Municipal annexation has been one of the most widely adopted instruments for urban growth in the United States. Scholars of public choice and regional studies have long debated the fiscal effect of ...local government annexation. Few studies, however, examine the fiscal effect of municipal administrative annexations in China, where prefectural cities have extensively annexed county-level governments through forcefully converting rural counties into urban districts in a top-down manner. Employing a difference-in-differences (DID) method coupled with an event study approach, we analyzed a panel data set of 282 prefectural cities from 2007 to 2015 to examine the fiscal impact of annexation in China. The findings show that prefectural cities have significantly increased their land conveyance fees through administrative annexation. Given that land conveyance fees serve as one of the most important own-source revenues at the local level, our findings shed light on the crucial link among the urbanization process, government reorganization, and local land finance in China and, potentially, in other transition countries.
Homeowner associations (HOAs), as a form of private residential governance, have grown exponentially in the United States, representing a profound transformation in urban governance. This paper ...examines the fiscal correlation between local municipal governments and private residential governments, and specifically, the extent to which the proliferation of HOAs in a municipality is related to municipal expenditures and revenues. Administrative data of the Florida Department of Business and Professional Regulation are employed with spatial econometric methods for accounting for potential inter-jurisdictional spillover effects. Empirical evidence suggests that a greater presence of HOAs within a local municipality is associated with the municipality's declining public expenditures and revenues for providing public services to local residents.
Public participation in administrative decision making has been widely advocated by both theorists and practitioners of public administration. Despite the importance of citizen engagement, we know ...little about its impact on the performance of government agencies. Is participation only normatively desirable or does it have some practical value attached to it? We draw on data from U.S. state transportation agencies to test the relevance of two theoretical perspectives about the effect of public participation on organizational performance. The traditional perspective holds that there is a trade-off between democratic and administrative decision making. A competing perspective suggests that citizen input provides administrators with valuable site-specific information and contributes to more efficient and effective public programs. We find strong support for the latter perspective. Our results show that there is not necessarily a trade-off between the values of democracy and bureaucracy, with clear implications for the theory and practice of democratic governance.
While government fiscal gap is traditionally considered a demand factor for the use of public-private partnerships (PPPs) to deliver public services, a high level of fiscal gap may signal elevated ...financial risks to private partners and deter them from entering into PPP agreements. A causal mediation analytic framework is used to delineate the two distinct causal pathways. We develop a conceptual model and test derived hypotheses with data of Chinese prefecture-level cities during 2015-2017. The findings suggest that government fiscal gap has a positive impact on PPP adoption, through the mediating role of the debt position. The fiscal gap, as a risk factor, is negatively associated with PPP participation. Risk aversion of the private sector manifests more conspicuously as smaller PPP investment amounts than as a lower likelihood of PPP participation. The adverse effects of the fiscal gap associated with financial risks may entirely offset any positive impact.
Primary and secondary education, provided by the local governments in China, plays an important role in attracting talented migrants. The race for talent and the education assessment from the top ...encourage local governments to compete with its neighboring localities in public education spending. Two theoretical frameworks can be applied to explain such strategic interactions among local governments-the resources-flow model and yardstick competition model. Using panel data of China's prefecture-level cities from 2007 to 2016, this article conducts a spatial econometric analysis to test the two aforementioned models empirically. The estimation results show that aside from a significant positive spatial dependence of education expenditures among local government in the same province, it also occurs among prefecture-level cities in different provinces. Indeed, based on the data that demonstrated the comparison among cities in different provinces with similar economic distance is stronger than that with closer geographical distances.
State tax and nontax incentives have been widespread in the United States, though their efficacy in job creation and economic development has been repeatedly questioned in the literature by scholars ...and policy makers. Why, then, do states persistently pursue these incentive policies? Using the newly developed Panel Database on Incentives and Taxes, we adopt a dynamic spatial Durbin panel model to account for both temporal and spatial dependence and to shed light on this question. Empirical evidence suggests a statistically significant and positive relationship between tax credits and tax burdens (i.e., elevated tax breaks are used to offset higher tax differentials). States therefore may seek to create a level playing field in business attraction and retention by overcoming tax disadvantages. Besides, high-serial dependence is present in the use of various tax credits, suggesting a high self-perpetuating tendency that tax breaks, once introduced, are likely to be persistent over time. States are also found to be engaged both in spatial competition or imitation among geographically proximate states, and in strategic benchmarking among states that are geographically distant but economically alike.
Debts incurred by Chinese cities have skyrocketed. Policymakers and scholars are concerned with potential default risks and political, economic, and social impacts of a possible debt default. It has ...also drawn attention to drivers of the rapidly increasing municipal debts. This article examines the extent to which competition among Chinese cities affected the debts they accumulated. Drawing from the literature of local government strategic interaction and fiscal competition, we hypothesised that spillover effects might exist among Chinese cities' decisions and behaviours to issue how much bonds. With access to a panel dataset of 285 cities over 2008-2016, we applied the spatial panel regression analysis to capture and gauge the spillover effects on debt accumulation of Chinese cities. Findings confirm the spillover effects among Chinese cities and support the role that inter-city competition has played in the rapid accumulation of municipal debts.
Early in the pandemic, Florida municipal managers indicated that forecasting the impact on local revenues was one of their top priorities in responding to the pandemic, yet such a tool has not been ...widely available. This study offers simple and straightforward fiscal planning guides for assessing the short-term and long-term impacts of the COVID 19 recession on local government revenues by estimating the revenue declines among 411 Florida municipalities from FY 2021 to FY 2023. The forecast results predict revenues will be reduced by $5.11 billion from 2019 pre-pandemic levels for Florida cities in fiscal years 2021 through 2023. The decline is forecast to be 3.54 percent in FY 2021, 4.02 percent in FY 2022, and 3.29 percent in FY 2023. The revenue structure matters for estimating the revenue decline.
The most recent Great Recession brought our attention to the issue of fiscal sustainability of local governments. Local governments often rely on their general fund balances to deal with ...contingencies and economic downturns. Empirical research, however, produces mixed results and is inconclusive about what determines the size of local savings. No previous research on this topic has considered strategic interactions and the spatial relationship among local governments. Using a panel dataset of all the county governments in Florida from 2007 to 2011, this study examines the factors that affect the size of unreserved fund balances and empirically tests the spatial effects concerning local fund balance policies in Florida. Empirical findings indicate the importance of the spillover effects of a county's millage rate change and reliance on intergovernmental transfers. This research contributes to the literature by accounting for the spatial effects in local fund balance behavior.
Results-based intergovernmental transfers have recently attracted attention from both scholars and practitioners. In contrast to other types of grants, the results-based approach can lead to improved ...accountability and responsive performances on the part of subnational governments while still enabling broad local flexibility. In education, the principles of results-based transfers fit in with the mechanism of the educational accountability system. A case in point is the Race to the Top (RttT) program, which aimed to support large-scale educational reform. This study examines whether the RttT program achieved its goal of improving student achievement in Florida. A difference-in-differences comparison shows some positive effects of the RttT program when considering spillover effects or comparing Florida with a state that did not receive this fund. The overall estimation results, however, do not support the view that the program has had a significant positive impact on educational achievements. This finding may result from the lack of a clear and singular focus on the specified outputs or a lack of citizen-based accountability.
