Effects of vacation properties on local education budgets

Jason Giersch,Caroline Elliott

doi:10.1080/23322039.2014.941890

Jason Giersch, Caroline Elliott

Open Access

https://doi.org/10.1080/23322039.2014.941890

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Abstract

AbstractResidents of school districts with large percentages of vacation properties have the opportunity to export a portion of their school taxes onto the owners of those vacation properties. Those property owners are unlikely to consume educational services or have the opportunity to vote against local school taxes. Previous studies address exportation of taxes onto vacation property owners and the effects on local government budgets generally but not on education finances specifically. This study connects research on rates of vacation properties with that on local education finances by using data from the state of Georgia in 2010 and weighted least squares regression analysis to show that high percentages of vacation properties do indeed result in larger local school expenditures.

Highlights

The presence of vacation homes in a community creates an opportunity for full-time residents to export a portion of their local taxes
The second model tests the effects of vacation homes and other variables on class student–teacher ratio and finds evidence that the ratio shrinks as vacation
Confirmation of the first hypothesis that vacation properties increase school budgets is unsurprising, given the literature confirming that voters frequently take advantage of opportunities for tax exporting

Summary

Introduction

The presence of vacation homes in a community creates an opportunity for full-time residents to export a portion of their local taxes. As residents choose to increase the tax rates in their communities, a portion of the tax burden falls upon vacation property owners who typically neither vote in local elections nor consume many local government services, education services. Owners of vacation properties are certainly interested in reliable police and fire departments to protect their investments, but they are unlikely to consume local education services. Any effect that the presence of vacation properties has on the level of school revenues is likely moderated by both alternative vacation destinations in the market for second homes and voters’ preferences for lower taxes, . A community with large numbers of vacation properties may ABOUT THE Author

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