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The expenditure effects of municipal annexation

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  • Stephen Mehay

Abstract

The shift in the institutional stucture in California in 1963 simultaneously reduced the ability of new cities to incorporate and elevated the status of annexation as a favored municipal growth policy. This study finds that cities which grew more rapidly by annexation also experienced more rapid expenditure growth rates than cities which did not grow rapidly by annexation. These results, using somewhat better data, corroborate those of M-W. They support the hypothesis that the institutional shift toward annexation enhanced the service monopolies enjoyed by existing municipalities thus promoting bureau-growth and inefficiency. Of course, further tests will be necessary to determine whether these expenditure effects arise solely because of annexation. That is, would this expenditure growth be expected in easy-annexation states even if entry to the local government services market were relatively open? The bureaucracy-monopoly hypothesis also needs to be tested against alternative hypotheses about the causes of rapid expenditure growth in high annexation cities. Nonetheless, the results of this study, combined with those of M-W, clearly indicate the importance of the institutional structure in affecting municipal fiscal behavior. Copyright Martinus Nijhoff Publishers bv 1981

Suggested Citation

  • Stephen Mehay, 1981. "The expenditure effects of municipal annexation," Public Choice, Springer, vol. 36(1), pages 53-62, January.
    • Handle: RePEc:kap:pubcho:v:36:y:1981:i:1:p:53-62
    DOI: 10.1007/BF00163770
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    Cited by:

    1. Katsuyoshi Nakazawa & Tomohisa Miyashita, 2014. "Municipality amalgamation in Japan: an examination using event history analysis," Economics Bulletin, AccessEcon, vol. 34(2), pages 627-633.
    2. Pengju Zhang & Phuong Nguyen‐Hoang & Na Chen, 2022. "The impact of home rule on municipal boundary and fiscal expansion: Evidence from Texas," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1442-1466, November.
    3. Katsuyoshi Nakazawa, 2016. "Amalgamation, free-rider behavior, and regulation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 812-833, October.
    4. Stephen Mehay, 1984. "The effect of governmental structure on special district expenditures," Public Choice, Springer, vol. 44(2), pages 339-348, January.
    5. Agrawal, Sandeep & Gretzinger, Cody & Lowerre, Andrew, 2022. "Trends, motivations, and land use outcomes of municipal annexation: A case of Alberta, Canada," Land Use Policy, Elsevier, vol. 112(C).
    6. Juan Luis Gómez-Reino & Santiago Lago-Peñas & Jorge Martinez-Vazquez, 2021. "Evidence on Economies of Scale in Local Public Service Provision: A Meta-Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper2116, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Jeffrey Zax, 1988. "The Effects of Jurisdiction Types and Numbers on Local Public Finance," NBER Chapters, in: Fiscal Federalism: Quantitative Studies, pages 79-106, National Bureau of Economic Research, Inc.
    8. Chris Mothorpe & W. William Woolsey & Russell S. Sobel, 2021. "Do political motivations and strategic considerations influence municipal annexation patterns?," Public Choice, Springer, vol. 188(3), pages 385-405, September.
    9. Rodolfo Gonzalez & Stephen Mehay, 1987. "Municipal annexation and local monopoly power," Public Choice, Springer, vol. 52(3), pages 245-255, January.
    10. John Meligrana, 2007. "Testing the Elastic-Cities Concept within a Nonmetropolitan Environment: Evidence from British Columbia, Canada, 1971 to 2001," Environment and Planning A, , vol. 39(3), pages 700-727, March.
    11. Katsuyoshi Nakazawa & Tomohisa Miyashita, 2013. "Does the method adopted for distribution of services by amalgamating municipalities affect expenditure after amalgamation? Evidence from Japan," MAGKS Papers on Economics 201315, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Kenneth Greene, 1984. "Sequential referenda and bureaucratic man," Public Choice, Springer, vol. 43(1), pages 77-82, January.

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