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The impact of excess taxing capacity on short‐term resources

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  • Michelle L. Lofton

Abstract

Local governments aim to accumulate slack resources to mitigate economic turbulence. Yet efforts to increase multiple slack resources could hinder accumulation. This paper examines whether increasing one form of slack is detrimental to the accumulation of another. By using data from 672 New York local governments from 1996 to 2016, this article examines the impact of excess taxing capacity, or unused property taxing authority, on unrestricted cash and short‐term borrowing. Regression results indicate that short‐term resources are reduced to boost excess taxing capacity for counties to suggest cash flows can be hindered by increasing political forms of slack.

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  • Michelle L. Lofton, 2022. "The impact of excess taxing capacity on short‐term resources," Public Budgeting & Finance, Wiley Blackwell, vol. 42(1), pages 3-27, March.
    • Handle: RePEc:bla:pbudge:v:42:y:2022:i:1:p:3-27
    DOI: 10.1111/pbaf.12286
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    References listed on IDEAS

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