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Do budget maximizing public officials increase the probability of property reassessment?

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  • William Stine

Abstract

County governments in Pennsylvania face non-binding limits on their property tax rates. These are considered non-binding because they do not place a limit on tax levies or expenditures. Assuming local public officials have monopoly power, tax rate limits can be circumvented by reassessing the property tax base. A two-stage process was hypothesized in which the probability of reaching tax rate limits first was determined and the probability of reassessment then was determined. The effect of budget maximizing government officials at each stage was tested for 66 Pennsylvania counties over the 1970-1995 period. The empirical results showed that variables associated with budget maximizing behaviour influenced the choice in each stage. Public expenditure growth increased the probability of reaching the tax rate limit in the first stage while reaching the tax rate limit increased the probability of reassessment in the second stage. The estimates also showed that economic, fiscal and taste variables were significant determinants of these probabilities.

Suggested Citation

  • William Stine, 2005. "Do budget maximizing public officials increase the probability of property reassessment?," Applied Economics, Taylor & Francis Journals, vol. 37(20), pages 2395-2405.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:20:p:2395-2405
    DOI: 10.1080/00036840500218646
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    References listed on IDEAS

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    1. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, June.
    2. Cutler, David M. & Elmendorf, Douglas W. & Zeckhauser, Richard, 1999. "Restraining the Leviathan: property tax limitation in Massachusetts," Journal of Public Economics, Elsevier, vol. 71(3), pages 313-334, March.
    3. Bloom, Howard S. & Ladd, Helen F., 1982. "Property tax revaluation and tax levy growth," Journal of Urban Economics, Elsevier, vol. 11(1), pages 73-84, January.
    4. Dale Bails, 1982. "A critique on the effectiveness of tax-expenditure limitations," Public Choice, Springer, vol. 38(2), pages 129-138, January.
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    Cited by:

    1. Stine, William F., 2010. "Estimating the Determinants of Property Reassessment Duration: An Empirical Study of Pennsylvania Counties," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(2), pages 1-17.

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