Carry-overs or leftovers – tackling (wasteful) spend-downs at the cen...

Carry-over rules gained popularity during public sector financial and accounting reforms as they allowed more flexibility in budget execution, created incentives for efficiency, and have been discussed as an important remedy to (wasteful) spend-downs. Surprisingly, their effect on the latter has been rarely addressed in empirical studies. Applying a mixed-method approach, this article provides empirical evidence for (wasteful) spend-downs, uncovers reasons for the latter, and analyzes the effect of changes in carry-over rules in the context of the introduction of a comprehensive budgeting and accounting reform in Austria. While the introduction of carry-overs initially had a positive effect on year-end spending surges, the design of the rules and implementation problems led to rational but dysfunctional behavior in central government entities.