The importance of demographic analyses in state- and local-level policy evaluations: A case study analysis of property taxes in Texas, USA

Abstract

The reluctance of policy-makers to incorporate detailed demographic analyses in policy analyses often means that population composition is ignored in state and local policy evaluations. This article uses standard demographic projection, standardization and rate decomposition techniques to examine the implications of changing population composition for the property tax revenue base of Texas. The authors find that if current socioeconomic differentials persist into the future, projected compositional changes in the household population of Texas will significantly impact property tax revenues. Thus revenue projections based on aggregate growth and current average property value would seriously overestimate future property tax revenues in Texas because changes in the composition of the population lead to disproportionate growth in households likely to live in lower valued housing unite. The results indicate that the continuing focus of state and local policy-makers on changes in population size alone may be ill-advised and demonstrate the increasing importance of local- and state-level demographic analysis in a period of increasing Federal devolution of service provision.