“Debrucing” the Link between Tax and Expenditure Limits and Special District Governments

Abstract

We provide a direct test of the extent to which the stringency of a Tax and Expenditure Limit (TEL) influences the creation of special district governments by examining one of the strictest TELs in U.S. history, the Colorado Taxpayer's Bill of Rights (TABOR). Through analysis of panel data from 1993 to 2004 of general purpose and special district governments, we test the relationship between TABOR and the creation of special districts. The novelty of our research involves the use of successful and failed attempts to override TABOR to measure variation in TEL restrictiveness at the county and municipal geography. Our results indicate that counties and municipalities unable to override TABOR's restrictions and therefore bound by the TEL have no greater use of special district governments than local jurisdictions experiencing similar demand for services but not bound by TABOR. These results are robust to failed override attempts specific to tax revenue as well as debt proceeds. Furthermore, results are unaffected by the use of multiyear lagged measures of override attempts and the inclusion of county debrucing initiatives that passed or failed by a small margin—i.e., less than 60 percent of votes. Contrary to anecdotal evidence, our results find no relationship between tax and expenditure limits and the formation of special districts.

Do Cities and Counties Attempt to Circumvent Changes in their Autonomy by Creating Special Districts?

“…Rather, they focus on the usage of special districts (Bowler and Donovan 2004;Carr 2006;Carr and Farmer 2011;Foster 1996;Frant 1997;Nelson 1990;Shi 2017). Second, few analyses utilize panel data ((Billings and Carroll 2012;Farmer 2010;McCabe 2000;Shi 2017) and among those that do, few utilize as many time periods as the analysis presented here. Finally, a county or metropolitan area level of aggregation is not uniformly agreed upon (Bauroth 2015;Billings and Carroll 2012;Carr and Farmer 2011;Farmer 2010;Nelson 1990).…”

“…First, few analyses focus on special district creation (Bauroth 2015;Billings and Carroll 2012;Farmer 2010;McCabe 2000). Rather, they focus on the usage of special districts (Bowler and Donovan 2004;Carr 2006;Carr and Farmer 2011;Foster 1996;Frant 1997;Nelson 1990;Shi 2017).…”

“…To test the unconditional hypothesis outlined above, a model built upon recent research (Nelson 1990;Carr and Farmer 2011;Billings and Carroll 2012;Goodman and Leland 2012;Goodman, Forthcoming) is specified.…”

Do Cities and Counties Attempt to Circumvent Changes in Their Autonomy by Creating Special Districts?

“…To test the unconditional hypothesis outlined above, a model built upon recent research (Nelson, 1990;Carr & Farmer, 2011;Billings & Carroll, 2012;Goodman & Leland, 2012) is specified.…”

“…First, few analyses focus on special district creation (Bauroth, 2015;Billings & Carroll, 2012;Farmer, 2010;McCabe, 2000). Rather, they focus on the usage of special districts (Bowler & Donovan, 2004;Carr, 2006;Carr & Farmer, 2011;Foster, 1996;Frant, 1997;Nelson, 1990;Shi, 2017).…”