Beyond limiting governmental revenues or expenditures, fiscal limits affect governance capacity, the ability to make and effectuate collective choices for a geographically bounded grouping of humans, sustained over time. These effects are visible in California's experience with Proposition 13 and other fiscal limits. Reductions in growth rates of revenues, a political culture constraining governmental action, and tighter constraints on fiscal choices combine to make governments less useful instruments of collective action.
Professor Kirlin argues that the indirect impacts of fiscal limits include diminished intelligibility, reduced visibility, and reduced accountability of governmental activities, yielding increased transaction costs for governments, citizens and private interests and feeding suspicion of government.
John J. Kirlin,
The Impact of Fiscal Limits on Governance,
25 Hastings Bus L.J. 197
Available at: https://repository.uchastings.edu/hastings_constitutional_law_quaterly/vol25/iss2/3