« Tolbert on Ballot Initiatives and the 2004 Elections | Main | APRW: Burden & Hillygus on Biased Voter Learning »

21 February 2006

Gerber on State Fiscal Policies and Local Government Inequality

Last week at the American Politics Research Workshop, Professor Elisabeth Gerber of the University of Michigan presented a paper entitled "The Impact of State Fiscal Policies on Local Government Inequality," co-authored with Michelle Woolery. Using data from a sample of Michigan cities, the authors find that limitations imposed by the state on localities' ability to tax exacerbate disparities among communities.

According to Professor Gerber, many states enacted tax and expenditure limits (TELs) as a result of the tax revolt of the late 1970s. Michigan, for example, passed the Headlee Amendment, which limits the amount of property tax that can be levied by localities. Further restrictions were imposed following the passage of a ballot proposal in 1994. Professor Gerber is interested in studying on how the impact of these limitations varies across communities, focusing especially on community capacity (such as wealth), demand factors (such as community demographics), and the local political system.

Professor Gerber found that wealthier counties are much less likely to be "constrained" by TELs, largely because they start with a greater tax base to begin with. Somewhat surprisingly, more racially diverse counties seem to be more constrained, despite the hypothesis that racial tensions might dampen demand for expenditures. Finally, local governments with partisan elections were relatively less constrained, presumably because partisan competition forces taxes to be low.

This area seems to be a promising one for future research. Given the variety of local institutional forms in the United States, one can imagine numerous studies examining the effect of the political system on public policy.

Posted by Ian Yohai at February 21, 2006 12:09 AM