The Effect of Fiscal Performance on Local Government Election Results in Israel : 1989-1998

We discuss the circumstances under which voters in local elections will reward fiscal responsibility and suggest that such circumstances evolved in Israel in the mid-1990s. We present empirical evidence that, indeed, fiscal performance of mayors substantially affected their reelection probability in the 1998 campaign but not in the 1989 and 1993 campaigns. Changes in the political environment, enforcement of audit and financial reporting requirements, tougher imposition of hard budget constraints and the development of local media are proposed as explanations. The hypotheses that the fiscal variables reflect the income level at the locality, or the mayor's success in extracting resources from the central government are tested and rejected