The impact of home rule on municipal boundary and fiscal expansion: Evidence from Texas

Abstract

Changing boundaries is a major method for municipalities to accommodate growth, expand economic and tax base, and optimize resource allocation. This study leverages variation in the adoption of home rule charters in Texas to provide the first empirical examination of whether home rule adoption causes municipal boundary expansion. We employ fuzzy regression‐discontinuity and event‐study estimation methods on actual boundary data for causal inference and find that home rule cities expand their boundaries to significantly greater total area than general law cities in Texas. This finding is robust to the voluntary Boundary and Annexation Surveys data used widely by extant studies. We also find evidence that annexations allow home rule cities to fiscally expand, primarily by broadening tax bases.