29 hidden by higher than expected revenue collections are likely to emerge and become
more difficult to sustain.
2.3.3 Theoretical Implications for State Responses to Fiscal Stress
Several practices and organizational factors are associated with punctuated policy actions in response to fiscal stress. Targeted cuts are the most often cited example of a
punctuated policy action in response to fiscal stress Hackbart and Ramsey 2004; Jordan 2003. An advantage of operationalizing punctuated changes as targeted cuts is that it
allows researchers to avoid the question of how big a change must be to qualify as a punctuated, not an incremental, change. Hackbart and Ramsey 2004 classify rainy day
fund use as an incremental response because it allows states to avoid making difficult decisions and essentially to defer programmatic action. Organizational characteristics
such as the presence of structural deficits and the extent of a governor’s control over the budget process are highlighted as causes of punctuated actions Hackbart and Ramsey
2004; Breunig and Koski 2009. Another implication of punctuated equilibrium theory on state budgetary responses is that responses may occur one or more fiscal years after stress
initially appears. Incremental changes may persist despite the need for more substantive action as budget actors try to figure out the correct course of action and navigate the
multiple layers of government decision-making. This has ramifications for the timing of responses and the connection between responses within one fiscal year to the level of
fiscal stress that occurred a year or more past.
2.3.4 Criticism and Limitation of Theory
Criticism of punctuated equilibrium theory centers on the lack of causal explanations, poor predictability, and the methods used to measure punctuations Givel
2006; Givel 2010; Robinson et al 2007. Robinson et al 2007, despite finding support for the stasis and punctuation model in school district budgets, questions the theory’s
30 ability to explain why punctuations occur. The authors note that success in describing the
nature of policy change – stasis combined with punctuation – does not substitute for explaining why the change occurs. As noted above, efforts to link institutional factors to
the prevalence of punctuations exists, but it is still in its infancy. The inability of punctuated equilibrium to predict punctuations or to explain the conditions that lead to
punctuations are major limitations of the theory. Furthermore, Givel 2010 points to cases in U.S. forestry policy, tobacco policy, and auto efficiency policy in which
punctuations would be expected to occur due to rapid and major changes in their external environments, but in which no major policy outputs changed. Much of the criticism
focuses on how to measure policy outputs via changes in statutes and regulations or in tone. All of this points to the difficulty in using punctuated equilibrium to form and
support predictive hypotheses.
2.4 Cutback Management Theory 2.4.1 Background and Description of Theory
