Some Effects of Suburban Residential Development on Local Finances

Recent population trends have transformed many rural farming communities into residential suburbs. The changing pattern of land use has had important effects on farmland values and on farm property taxes. It has also placed a strain on the financial resources of local government. Especially where local units are small and lack economic diversification, problems of supplying necessary governmental services to a growing population may become severe. This study examines the financial problems brought on by the process of suburbanization in four school districts of Wisconsin. The situation described is similar to that found in the school districts of many other areas where development of suburbs has been rapid and where financial resources are restricted by the small size of local governmental units. In some States, school district consolidation offers a partial solution to the problems such communities face. Other measures to be considered include more effective land use planning and zoning laws, improved property tax administration, possible use of nonproperty forms of local taxation, and perhaps an altered division of financial responsibility between States and their local subdivisions for school financing. The author acknowledges the contribution of Arthur J. W alrath,, of the Farm Economics Research Division, ARS, who supplied, or helped in the collection of, most of the data used in this study, and who gave many valuable comments on an earlier draft of the report.