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The Effect of Tax and Expenditure Limitations on the Revenue Structure of Local Government, 1962-87

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  • Shadbegian, Ronald J.

Abstract

This study estimates the impact of local tax and expenditure limitations (TELs) on the level and structure of local government revenue. Using a panel data set on 2955 counties (1962-87), this study demonstrates that TELs decrease the level of property and "other" taxes, but increase the level of miscellaneous revenue, partially offsetting the decrease in taxes. Thus, TELs shift the revenue structure of local government away from taxes and toward miscellaneous revenue. However, more stringent TEL laws eliminate local government's ability to increase the level of miscellaneous revenue to offset the decrease in taxes.

Suggested Citation

  • Shadbegian, Ronald J., 1999. "The Effect of Tax and Expenditure Limitations on the Revenue Structure of Local Government, 1962-87," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 221-238, June.
    • Handle: RePEc:ntj:journl:v:52:y:1999:i:2:p:221-38
    DOI: 10.1086/NTJ41789391
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    1. Mahgoub, G., 1996. "Budgeting for irrigation services cost and its relation with the cost recovery mechanisms in different irrigation schemes," Conference Papers h021894, International Water Management Institute.
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    Cited by:

    1. Liu, Shimeng & Yang, Xi, 2020. "Property tax limits and female labor supply: Evidence from the housing boom and bust," Journal of Housing Economics, Elsevier, vol. 50(C).
    2. Justina A.V. Fischer, 2005. "Do Institutions of Direct Democracy Tame the Leviathan? Swiss Evidence on the Structure of Expenditure for Public Education," CESifo Working Paper Series 1628, CESifo.
    3. Wenchi Wei, 2021. "State fiscal constraint and local overrides: a regression discontinuity design estimation of the fiscal effects," Public Choice, Springer, vol. 189(3), pages 347-373, December.
    4. Raúl Alberto Ponce Rodríguez, 2009. "Political institutions and tax rate initiatives," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 65-94, November.
    5. Schaltegger, Christoph A. & Feld, Lars P., 2009. "Are fiscal adjustments less successful in decentralized governments?," European Journal of Political Economy, Elsevier, vol. 25(1), pages 115-123, March.
    6. Bigelow, Daniel P. & Kuethe, Todd, 2023. "The impact of preferential farmland taxation on local public finances," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    7. Saeid Mahdavi, 2013. "State Government Tax Revenue, Tax Revenue Composition and Tax Effort Index: An Assessment of the 1978-97 period," Working Papers 0213eco, College of Business, University of Texas at San Antonio.
    8. Blankenau, William & Skidmore, Mark, 2002. "The Relationship Between Education Finance Reform and Tax and Expenditure Limitations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 32(1), pages 1-18.
    9. 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.
    10. Fischer, Justina AV, 2009. "Development of Direct Democracy in Swiss Cantons between 1997 and 2003," MPRA Paper 16140, University Library of Munich, Germany.
    11. Productivity Commission, 2008. "Assessing Local Government Revenue Raising Capacity," Research Reports, Productivity Commission, Government of Australia, number 26.
    12. Skidmore, Mark & Peltier, James & Alm, James, 2005. "Do state motor fuel sales-below-cost laws lower prices?," Journal of Urban Economics, Elsevier, vol. 57(1), pages 189-211, January.
    13. Nalitra Thaiprasert & Dagney Faulk & Michael J. Hicks, 2013. "A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana," Public Finance Review, , vol. 41(4), pages 446-472, July.
    14. Gebhard Kirchgassner, 2002. "The effects of fiscal institutions on public finance: a survey of the empirical evidence," Chapters, in: Stanley L. Winer & Hirofumi Shibata (ed.), Political Economy and Public Finance, chapter 9, Edward Elgar Publishing.
    15. Schmidt, Stephen J. & McCarty, Therese A., 2008. "Estimating permanent and transitory income elasticities of education spending from panel data," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 2132-2145, October.
    16. Luna, LeAnn & Bruce, Donald J. & Hawkins, Richard R., 2007. "Maxing Out: An Analysis of Local Option Sales Tax Rate Increases," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(1), pages 45-63, March.
    17. Michael S. Hayes, 2015. "The Differential Effect of the No Child Left Behind Act (NCLB) on States’ Contributions to Education Funding in States with Binding School District Tax and Expenditure Limitations," Public Budgeting & Finance, Wiley Blackwell, vol. 35(1), pages 49-72, March.
    18. Alexander Fink & Richard Wagner, 2013. "Political entrepreneurship and the formation of special districts," European Journal of Law and Economics, Springer, vol. 35(3), pages 427-439, June.
    19. Rebecca Hendrick & Jared Crawford, 2014. "Municipal Fiscal Policy Space and Fiscal Structure: Tools for Managing Spending Volatility," Public Budgeting & Finance, Wiley Blackwell, vol. 34(3), pages 24-50, September.
    20. William F. Blankenau & Mark L. Skidmore, 2004. "School Finance Litigation, Tax and Expenditure Limitations, and Education Spending," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 127-143, January.
    21. Austin M Aldag & Mildred E Warner & Yunji Kim, 2019. "Leviathan or Public Steward? Evidence on Local Government Taxing Behavior from New York State," Publius: The Journal of Federalism, CSF Associates Inc., vol. 49(4), pages 671-693.

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