Dagney Faulk

City-county Consolidation and Local Government Expenditures

As more local governments consider consolidation of government functions, officials are concerned about the expected impact on expenditures. Using a treatment group of consolidated city-counties and a control group of city-counties that considered but rejected consolidation through the referendum process, the authors examine differences in per capita local government expenditures. The statistical analysis shows that per capita expenditures in consolidated communities are not statistically different from those that considered and rejected consolidation. These results suggest that consolidation is not likely to decrease expenditures in the typical consolidated local government.

A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana

We use a regional computable general equilibrium (CGE) model and Indiana data to examine both the short-run and the long-run effects of property tax rate limits and an increase in the sales tax rate. We find that the property tax caps and sales tax rate increase have a relatively small impact on aggregate economic measures in the short run and a positive effect in the long run. Higher-income households experience larger increases in income than lower-income households in terms of the dollar amount of the increase, but lower-income households experience larger gains as a percentage of labor income. The value of output (sales) increases in the long run with construction, certain manufacturing industries, and wholesale trade experiencing the largest increases.

Sources of Funding and Academic Performance in Economics Principles Courses.

The authors examine two factors that may affect student achievement in economics principles courses: working for pay and the primary source of funds (employer tuition reimbursement, loans, scholarships, financial aid, self-financing, parental transfers, other) used to pay for college for a sample of students in economics principles classes at a regional, nonresidential public university. After controlling for endogeneity, working for pay has no statistical effect on course performance, but the sources of education funding have differential effects on the course grade, with employer funding having a strong positive and significant influence. Students receiving employer tuition reimbursement score approximately 14 percentage points higher in the course than students funded through parental transfers.

The Economic Effects of Bus Transit in Small Cities

This analysis investigates the impact of public transit in counties with small to medium-sized cities. The objectives are to answer: Do counties with bus transit have lower growth in transfer payments such as food stamps, Temporary Aid to Needy Families (TANF), or higher income growth, employment growth, and population growth? Public transit is commonly viewed as a social service; this analysis explores the economic impact of this public investment. The authors find that relative to counties without bus transit, counties with bus systems have significantly lower unemployment rates, lower growth in family assistance, lower growth in food stamp payments, and higher population and employment growth. Yet, the positive impact on job access, which reduces payments for family assistance and food stamps is tempered by lack of discernable effects on income likely driven by supply-side effects in the labor market.

The impact of bus transit on employee turnover: Evidence from quasi-experimental samples

This analysis investigates the relationship between fixed-route bus transit and employee turnover using data from quasi-experimental samples. We expect that counties with fixed-route bus transit will have lower turnover rates because transit offers an affordable means of transportation to workers without automobiles, allowing these workers to reach job sites. Panel regression models and county-level data from Illinois, Indiana, Michigan, Ohio, Pennsylvania and Wisconsin from 1998 through 2010 are used to test this hypothesis. We find that the size of the fixed-route bus system (measured as real per capita operating expenditures) is negatively related to employee turnover rates: An increase in bus systems’ per capita operating expenditures is associated with a decrease in employee turnover. Decreases in employee turnover represent cost savings to businesses by reducing the costs associated with training new workers and rebuilding firm-specific knowledge or better employee-employer matches. These results suggest that access to fixed-route bus transit should be a component of the economic development strategy for communities not only for the access to jobs that it provides low-income workers but also for the benefits accruing to businesses that hire these workers.

Using Human-Capital Theory to Establish a Potential-Income Tax

There are good arguments for an individual income tax on potential income, but a drawback to such a tax is the significant administrative concern regardingits implementation. This paper argues that human-capital theory provides a widely accepted and straightforward method to estimate potential income using observed characteristics of individuals, and operationalizes this approach using data for the U.S. The paper also suggests that a potential-income tax is verysimilar to a presumptive income tax. The paper concludes by reviewing some significant problems with the implementation of a potential or presumptive income tax.

WHERE ARE THE COST SAVINGS IN CITY–COUNTY CONSOLIDATION?

ABSTRACT Although proposals for city–county consolidation are often justified on the basis of reducing government expenditures or improving efficiency, few studies find that expenditures are actually reduced after consolidation. This study examines long‐term spending trends in four consolidated city–county jurisdictions for periods of eight to ten years pre‐ and post‐consolidation. Although the results of the four cases are mixed, we find that in some cases there are cost savings associated with cit5y–county consolidation, more frequently in specific functional categories than in overall spending. We also find that it is necessary to examine spending patterns over several years after consolidation. In some cases, short‐term savings dissipate over time. In other cases, initially modest savings grow over time due to a reduction in spending growth.