THE RELATIVE EFFICIENCY AND REVENUE POTENTIAL OF LOCAL USER CHARGES: THE CALIFORNIA CASE

Tax limitation measures and reduced transfers from the federal government to local governments have increased local governments' need to examine their revenue sources. User charges are one area receiving additional scrutiny. This paper reports on a study of user charges for California cities and counties since Proposition 13. Deviations from efficiency are estimated for a sample of user charges for a number of California cities and counties. These allow estimation of the potential revenue gain in 1981 to efficient pricing of goods and services provided under user charges in California. The total potential revenue gain from efficient pricing is as much as $250 million in 1981, a rise of 20 percent in user charge revenue.