Surveying the Effects of Limitations on Taxes and Expenditures: What Do/Don’t We Know

Judith I Stallmann,Craig S Maher,Sungho Park,Steven C Deller

doi:10.20899/jpna.3.2.197-222

Abstract

The literature on tax and expenditure limitations (TELs) is extensive and continues to grow as the impact of these institutional constraints on fiscal and economic outcomes continues to develop. In this survey, we review the literature of both state- and local-level TELs in an attempt to provide an overview of their theoretical, operational, and empirical contexts. The study concludes with a discussion of future TEL research needs.

Highlights

Method of ApprovalDeclaration of and Emergency Funds with: Supermajority legislature and voter approval
A TEL on local governments in Wisconsin will have a different impact than the identical TEL imposed in Illinois, which is a home-rule state and has no restrictions on user fees and charges. Another take-away from the literature is that TELs seldom have the intended outcome their proponents promise
Because states in general have different TEL structures for their counties, municipalities, and school districts (ACIR, 1995), separate efforts to understand the role of TELs by units of local government may be needed

Summary

Method of Approval

Declaration of and Emergency Funds with: Supermajority legislature and voter approval. The index was recalibrated to reflect the more significant nature of overall revenue and expenditure limitations over property rate limits (Maher, Park, & Harrold, 2016). Municipalities in 12 states are currently subject to overall property tax rate limits: AL, AZ, CA, ID, IN, NV, NM, OH, OK, OR, WA, and WV. The majority of state constitutions or statutes provide a set rate or revenue growth limit: Arizona limits annual growth to 1% of property value (Arizona Constitution, Article IX, Section 18), whereas levies in California may not to exceed 1% of full value (California Constitution, Article XIII A, Section 1). On top of overall property tax rate limits, many states impose property tax limits on municipalities These specific rate limits are the most common form of TEL and currently exist in 25 states.

Method of override

Key findings Relation*

Summary and Conclusion