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The Impact of Mandates and Tax Limits on Voluntary Contributions to Local Public Services: An Application to Fire Protection Services

Author

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  • Douglas C. Bice

    (Eastern New Mexico University)

  • William H. Hoyt

    (University of Kentucky)

Abstract

The past twenty-five years have seen a tremendous increase in interventions by state governments into local public service provision through mandates related to employee compensation and production processes and tax and spending limitations. Reflecting this phenomena, a substantial literature has arisen examining the impact of these mandates on both spending on and the quality of public services. Here, we focus on another impact of mandates on public services, the use of volunteers and fund-raising by local governments. We develop a model of contributions to local public services, which predicts that tax limits increase both the use of volunteers and fund-raising and mandates increase the use of volunteers. These predictions are then tested using data on 1,846 fire-protection departments in twenty-eight states in 1993. Specifically, we examine how the existence of mandates and tax limits influences the type of department (volunteer; paid; or combined) as well as on the extent of fund-raising. The results of our empirical work generally support our theoretical predictions. The existence a tax limit makes it 11% more likely that a department (of mean characteristics) is volunteer and 10% more likely that it engages in fund-raising. A mandated pension increases the probability that a department is volunteer by 13% and increases the likelihood that it engages in fund-raising by approximately 7%.

Suggested Citation

  • Douglas C. Bice & William H. Hoyt, 1997. "The Impact of Mandates and Tax Limits on Voluntary Contributions to Local Public Services: An Application to Fire Protection Services," Public Economics 9704002, EconWPA.
  • Handle: RePEc:wpa:wuwppe:9704002
    Note: Type of Document - Binary Word for Windows (V.6/7) document; prepared on IBM PC Compat.; to print on HP LaserJet; pages: 37
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    References listed on IDEAS

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    Cited by:

    1. Benjamin A. Olken & Monica Singhal, 2011. "Informal Taxation," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 1-28, October.
    2. Brunet, Alexia & McNamara, Kevin T. & Deboer, Larry, 2001. "Alternative Service Delivery Strategies For Local Governments," 2001 Annual meeting, August 5-8, Chicago, IL 20705, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Ron Cheung, 2005. "The Effect of Property Tax Limitations on Residential Private Governments," Working Papers wp2005_05_01, Department of Economics, Florida State University.

    More about this item

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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