Contingent Effects of Municipal and County TELs on Special District Usage in the United States

This research examines the joint effects of the tax and expenditure limits states impose on municipal and county governments on the structure of local government in 500 randomly selected U.S. counties. Understanding the contingent effects of these limitations is critical to assessing the consequences of TELs on the structure of local government in communities and the "circumvention" arguments common in this literature. We find evidence of a circumvention effect for restrictive limits on county governments, but not for the limits states place on municipal governments. Also, our findings indicate that the effect of increasing the limits on either government is to mitigate any circumvention effects created by limitations on the other. Our findings indicate that the circumvention question is more complex than previous works suggest.