Special Districts and Local Public Services

Abstract

This article examines the role of special districts in the efficient provision of local public services. Many public administrators, political scientists, and urban planners have long held that the proliferatian of special districts in urban areas leads to an increase in the cost ofproviding local public services and a decline in the degree to which service provision is responsive to the demands of consumer-taxpayers. In contrast, this article evaluates special districts on the basis of economic theory and deduces that they can be conducive to both production and consumption efficiency. Furthermore, it is hypothesized that restrictions on the growth of special districts diminish competition in the provision of local public services and lead to rising costs. This hypothesis is tested using data from California and Oregon, two states which have severely restricted the growth of special districts. It is found that, ceteris paribus, such restrictions are likely to have increased the cost of providing local public services.