We examine the effect of a state-funded property tax homestead exemptions on the burden of property taxes. This class of exemptions is characterized by a grant from the state to local governments that is intended to replace the reduction in property tax revenue due to the exemption. The median voter model predicts that part of the homestead exemption will be used to increase expenditures. In addition, fiscal illusion could reduce the effectiveness of this type of grant in lowering the tax burden. We test these predictions for the Georgia’s Homeowner’s Tax Relief Grant program by separately using panels of county-level data and school system data. We find that over one-third of funds transferred to counties through this program are used to increase revenues rather than provide tax relief. We find evidence of possible fiscal illusion for school systems.
Using 34 years of data from Florida counties, we examine the effect of multiple fiscal stressors on expenditures over time to test theoretical propositions in Charles Levine's seminal study on cutback management. We demonstrate support for Levine's stages model and his claims on linkages between the causes of fiscal stress and managerial responses. Specifically, unemployment levels produce differential effects by service area (e.g., human services bear the most significant share of the reductions), especially in relation to the persistence of the stressor. We cannot support the stages model with other stressor measures. We expand the literature to include county governments, enhancing the contemporary literature on local government fiscal stress.
This study investigates how outsourcing multiple public functions in a single contract increases the complexity of the services rendered under the agreement. We hypothesize that product complexity arises in these bundled service agreements due to several factors including diseconomies of scope, the 'lock-in' problem, and communications problems between the contractor, the government and the public. We investigate these questions using a textual analysis research methodology to examine the initial contract documents that formalized an agreement between the City of Sandy Springs Georgia and the firm CH2M Hill. The results of this qualitative study identified several ways that different combinations of functions increased product complexity. It also revealed ways the contracts were designed to mitigate the risks of outsourcing multiple functions in a single contract.
The residual view of the property tax assumes that local governments set their levies equal to the difference between budgeted expenditures and expected receipts from other revenues. This approach allows them to adjust the levy to achieve greater overall revenue stability potentially at the cost of tax predictability. This article presents a formal model of the residual rule and uses it to test whether this active approach to property tax administration describes observed fiscal behavior. This test is conducted using data from county governments in Georgia over a fifteen-year period. The results support the validity of the residual rule over an alternative model of passive tax administration.
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