Property Tax Responses to State Aid Cuts in the Recent Fiscal Crisis

Dye, Richard F.; Reschovsky, Andrew

doi:10.1111/j.1540-5850.2008.00906.x

Cited by 42 publications

(42 citation statements)

References 12 publications

(4 reference statements)

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“…As expected, these studies largely find that inequality in 1 Dye and Reschovsky (2008) find that local school districts increased property taxes by 37 cents for every dollar lost in state aid. 2 Reschovsky (2004) argues that funding constraints limit the ability of districts to respond to reductions in state aid and reductions in taxable values, exacerbating the financial problems facing these districts.…”

supporting

confidence: 59%

Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency

Conlin

Thompson

2014

Education Finance and Policy

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We consider issues of equality and efficiency in two different school funding systems -a state-level system in Michigan and a foundation system in Ohio. Unlike Ohio, the Michigan system restricts districts from generating property or income tax revenue to fund operating expenditures. In both states, districts fund capital expenditures with local tax revenue. Our results indicate that although average revenue and expenditures per pupil in Michigan and Ohio are almost identical, the distributions of the various revenue sources are quite different. Ohio's funding system has greater equality in terms of total revenue, largely due to Ohio redistributing state funds to the least wealthy districts while Michigan does not. We find that relatively wealthy Michigan districts spend more on capital expenditures while relatively wealthy Ohio districts spend more on labor and materials. This suggests that constraints on raising local revenue to fund operating expenditures in Michigan could create efficiency issues.3

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confidence: 59%

Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency

Conlin

Thompson

2014

Education Finance and Policy

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“…At present, little empirical analysis has been conducted to address the question of why effective tax rates did not decline in proportion to the increases in housing prices. Dye and Reschovsky (2008) suggest that cuts in state school aid caused by state fiscal crisis may be partially responsible for rising property taxes in the early 2000s. Furthermore, virtually no evidence has been presented to rationalize the prevalence of property tax relief programs and the political popularity associated with expanding these programs.…”

Section: Discussionmentioning

confidence: 99%

Property taxes and elderly mobility

Shan

2010

Journal of Urban Economics

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The 2000–05 housing market boom in the U.S. has caused sharp increases in residential property taxes. Housing-rich but income-poor elderly homeowners often complain about rising tax burdens, and anecdotal evidence suggests that some move to reduce their tax burden. There has been little systematic analysis, however, of the link between property tax levels and the mobility rate of elderly homeowners. This paper investigates this link using household-level panel data from the Health and Retirement Study (HRS) and a newly collected data set on state-provided property tax relief programs. These relief programs generate variation in effective property tax burdens that is not due solely to arguably endogenous local community choices about taxes and expenditure programs. The findings provide evidence suggesting that higher property taxes raise mobility among elderly homeowners. The point estimates from instrumental variable estimation using relief programs to generate instruments suggest that a $100 increase in annual property taxes is associated with a 0.73 percentage point increase in the two-year mobility rate for homeowners over the age of 50. This is an eight percent increase from the baseline two-year mobility rate of nine percent. These results are robust to alternative specifications.

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“…In this section, we provide a brief overview of the changes in revenues by source of our One way in which states closed their budget deficits during this period was to cut state aid to local government (Dye and Reschovsky, 2008). As is well known, during most of this period, until 2006, housing prices and municipal government property tax bases were growing rapidly.…”

Section: Central City Revenue Changes 1997 To 2008mentioning

confidence: 99%

The impact of the Great Recession and the housing crisis on the financing of America's largest cities

Chernick

Langley

Reschovsky

2011

Regional Science and Urban Economics

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The Impact of the Great Recession and the Housing Crisis on the Financing of America's Largest CitiesThe housing crisis and the recession have placed tremendous fiscal pressure on the nation's central cities. Cuts in state government fiscal assistance to their local governments, plus shrinking property tax bases are challenging the ability of local governments to continue their current levels of public services.In this paper, we use data on the financing of the nation's largest central cities from 1997 to 2008 to forecast the impact of the recession and the housing crisis on central city expenditures between 2009 and 2013. Because expenditure responsibilities vary among city governments and because overlying governments play different roles, we develop the concept of constructed governments in order to allow us to compare the revenue-raising and spending policies of large central cities. We predict that real per capita spending in the average central city will be reduced by about seven percent during the forecast period, and that spending cuts will be substantially greater in cities hit hardest by the economic recession and the housing market collapse.

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Property Tax Responses to State Aid Cuts in the Recent Fiscal Crisis

Cited by 42 publications

References 12 publications

Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency

Michigan and Ohio K–12 Educational Financing Systems: Equality and Efficiency

Property taxes and elderly mobility

The impact of the Great Recession and the housing crisis on the financing of America's largest cities

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