Do Cities and Counties Attempt to Circumvent Changes in Their Autonomy by Creating Special Districts?
This study uses forty years of data from the US Census of Governments to examine the impact of changes in local autonomy on the creation of special districts, the most popular and fastest growing form of local government in the U.S. Using a fixed effects negative binomial regression specified at the urban county and MSA level, we find that restrictions of fiscal autonomy of cities is associated with creation of new special districts. The magnitude of this finding is amplified when limits on fiscal autonomy are paired with grants of functional autonomy. We find no analogous effects for county governments. These two findings are consistent with the circumvention argument made in the local autonomy literature.
This paper examines the fiscal impacts of urban development patterns in the United States. Previous studies have indicated that low-density, spatially expansive development patterns are costly to provide public services leading to higher per capita expenditures. However, theory would suggest alternate outcomes. These two possibilities are examined empirically using a panel dataset of U.S. county areas from 1982 to 2012 and a specification allowing for a potential non-linearity between development patterns and per capita expenditures. Estimates indicate that the spatial extent of urban development is the most important, suggesting that more compact development is less costly to provide public services. Increased density increases per capita expenditures suggesting “urban harshness”; however, the effects are quantitatively small.
Goodman, Christopher B. Forthcoming. House Prices & Property Tax Revenues During the Boom & Bust: Evidence from Small-Area Estimates. Growth & Change.
Although the Great Recession put the U.S. economy into a tailspin, we know little about how the changes in house prices influenced property tax collections. Using local level housing data from Zillow® matched to property tax data from 1998 to 2012, two questions are examined. First, the elasticity of property tax revenue with respect to house values is estimated. Second, the timing of this elasticity is determined. The analysis rules out that local policymakers capture the entire increase of house value in property tax revenues but unable to rule out that increases in house values are completely offset by changes in effective property tax rates. Decreases in values have an elasticity between 0.3 and 0.4 and take three years for changes in values to impact property tax revenues. While property tax collections declined, local policymakers adjusted effective millage rates such that revenues did not decline as much as home values.
Goodman, Christopher B. Forthcoming. Usage of Specialized Service Delivery: Evidence from Contiguous Counties. Publius: The Journal of Federalism.
This study exploits exogenous policy discontinuities along state borders to estimate the influence of differences in local autonomy on the usage of special districts in U.S. counties. Using forty years of data, this analysis compares counties on either side of state borders where local autonomy differs and finds little to no evidence that negative changes in local autonomy leads to increased utilization of special districts. This study suggests that some prior literature may overstate the importance of local autonomy in local service delivery.
Goodman, Christopher B. 2018. Jurisdictional Overlap & the Size of the Local Public Workforce. State & Local Government Review 50 (1): 15-23.
The United States is a country of many overlapping local governments. Theoretical explorations of the potential influence of this institutional arrangement abound; however, empirical evidence as the influence of such an arrangement on local public sector remains relatively thin. Instead of competing for mobile resources as suggested by Tiebout, overlapping jurisdictions utilize similar tax and voting bases introducing a potential commons problem. Using a county-level dataset from 1972 to 2012, this commons problem is explored. The results suggest that a positive relationship between jurisdictional overlap and the size of local public workforce amounting to approximately a one percent increase in employment or an increase of less than one full-time equivalent employee.
Technical version with multiple specifications and robustness checks. PDF
Carroll, Deborah A. and Christopher B. Goodman. 2017. Assessing the Influence of Property Tax Delinquency and Foreclosures on Residential Property Sales. Urban Affairs Review 53 (5): 898-923.
We examine the influence of property tax delinquency on the sale price of nearby homes from 2002 to 2013 using more than 46,000 residential property sales in a representative midwestern central city—Milwaukee, Wisconsin. After controlling for a number of property and neighborhood characteristics including nearby foreclosures, we find property tax delinquency has a significant influence on nearby home sales. The relationship is negative; one additional tax delinquent property within 250 m of a home sale is associated with a discounted sale price of 0.79% or approximately $1,085 on average. In addition, the influence of tax delinquent properties on home sale prices diminishes with distance, suggesting blight is the source of the discount. Based on these findings, the negative influence of tax delinquency is likely to be exacerbated in central cities where housing density is greater and delinquency is higher and more persistent than the surrounding suburbs, which has the potential to lead to fiscal distress as property taxes are the primary revenue source for cities. As such, we suggest a two-tiered approach for cities to mitigate the negative consequences of tax delinquency: a combination of policies to eliminate delinquency and also to help homeowners become financially stable.
Goodman, Christopher B. 2015. Local Government Fragmentation and the Local Public Sector: A Panel Data Analysis. Public Finance Review 43 (1): 82-107
This study analyzes the influence of fragmentation and concentration variables on per capita direct expenditures for all counties in the United States from 1982 to 2002. Building on recent research, fragmentation and concentration variables are developed to incorporate the horizontal as well as the vertical dimensions. This analysis explicitly takes into account the potential simultaneity between individual preferences for the spatial arrangement of local governments and the size of the local public sector using the element of time. The findings suggest that increased levels of fragmentation lead to an enlargement of the local public sector; however, the results are more complex than expected. Similarly, the concentration of service delivery responsibilities into counties and single purpose districts tends to increase the size of the local public sector.
Cost shocks and their relationship to the creation, consolidation and dissolution of US local governments
Goodman, Christopher B. and Suzanne M. Leland. 2013. Cost shocks and their relationship to the creation, consolidation and dissolution of US local governments. Public Finance & Management 13 (2): 58-79.
There are several explanations as to why the total number of local governments may fluctuate, including financial viability and purpose. Many speculate the current economic recession will lead to fewer governments. Yet public choice theorists would assert that more fragmentation, not less leads to more efficient government, which should lead to more, not less local governments (Tiebout 1956). Therefore the following paper further explores the micro and macro reasons behind the reduction or increase in the number of local governments in the United States. Using county-level data from five Census of Governments from 1982 to 2002, we test whether the number of local governments in the US increases or decreases during an economic shock.
Understanding and Measuring Elasticity, Volatility, and Implications for Local Government Fiscal Health
Carroll, Deborah A. and Christopher B. Goodman. 2013. Understanding and Measuring Elasticity, Volatility, and Implications for Local Government Fiscal Health. Handbook of Local Government Fiscal Health Eds. Jonathan B. Justice, Helisse Levine, and Eric Scorsone. Sudbury, MA: Jones and Bartlett, Inc.
Carroll, Deborah A. and Christopher B. Goodman. 2011. The Effects of Assessment Quality on Revenue Volatility. Public Budgeting & Finance 31 (1): 76–94.
This paper examines the relationships between assessment quality, property tax revenue volatility, and other revenue volatility using panel data of all 100 counties in North Carolina between 2003 and 2007. Findings suggest that characteristics of the property tax base are the most important predictors of property tax revenue volatility among counties over time. Specifically, increases in assessed value and years in which a mass revaluation occurs are most influential in determining property tax revenue volatility. The second stage of analysis reveals that population, nontax revenue dependence, property tax dependence, and assessment quality have the greatest influences on volatility of other revenues among counties over time. The effect of assessment quality on nonproperty tax revenue volatility is conditional upon a county’s property tax dependence.