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The unintended impact of tax and expenditure limitations on the use of special districts: the politics of circumvention

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  • Pengju Zhang

    (The State University of New Jersey - Newark)

Abstract

The increasing trend of special districts deserves more attention as it raises concerns on the efficiency and accountability of the fragmented local governance system in America. This paper examines whether the rapid growth of special districts can be partially explained by the expansion of state-imposed tax and expenditure limitations (TELs) during the last several decades. Using panel data from 1972 to 2007, this paper finds that TELs produce unintended circumvention effects among local governments. Specifically, the results reveal TELs motivate local general-purpose governments to create new special districts as an institutional strategy to evade the fiscal constraints imposed by the state.

Suggested Citation

  • Pengju Zhang, 2018. "The unintended impact of tax and expenditure limitations on the use of special districts: the politics of circumvention," Economics of Governance, Springer, vol. 19(1), pages 21-50, February.
    • Handle: RePEc:spr:ecogov:v:19:y:2018:i:1:d:10.1007_s10101-017-0198-4
    DOI: 10.1007/s10101-017-0198-4
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    2. Pengju Zhang, 2023. "The fiscal and economic impacts of municipal dissolution: evidence from New York," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 948-1001, August.

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    More about this item

    Keywords

    Special districts; Tax and expenditure limitations; The politics of circumvention; State and local public finance; Fiscal federalism;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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