental Studies

Forty-three of the fifty states of the United States have granted item veto authority to their governors as part of state constitutions. In this paper, I test four explanations of why and when a legislature would cede institutional power. Using data from 1865 to 1994, I show that these measures are most likely proposed by fiscal conservatives who fear the loss of power in the future; in order to protect their interests for those periods when they will be in the minority, therefore, they seek to obtain institutions such as the item veto which will limit future, liberal legislatures. The results therefore shed light on two important substantive areas. First, by endogenizing budgetary institutions, it clarifies that they are not necessarily adopted for economic efficiency. Second, it provides evidence in support of theories which have posited that electorally weak groups will heavily ‘insulate’ policies in periods in which they momentarily hold power (e.g. Moe 1989, de Figueiredo 2000.