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If you build it, will they come?: fiscal federalism, local provision of public tourist amenities, and the Vision Iowa fund

Author

Listed:
  • Premkumar, Deepak
  • Quackenbush, Austin
  • Artz, Georgeanne M.
  • Orazem, Peter

Abstract

The philosophy of fiscal federalism presumes that local communities will under- or over-provide public amenities in the presence of externalities. We test this hypothesis using data from Vision Iowa, a state program which provided partial funding to communities to build tourist attractions. We find a 1% increase in investment increased county taxable retail sales 0.9%. The State's return, from program-induced sales tax revenue, averaged 9.2% annually. Local communities' returns averaged 0.9% and we find a significant increase in surrounding areas' sales. This suggests that without state subsidies, communities would undersupply public amenities aimed at attracting visitors.

Suggested Citation

  • Premkumar, Deepak & Quackenbush, Austin & Artz, Georgeanne M. & Orazem, Peter, 2011. "If you build it, will they come?: fiscal federalism, local provision of public tourist amenities, and the Vision Iowa fund," ISU General Staff Papers 201110090700001056, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201110090700001056
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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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