The financing of different types of infrastructure has become a core issue in Africa, considering its high urbanisation rates. An acute shortage of water infrastructure in Zimbabwe- a failed state, is one of the primary causes of water insecurity in most cities and towns. This study explores the innovative financing mechanisms and technological advancements that can help ease urban water shortages. The study found that the limited participation of the private sector in urban water supply inhibits private financing in water infrastructure. National and local government institutions dominate the water supply sector and operate on a cost-recovery basis. However, some cities have embarked on a drive to reduce the water purification costs to create extra water supply funds. This strategy involves synergies between municipalities and local private firms working towards replacing imported with locally produced water purification chemicals. Similar synergies are recommended, especially in finding sustainable financing mechanisms that can improve sustainable investments in water infrastructure. For this study, a secondary analysis approach was utilized, wherein existing survey data from the Afrobarometer were accessed and analyzed. By leveraging the Afrobarometer's extensive dataset, this study provided nuanced insights into acquiring descriptive data. The study recommends that, meanwhile, urban households should also consider using low-cost sustainable household purification techniques such as boiling water, using aqua tablets and water filters that have become common in Africa’s low-income communities. These household purification methods can guarantee the consumption of clean and safe water.

Do politicians behave opportunistically regarding their tax proposals during the election cycle, or do they maintain ideological sincerity? The purpose of our research is to determine if U.S. governors follow political tax cycles when making proposals to change revenue structures in their annual executive budget recommendations. On the one hand, politicians might use the budget cycle to try to influence voters (Dubois 2016; Katsimi and Sarantides 2012; Nordhaus 1975; Mink and de Haan 2006; Paldam 1979; Shi and Svensson 2006). In this case, we would expect governors to be more likely to propose tax cuts during election years. On the other hand, politicians might believe that it is more important to stick to their political party's ideological position during election years (Alesina 1987; Alesina and Roubini 1992; Alesina et al. 1997; Hibbs 1977; Sakurai and Menenez-Filho 2011). In this case, we would expect Democratic governors to be more likely to propose tax increases and Republican governors to be more likely to propose tax cuts.

We examine U.S. governors’ revenue proposals between the years of 1989 and 2018 to assess gubernatorial behavior during election years. Our dependent variable is the amount of real aggregate per capita revenue change sought by the state’s governor for the coming fiscal year, from 1989 to 2018. These recommended changes represent proposals for legislative action that would increase/decrease revenue collection. Thus, the dependent variable measures proposed changes to the revenue code, as opposed to forecasted year-over-year changes to total revenues. Since the measure is continuous and theoretically unbounded, we estimate the model using OLS regression.

We find that governors, in general, do indeed follow a political budget cycle where they request lower revenues during election years. However, this finding is largely driven by Democratic governors asking for significantly lower revenues during election years when compared to non-election years. Republican governors are more ideologically sincere, maintaining behaviors that are consistent across the election cycle. This makes sense given that Democratic governors have a greater incentive to behave opportunistically when making revenue proposals. They are generally expected to seek greater spending and are often rewarded for doing so (Lowry et al 1998). Since higher spending requires more revenues, they are more ideologically sincere during non-election years, asking for greater revenues. However, high taxes can result in electoral losses (Kone and Winters 1993; Besley and Case 1995; Niemi et al 1995; Olle 2003; Geys and Vermeir 2008; Tillman and Park 2009), whereas tax cuts can yield electoral gains (Ploeg 1989; Tillman and Park 2009). Thus, they have an incentive to move away from their sincere ideological preferences during election years and behave more opportunistically. Republican governors, on the other hand, have a greater incentive to remain ideologically sincere during election years because they are generally expected to keep taxes low (Sobel 1998), making a low-tax position ideologically consistent across time.

References

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Alesina, A. and Roubini, N., 1992. Political cycles in OECD economies. The Review of Economic Studies, 59(4), pp.663-688.

Alesina, A., Roubini, N. and Cohen, G.D., 1997. Political cycles and the macroeconomy. MIT press.

Besley, Timothy, and Anne Case. 1995. “Does Electoral Accountability Affect Economic Policy Choice? Evidence from Gubernatorial Term Limits.” Quarterly Journal of Economics 110 (August): 769-98.

Dubois, Eric. 2016. “Political business cycles 40 years after Nordhaus.” Public Choice, 166(1), pp.235-259.

Geys, Benny, and Jan Vermeir. 2008. “Taxation and Presidential Approval: Separate Effects from Tax Burden and Tax Structure Turbulence?” Public Choice 135: 301-17.

Hibbs, D.A., 1977. Political parties and macroeconomic policy. American Political Science Review, 71(4), pp.1467-1487.

Katsimi, M. and Sarantides, V., 2012. Do elections affect the composition of fiscal policy in developed, established democracies?. Public Choice, 151(1), pp.325-362.

Kone, Susan L., and Richard F. Winters. 1993. “Taxes and Voting: Electoral Retribution in the American States.” Journal of Politics 55 (February): 22-40.

Lowry, Robert C., James E. Alt, and Karen E. Ferree. 1998. “Fiscal Policy Outcomes and Electoral Accountability in American States.” American Political Science Review 92 (December): 759-74.

Mink, Mark and De Haan, Jakob. 2006. Are there political budget cycles in the euro area?. European Union Politics, 7(2), pp.191-211.

Niemi, Richard G., Harold W. Stanley, and Ronald Vogel. 1995. “State Economies and State Taxes: Do Voters Hold Governors Accountable?” American Journal of Political Science 39 (November): 936-57.

Nordhaus, William D., 1975. The political business cycle. The Review of Economic Studies, 42(2), pp.169-190.

Olle, Albert Sole. 2003. “Electoral Accountability and Tax Mimicking: The Effect of Electoral Margins, Coalition Government, and Ideology.” European Journal of Political Economy 19: 685-713.

Paldam, M., 1979. Is There an Election Cycle? A Comparative Study of National Accounts. The Scandinavian Journal of Economics, pp.323-342.

Ploeg, F. V. 1989. “Disposable Income, Unemployment, Inflation and State Spending in a Dynamic Political-Economy Model. Public Choice 60: 211-39.

Sakurai, S.N. and Menezes-Filho, N., 2011. Opportunistic and partisan election cycles in Brazil: new evidence at the municipal level. Public Choice, 148(1), pp.233-247.

Shi, Min and Svensson, Jakob. 2006. Political budget cycles: Do they differ across countries and why?. Journal of public economics, 90(8-9), pp.1367-1389.

Sobel, Russell S. 1998. “The Political Costs of Tax Increases and Expenditure Reductions: Evidence from State Legislative Turnover.” Public Choice 96: 61-79.

Tillman, Erik R., and Baekkwan Park. 2009. “Do Voters Reward and Punish Governments for Changes in Income Taxes?” Journal of Elections, Public Opinion & Parties 19: 313-31.

In last decades public sector has undergone a series of reforms that have had a great influence on the development of public accounting and reporting system. The public sector consolidated financial statements became a challenging topic of worldwide research and became a debated issue both for international regulatory body (IPSASB) and for governments in consequence of decentralization and outsourcing of activities to off-budget entities and to corporations taking care of activities important for public service delivery.

The deepening attention to financial sustainability is even more relevant in a country like Italy where the municipal capitalism phenomenon is particularly relevant (Teodori et al., 2011; Scarpa et al., 2010; Teodori and Falini 2009; Grossi and Reichard 2008; Grossi and Steccolini 2008). As pointed out by the Italian Court of Auditors in 2021, there were over 5,000 participating entities of local authorities.

Literature within the public sector focused on many issues related to CFS, such as, for instance, the definition of the consolidation area and the concept of control (i.e. Chow et al., 2009), the obstacles to the implementation of CFS (Grossi, 2009), the identification of the reporting entity (Brusca and Montesinos, 2009; Grossi and Pepe, 2009). Santis et al. (2018) recently published a structured literature review unveiling two under-investigated topics. The first topic is connected to what information CFS should disclose in relations to politicians and manager’s needs and who are the users, uses, and primary decision-making processes that CFS would support, while the second research topic is relied to mandatory versus voluntary implementation of CFS. Moreover, some authors suggested using the financial reports in the public sector also for external users and uses (IPSASB, 2013; Brusca and Montesinos 2006; Mack and Ryan 2006).

Italy offers an important experience since it was one of the first countries in the European Union, after Sweden and the United Kingdom (Stewart and Connolly, 2022; Brusca et al., 2015; Tagesson and Grossi 2012; Heald and Georgiou 2011; Karlsson and Nilsson 2010), to expressly provide for compulsory adoption of the consolidated financial report (Carini et al., 2019; Carini and Teodori 2016). In fact, following Legislative Decree no. 118/2011 voluntary drafting was abandoned, gradually introducing the obligation for LG with more than 5,000 inhabitants to draw up a consolidated financial report.

The centrality of the consolidated budget is functional to comply with public finance constraints since it allows the “neutralization” of the budget to be achieved with respect to the phenomenon of outsourcing. However, it could also represent an additional managerial tool for decision makers by providing information on the financial position and financial performance of the LG and its controlled entities.

On the contrary, there is no reference in the Italian legislation to preparation of the consolidated financial reports for external purposes, neither are the decision-making purpose nor the prospect of accountability invoked. Lastly, users and user needs are not explicated.

In this context, the article investigates the perceptions of CFOs – who are the prepares ‘preparers’ of CFS - about the users, usefulness, benefits, and limits five years after the introduction of the consolidated financial report in Italian LGs, by focusing on an empirical analysis. A questionnaire was sent to a statistical stratified sample of LG during 2023, collecting 122 responses (response rate 10.96%).

Looking at the normative approaches of the standard setters and at the data collected in the literature, the article investigates the impact on both external and internal users and uses. Moreover, the article underpins the relations, in terms of conflict and cooperation (Voorn et al., 2017), between LG and the municipally controlled entities and the enabling factors that could favor the use of CFR with reference to external factors and institutional support. Correlations with the financial situation of the group and the main financial variables are explored too.

In short, the research questions underlying the article are the following:

● ● Who are the perceived users and what is the perceived relevance do they give to the document?

● What are the circumstances or enabling factors under which CFS is used and what are its uses and usefulness?

● What are the characteristics of financial information that make it suitable for being used (types of information and documents)?

The results confirm that the stakeholders most interested in the consolidated financial report are the members of the “internal community of the institutions” with differences that vary depending on the size of the institution and the financial situation. About the uses of the instrument, management decisions and performance assessments are the categories of decisions perceived by CFOs as the most influenced by the use of the consolidated reporting five years after its introduction. The article ends with reflections on policy indication over accounting harmonization and place emphasis on the quest to evaluate its real need in municipalities of any size.