The Impact of Fiscal Transparency and Public Participation on Municipal Fiscal Health: Evidence from California Cities’ Social Media Posts

Abstract

Fiscal transparency and public participation are important elements of the democratic decision-making process. However, empirical evidence on their impact on local fiscal outcome is lacking. This study addresses two research questions: (1) How do municipal governments use social media to promote fiscal transparency and public participation? (2) Do fiscal transparency and public participation on social media affect municipal fiscal health? Using a sample of 174 California cities from 2016 to 2022, this study analyzes data from the social media platform X (formerly Twitter) and fiscal data of cities. Mixed research methods are used. The study finds that governments post budget-related information on social media and encourage different levels of public participation throughout the various stages of a budget cycle. The regression results also show that budget tweets have a positive impact on long-term obligations while the number of public responses to these tweets is negatively associated with long-term obligations. The study contributes to the literature and has practical implications for enhancing fiscal transparency and public participation in budgeting through social media.