The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio
A key informational asymmetry in local public finance is the lack of information available to local residents regarding the financial status of the school districts and local governments in which they reside. Given that voters in many states must approve property and income tax increases for these l...
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| Veröffentlicht in: | Public choice 2017-03, Vol.170 (3/4), p.265-288 |
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| creator | Thompson, Paul N. Whitley, Joseph |
| description | A key informational asymmetry in local public finance is the lack of information available to local residents regarding the financial status of the school districts and local governments in which they reside. Given that voters in many states must approve property and income tax increases for these local entities, the lack of full information on the financial status of these local entities may lead to sub-optimal voting decisions. State financial intervention systems have begun to make financial problems more salient to residents, potentially alleviating these informational asymmetries. This paper examines the effect of the Ohio fiscal stress labeling program on voting outcomes and the tax-setting behavior of local officials for school district and municipal government tax referendums. We use a difference-in-differences approach to examine data from over 3000 school district and 2300 municipality property tax elections from 2004 to 2012. While we find minimal evidence that the yes vote share changed for school district referendums following fiscal stress label receipt, we find very large increases (15 to 23 percentage points) in the likelihood of referendum passage for school districts following label receipt. We do not find much evidence of changes in the likelihood of passage or the yes vote share following label receipt for municipalities, but we do find that these voting outcomes rise following label removal. We also find that local officials do not appreciably change their tax-setting behavior in response to these labels, as the size and likelihood of property tax proposal are largely unchanged following label receipt or removal. |
| doi_str_mv | 10.1007/s11127-016-0395-7 |
| format | Article |
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Given that voters in many states must approve property and income tax increases for these local entities, the lack of full information on the financial status of these local entities may lead to sub-optimal voting decisions. State financial intervention systems have begun to make financial problems more salient to residents, potentially alleviating these informational asymmetries. This paper examines the effect of the Ohio fiscal stress labeling program on voting outcomes and the tax-setting behavior of local officials for school district and municipal government tax referendums. We use a difference-in-differences approach to examine data from over 3000 school district and 2300 municipality property tax elections from 2004 to 2012. While we find minimal evidence that the yes vote share changed for school district referendums following fiscal stress label receipt, we find very large increases (15 to 23 percentage points) in the likelihood of referendum passage for school districts following label receipt. We do not find much evidence of changes in the likelihood of passage or the yes vote share following label receipt for municipalities, but we do find that these voting outcomes rise following label removal. We also find that local officials do not appreciably change their tax-setting behavior in response to these labels, as the size and likelihood of property tax proposal are largely unchanged following label receipt or removal.</description><identifier>ISSN: 0048-5829</identifier><identifier>EISSN: 1573-7101</identifier><identifier>DOI: 10.1007/s11127-016-0395-7</identifier><language>eng</language><publisher>New York: Springer Science + Business Media</publisher><subject>Bond ratings ; Capital expenditures ; Decision making ; Disclosure ; Economic problems ; Economics ; Economics and Finance ; Election results ; Elections ; Health care policy ; Income taxes ; Intervention ; Labeling ; Labels ; Local elections ; Local government ; Mental health ; Municipal government ; Municipal taxation ; Municipalities ; Ohio ; Political Science ; Property taxes ; Public Finance ; Referendums ; Residents ; School districts ; Studies ; Tax elections ; Tax increases ; Tax rates ; Taxation ; United States ; Voter behavior ; Voters ; Voting</subject><ispartof>Public choice, 2017-03, Vol.170 (3/4), p.265-288</ispartof><rights>Springer Science+Business Media New York 2016</rights><rights>Public Choice is a copyright of Springer, 2017.</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c436t-a9ea6d10371c2308c81027b4a2158b39cce0db9f61830163786063b2fcc4143</citedby><cites>FETCH-LOGICAL-c436t-a9ea6d10371c2308c81027b4a2158b39cce0db9f61830163786063b2fcc4143</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/48720167$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/48720167$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,777,781,800,12826,27905,27906,41469,42538,51300,57998,58231</link.rule.ids></links><search><creatorcontrib>Thompson, Paul N.</creatorcontrib><creatorcontrib>Whitley, Joseph</creatorcontrib><title>The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio</title><title>Public choice</title><addtitle>Public Choice</addtitle><description>A key informational asymmetry in local public finance is the lack of information available to local residents regarding the financial status of the school districts and local governments in which they reside. Given that voters in many states must approve property and income tax increases for these local entities, the lack of full information on the financial status of these local entities may lead to sub-optimal voting decisions. State financial intervention systems have begun to make financial problems more salient to residents, potentially alleviating these informational asymmetries. This paper examines the effect of the Ohio fiscal stress labeling program on voting outcomes and the tax-setting behavior of local officials for school district and municipal government tax referendums. We use a difference-in-differences approach to examine data from over 3000 school district and 2300 municipality property tax elections from 2004 to 2012. While we find minimal evidence that the yes vote share changed for school district referendums following fiscal stress label receipt, we find very large increases (15 to 23 percentage points) in the likelihood of referendum passage for school districts following label receipt. We do not find much evidence of changes in the likelihood of passage or the yes vote share following label receipt for municipalities, but we do find that these voting outcomes rise following label removal. We also find that local officials do not appreciably change their tax-setting behavior in response to these labels, as the size and likelihood of property tax proposal are largely unchanged following label receipt or removal.</description><subject>Bond ratings</subject><subject>Capital expenditures</subject><subject>Decision making</subject><subject>Disclosure</subject><subject>Economic problems</subject><subject>Economics</subject><subject>Economics and Finance</subject><subject>Election results</subject><subject>Elections</subject><subject>Health care policy</subject><subject>Income taxes</subject><subject>Intervention</subject><subject>Labeling</subject><subject>Labels</subject><subject>Local elections</subject><subject>Local government</subject><subject>Mental health</subject><subject>Municipal government</subject><subject>Municipal taxation</subject><subject>Municipalities</subject><subject>Ohio</subject><subject>Political Science</subject><subject>Property 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Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Thompson, Paul N.</au><au>Whitley, Joseph</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio</atitle><jtitle>Public choice</jtitle><stitle>Public Choice</stitle><date>2017-03-01</date><risdate>2017</risdate><volume>170</volume><issue>3/4</issue><spage>265</spage><epage>288</epage><pages>265-288</pages><issn>0048-5829</issn><eissn>1573-7101</eissn><abstract>A key informational asymmetry in local public finance is the lack of information available to local residents regarding the financial status of the school districts and local governments in which they reside. Given that voters in many states must approve property and income tax increases for these local entities, the lack of full information on the financial status of these local entities may lead to sub-optimal voting decisions. State financial intervention systems have begun to make financial problems more salient to residents, potentially alleviating these informational asymmetries. This paper examines the effect of the Ohio fiscal stress labeling program on voting outcomes and the tax-setting behavior of local officials for school district and municipal government tax referendums. We use a difference-in-differences approach to examine data from over 3000 school district and 2300 municipality property tax elections from 2004 to 2012. While we find minimal evidence that the yes vote share changed for school district referendums following fiscal stress label receipt, we find very large increases (15 to 23 percentage points) in the likelihood of referendum passage for school districts following label receipt. We do not find much evidence of changes in the likelihood of passage or the yes vote share following label receipt for municipalities, but we do find that these voting outcomes rise following label removal. We also find that local officials do not appreciably change their tax-setting behavior in response to these labels, as the size and likelihood of property tax proposal are largely unchanged following label receipt or removal.</abstract><cop>New York</cop><pub>Springer Science + Business Media</pub><doi>10.1007/s11127-016-0395-7</doi><tpages>24</tpages></addata></record> |
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| source | Worldwide Political Science Abstracts; Business Source Complete; Jstor Complete Legacy; Springer Nature - Complete Springer Journals; Political Science Complete |
| subjects | Bond ratings Capital expenditures Decision making Disclosure Economic problems Economics Economics and Finance Election results Elections Health care policy Income taxes Intervention Labeling Labels Local elections Local government Mental health Municipal government Municipal taxation Municipalities Ohio Political Science Property taxes Public Finance Referendums Residents School districts Studies Tax elections Tax increases Tax rates Taxation United States Voter behavior Voters Voting |
| title | The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio |
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