What Are the Determinants of Expenditure by Functions in Local Authorities? A Multivariate Analysis

Abstract :

Increasingly, local authorities have to satisfy a great variety of citizens’ needs efficiently, resulting from the transfer of competences from Central Administration. However, the scarcity of public resources often requires an increased tax burden, as a way to gather income to finance public expenditure. This can be of various types (general, social, economic and other functions) and determined by various factors (institutional, economic, budgetary and political, among others). There is a clear need for politicians/public managers to have mechanisms to control and inspect public expenditure, in order to avoid an increased tax burden or debt. In this context, this study aims to identify public expenditure by functions in Portuguese local authorities, so as to help politicians/public managers to control this. The results obtained reveal that the illiteracy rate, size, purchasing power index and the form of governance are determinants of some types of expenditure by municipal functions.