IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v170y2017i3d10.1007_s11127-016-0395-7.html
   My bibliography  Save this article

The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio

Author

Listed:
  • Paul N. Thompson

    (Oregon State University)

  • Joseph Whitley

    (Washington State Health Care Authority)

Abstract

A key informational asymmetry in local public finance is the lack of information available to local residents regarding the financial status of the school districts and local governments in which they reside. Given that voters in many states must approve property and income tax increases for these local entities, the lack of full information on the financial status of these local entities may lead to sub-optimal voting decisions. State financial intervention systems have begun to make financial problems more salient to residents, potentially alleviating these informational asymmetries. This paper examines the effect of the Ohio fiscal stress labeling program on voting outcomes and the tax-setting behavior of local officials for school district and municipal government tax referendums. We use a difference-in-differences approach to examine data from over 3000 school district and 2300 municipality property tax elections from 2004 to 2012. While we find minimal evidence that the yes vote share changed for school district referendums following fiscal stress label receipt, we find very large increases (15 to 23 percentage points) in the likelihood of referendum passage for school districts following label receipt. We do not find much evidence of changes in the likelihood of passage or the yes vote share following label receipt for municipalities, but we do find that these voting outcomes rise following label removal. We also find that local officials do not appreciably change their tax-setting behavior in response to these labels, as the size and likelihood of property tax proposal are largely unchanged following label receipt or removal.

Suggested Citation

  • Paul N. Thompson & Joseph Whitley, 2017. "The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio," Public Choice, Springer, vol. 170(3), pages 265-288, March.
    • Handle: RePEc:kap:pubcho:v:170:y:2017:i:3:d:10.1007_s11127-016-0395-7
    DOI: 10.1007/s11127-016-0395-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11127-016-0395-7
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11127-016-0395-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thompson, Paul N., 2016. "School district and housing price responses to fiscal stress labels: Evidence from Ohio," Journal of Urban Economics, Elsevier, vol. 94(C), pages 54-72.
    2. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    3. Gradstein, Mark & Kaganovich, Michael, 2004. "Aging population and education finance," Journal of Public Economics, Elsevier, vol. 88(12), pages 2469-2485, December.
    4. Eric J. Brunner & Stephen L. Ross, 2009. "Is the Median Voter Decisive? Evidence of 'Ends Against the Middle' From Referenda Voting Patterns," Working papers 2009-02, University of Connecticut, Department of Economics, revised May 2010.
    5. Ron Zimmer & John T. Jones, 2005. "Unintended Consequence of Centralized Public School Funding in Michigan Education," Southern Economic Journal, John Wiley & Sons, vol. 71(3), pages 534-544, January.
    6. Brender, Adi, 2003. "The effect of fiscal performance on local government election results in Israel: 1989-1998," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2187-2205, September.
    7. Balsdon, Ed & Brunner, Eric J. & Rueben, Kim, 2003. "Private demands for public capital: evidence from school bond referenda," Journal of Urban Economics, Elsevier, vol. 54(3), pages 610-638, November.
    8. Jin, Ginger Zhe & Sorensen, Alan T., 2006. "Information and consumer choice: The value of publicized health plan ratings," Journal of Health Economics, Elsevier, vol. 25(2), pages 248-275, March.
    9. Ronald G. Ehrenberg & Randy A. Ehrenberg & Christopher L. Smith & Liang Zhang, 2002. "Why Do School District Budget Referenda Fail?," NBER Working Papers 9088, National Bureau of Economic Research, Inc.
    10. Brunner, Eric J. & Ross, Stephen L., 2010. "Is the median voter decisive? Evidence from referenda voting patterns," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 898-910, December.
    11. Randall Holcombe & Lawrence Kenny, 2007. "Evidence on voter preferences from unrestricted choice referendums," Public Choice, Springer, vol. 131(1), pages 197-215, April.
    12. Pope, Devin G., 2009. "Reacting to rankings: Evidence from "America's Best Hospitals"," Journal of Health Economics, Elsevier, vol. 28(6), pages 1154-1165, December.
    13. Isabel Brusca & Vicente Montesinos, 2006. "Are Citizens Significant Users of Government Financial Information?," Public Money & Management, Taylor & Francis Journals, vol. 26(4), pages 205-209, September.
    14. Dunne, Stephanie & Reed, W Robert & Wilbanks, James, 1997. "Endogenizing the Median Voter: Public Choice Goes to School," Public Choice, Springer, vol. 93(1-2), pages 99-118, October.
    15. Thomas Luke Spreen & Caitlin M. Cheek, 2016. "Does Monitoring Local Government Fiscal Conditions Affect Outcomes? Evidence from Michigan," Public Finance Review, , vol. 44(6), pages 722-745, November.
    16. David N. Figlio & Maurice E. Lucas, 2004. "What's in a Grade? School Report Cards and the Housing Market," American Economic Review, American Economic Association, vol. 94(3), pages 591-604, June.
    17. Deborah Fletcher & Lawrence W. Kenny, 2008. "The Influence of the Elderly on School Spending in a Median Voter Framework," Education Finance and Policy, MIT Press, vol. 3(3), pages 283-315, July.
    18. Chernew, Michael & Gowrisankaran, Gautam & Scanlon, Dennis P., 2008. "Learning and the value of information: Evidence from health plan report cards," Journal of Econometrics, Elsevier, vol. 144(1), pages 156-174, May.
    19. Jan Vermeir & Bruno Heyndels, 2006. "Tax policy and yardstick voting in Flemish municipal elections," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2285-2298.
    20. Christopher B. Colburn & John B. Horowitz, 2003. "Local Politics and the Demand for Public Education," Urban Studies, Urban Studies Journal Limited, vol. 40(4), pages 797-807, April.
    21. Vladimir Kogan & Stéphane Lavertu & Zachary Peskowitz, 2016. "Performance Federalism and Local Democracy: Theory and Evidence from School Tax Referenda," American Journal of Political Science, John Wiley & Sons, vol. 60(2), pages 418-435, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thompson, Paul N., 2019. "Are school officials held accountable for fiscal stress? Evidence from school district financial intervention systems," Economics of Education Review, Elsevier, vol. 72(C), pages 44-54.
    2. Grant D. Jacobsen, 2019. "How do different sources of policy analysis affect policy preferences? Experimental evidence from the United States," Policy Sciences, Springer;Society of Policy Sciences, vol. 52(3), pages 315-342, September.
    3. Thompson, Paul N., 2017. "Effects of fiscal stress labels on municipal government finances, housing prices, and the quality of public services: Evidence from Ohio," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 98-116.
    4. Darren Grant, 2017. "The ballot order effect is huge: evidence from Texas," Public Choice, Springer, vol. 172(3), pages 421-442, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thompson, Paul N., 2019. "Are school officials held accountable for fiscal stress? Evidence from school district financial intervention systems," Economics of Education Review, Elsevier, vol. 72(C), pages 44-54.
    2. Brunner, Eric J. & Johnson, Erik B., 2016. "Intergenerational conflict and the political economy of higher education funding," Journal of Urban Economics, Elsevier, vol. 91(C), pages 73-87.
    3. Daniel Avdic & Tugba Bueyuekdurmus & Giuseppe Moscelli & Adam Pilny & Ieva Sriubaite, 2018. "Subjective and objective quality reporting and choice of hospital: Evidence from maternal care services in Germany," CINCH Working Paper Series 1803, Universitaet Duisburg-Essen, Competent in Competition and Health.
    4. Rajashri Chakrabarti & Max Livingston & Joydeep Roy, 2014. "Did Cuts in State Aid During the Great Recession Lead to Changes in Local Property Taxes?," Education Finance and Policy, MIT Press, vol. 9(4), pages 383-416, October.
    5. Luiz Mello & Simone Schotte & Erwin R. Tiongson & Hernan Winkler, 2017. "Greying the Budget: Ageing and Preferences over Public Policies," Kyklos, Wiley Blackwell, vol. 70(1), pages 70-96, February.
    6. Thompson, Paul N., 2017. "Effects of fiscal stress labels on municipal government finances, housing prices, and the quality of public services: Evidence from Ohio," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 98-116.
    7. Maennig, Wolfgang & Ahlfeldt, Gabriel M. & Steenbeck, Malte, 2016. "Après nous le déluge? Direct democracy and intergenerational conflicts in aging societies," VfS Annual Conference 2016 (Augsburg): Demographic Change 145793, Verein für Socialpolitik / German Economic Association.
    8. Stijn Baert & Herman Matthijs & Ilse Verdievel, 2019. "Voting with your wallet? Municipal budget policy and election results," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-11, August.
    9. Laura Bianchini & Federico Revelli, 2013. "Green Polities: Urban Environmental Performance and Government Popularity," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 72-90, March.
    10. Revelli, Federico, 2008. "Performance competition in local media markets," Journal of Public Economics, Elsevier, vol. 92(7), pages 1585-1594, July.
    11. Huan Gong & Cynthia L. Rogers, 2014. "Does Voter Turnout Influence School Bond Elections?," Southern Economic Journal, John Wiley & Sons, vol. 81(1), pages 247-262, July.
    12. Kim, Tami & Martin, Daniel, 2021. "What do consumers learn from regulator ratings? Evidence from restaurant hygiene quality disclosures," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 234-249.
    13. Hunt Allcott & Richard L. Sweeney, 2017. "The Role of Sales Agents in Information Disclosure: Evidence from a Field Experiment," Management Science, INFORMS, vol. 63(1), pages 21-39, January.
    14. Avdic, Daniel & Moscelli, Giuseppe & Pilny, Adam & Sriubaite, Ieva, 2019. "Subjective and objective quality and choice of hospital: Evidence from maternal care services in Germany," Journal of Health Economics, Elsevier, vol. 68(C).
    15. Michael Reed & Patrick O’Reilly & Joshua Hall, 2019. "The Economics and Politics of Carbon Taxes and Regulations: Evidence from Voting on Washington State’s Initiative 732," Sustainability, MDPI, vol. 11(13), pages 1-12, July.
    16. Brunner, Eric J. & Ross, Stephen L. & Simonsen, Becky K., 2015. "Homeowners, renters and the political economy of property taxation," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 38-49.
    17. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(1), pages 35-58, March.
    18. Tae Ho Eom & William Duncombe & Phuong Nguyen-Hoang & John Yinger, 2014. "The Unintended Consequences of Property Tax Relief: New York’s STAR Program," Education Finance and Policy, MIT Press, vol. 9(4), pages 446-480, October.
    19. Pierre Koning & Karen Wiel, 2012. "School Responsiveness to Quality Rankings: An Empirical Analysis of Secondary Education in the Netherlands," De Economist, Springer, vol. 160(4), pages 339-355, December.
    20. Epstein, Andrew J., 2010. "Effects of report cards on referral patterns to cardiac surgeons," Journal of Health Economics, Elsevier, vol. 29(5), pages 718-731, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:170:y:2017:i:3:d:10.1007_s11127-016-0395-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.