Interlocal Collaboration and Local Fiscal Structure: Do State Incentives Matter?
Sungho Park
Search for more papers by this authorCraig S. Maher
Search for more papers by this authorCarol Ebdon
Search for more papers by this authorSungho Park
Search for more papers by this authorCraig S. Maher
Search for more papers by this authorCarol Ebdon
Search for more papers by this authorSungho Park is an Assistant Professor of Public Policy and Administration at the Department of Political Science, University of Alabama. He can be reached at sungho.park@ua.edu.
Craig S. Maher is a Professor at the School of Public Administration, University of Nebraska at Omaha. He can be reached at csmaher@unomaha.edu.
Carol Ebdon is a Professor at the School of Public Administration, University of Nebraska at Omaha. She can be reached at cebdon@unomaha.edu.
Abstract
Interlocal collaboration is considered an important tool for cost-saving. States, therefore, have incentivized interlocal collaboration in different ways. To understand the budgetary consequences of interlocal collaboration and state incentives, we examine counties in Nebraska where the State uses two incentive mechanisms—resource restrictions and additional access to restricted revenues granted to counties with collaboration. This study finds that county expenditures are lower when they spend more through collaboration. While this lower spending is related to lower revenues in counties less constrained by state restrictions, the results for counties more constrained are unclear. State incentive structures may matter for such variations.
REFERENCES
- Agranoff, Robert. 2007. Managing within Networks: Adding Value to Public Organizations. Washington, DC: Georgetown University Press.
- Agranoff, Robert and Michael McGuire. 1998a. “A Jurisdiction-Based Model of Intergovernmental Management in U.S. Cities.” Publius: The Journal of Federalism. 28 (4): 1–20.
- Agranoff, Robert and Michael McGuire. 1998b. “Multinetwork Management: Collaboration and the Hollow State in Local Economic Policy.” Journal of Public Administration Research & Theory. 8 (1): 67–91.
10.1093/oxfordjournals.jpart.a024374 Google Scholar
- Agranoff, Robert and Michael McGuire. 1999. “Expanding Intergovernmental Management's Hidden Dimensions.” The American Review of Public Administration. 29 (4): 352–369.
- Bae, Sang-Seok and Richard C. Feiock. 2004. “The Flypaper Effect Revisited: Intergovernmental Grants and Local Governance.” International Journal of Public Administration. 27 (8-9): 577–596.
10.1081/PAD-120030256 Google Scholar
- Bartle, John R. 1995. “The Fiscal Impact of Federal and State Aid to Large U.S. Cities: An Empirical Analysis of Budgetary Response.” Public Budgeting & Finance. 15 (4): 56–67.
10.1111/1540-5850.01053 Google Scholar
- Bel, Germà and Mildred E. Warner. 2015. “Inter-municipal Cooperation and Costs: Expectations and Evidence.” Public Administration. 93 (1): 52–67.
- Bel, Germà and Mildred E. Warner. 2016. “Factors Explaining Inter-municipal Cooperation in Service Delivery: A Meta-regression Analysis.” Journal of Economic Policy Reform. 19 (2): 91–115.
- Bel, Germà, Xavier Fageda and Melania Mur. 2012. “Does Cooperation Reduce Service Delivery Costs? Evidence from Residential Solid Waste Services.” Journal of Public Administration Research & Theory. 24 (1): 85–107.
- Benton, J. Edwin. 2013. “Local Government Collaboration: Considerations, Issues, and Prospects.” State & Local Government Review. 45 (4): 220–223.
10.1177/0160323X13515683 Google Scholar
- Bickers, Kenneth N., Stephanie Post and Robert M. Stein. 2009. “ The Political Market for Intergovernmental Cooperation.” In Self-Organizing Federalism: Collaborative Mechanisms to Mitigate Institutional Collective Action Dilemmas, edited by Richard C. Feiock, and John T. Scholz, 161–177. New York, NY: Cambridge University Press.
10.1017/CBO9780511642319.009 Google Scholar
- Bjedov, Tjaša, Simon Lapointe and Thierry Madiès. 2014. “The Impact of Within-Party and Between-Party Ideological Dispersion on Fiscal Outcomes: Evidence from Swiss Cantonal Parliaments.” Public Choice. 161 (1-2): 209–232.
- Blair, Robert and Christian L. Janousek. 2013. “Collaborative Mechanisms in Interlocal Cooperation: A Longitudinal Examination.” State and Local Government Review. 45 (4): 268–282.
10.1177/0160323X13511647 Google Scholar
- Blom-Hansen, Jens, Martin Bækgaard and Søren Serritzlew. 2014. “Tax Limitations and Revenue Shifting Strategies in Local Government.” Public Budgeting & Finance. 34 (1): 64–84.
10.1111/pbaf.12029 Google Scholar
- Brown, Tommy M. 2001. “The Effects of TABOR on Municipal Revenues and Spending in Colorado.” Center for Colorado Policy Studies, University of Colorado at Colorado Springs. Colorado Springs, CO. Accessed September 10, 2018. https://www.uccs.edu/ccps/sites/ccps/files/inline-files/Municipal%20Article.final__0.pdf
- Brown, Trevor L. and Matthew Potoski. 2003. “Transaction Costs and Institutional Explanations for Government Service Production Decisions.” Journal of Public Administration Research & Theory. 13 (4): 441–468.
- Chen, Yu-Che and Kurt Thurmaier. 2009. “Interlocal Agreements as Collaborations: An Empirical Investigation of Impetuses, Norms, and Success.” The American Review of Public Administration. 39 (5): 536–552.
- Clark, Peter B. and James Q. Wilson. 1961. “Incentive Systems: A Theory of Organizations.” Administrative Science Quarterly. 6 (2): 129–166.
- Clingermayer, James C. and Richard C. Feiock. 1997. “Leadership Turnover, Transaction Costs, and External City Service Delivery.” Public Administration Review. 57 (3): 231–239.
- Cutler, David M., Douglas W. Elmendorf and Richard Zeckhauser. 1999. “Restraining the Leviathan: Property Tax Limitation in Massachusetts.” Journal of Public Economics. 71 (3): 313–334.
- Davies, Celia, Anand, Paul, Artigas, Lidia, Holloway, Jacky, McConway, Kevin, Newman, Janet, Storey, John and Thompson, Grahame. 2005. “Links between Governance, Incentives and Outcomes: A Review of the Literature.” National Co-ordinating Centre for NHS Service Delivery and Organization. London. Accessed August 17, 2018. http://www.netscc.ac.uk/netscc/hsdr/files/project/SDO_FR_08-1318-066_V01.pdf
- Deller, Steven C. and Craig S. Maher. 2005. “Categorical Municipal Expenditures with a Focus on the Flypaper effect.” Public Budgeting & Finance. 25 (3): 73–90.
10.1111/j.1540-5850.2005.00368.x Google Scholar
- DeLuca, Thomas A. 2013. “K-12 Non-instructional Service Consolidation: Spending Changes and Scale Economies.” Journal of Education Finance. 39 (2): 150–173.
- Dixit, Avinash. 2000. “IMF Programs as Incentive Mechanisms.” Research memo. The International Monetary Fund. Washington, DC. Accessed August 17, 2018. https://www.princeton.edu/~dixitak/home/incentive_schemes.doc
- Dixit, Avinash. 2002. “Incentives and Organizations in the Public Sector: An Interpretative Review.” Journal of Human Resources. 37 (4): 696–727.
- Dolan, Drew A. 1990. “Local Government Fragmentation: Does It Drive Up the Cost of Government?” Urban Affairs Quarterly. 26 (1): 2845.
10.1177/004208169002600102 Google Scholar
- Emerson, Kirk, Tina Nabatchi and Stephen Balogh. 2012. “An Integrative Framework for Collaborative Governance.” Journal of Public Administration Research & Theory. 22 (1): 1–29.
- Entwistle, Tom and Steve Martin. 2005. “From Competition to Collaboration in Public Service Delivery: A New Agenda for Research.” Public Administration. 83 (1): 233–242.
- Feiock, Richard C. 2007. “Rational Choice and Regional Governance.” Journal of Urban Affairs. 29 (1): 47–63.
- Feiock, Richard C. 2016. “Regional Governance and Institutional Collective Action for Environmental Sustainability in China.” Working Paper WP16RF1, Lincoln Institute of Land Policy,. Cambridge, MA. Accessed September 15, 2018. https://pdfs.semanticscholar.org/c09c/0f241a66f73f58161442193241c4486fe4a0.pdf
- Figlio, David N. and Arthur O'Sullivan. 2001. “The Local Response to Tax Limitation Measures: Do Local Governments Manipulate Voters to Increase Revenues?” The Journal of Law & Economics. 44 (1): 233–257.
- Fisher, Ronald C. and Leslie E. Papke. 2000. “Local Government Responses to Education Grants.” National Tax Journal. 53 (1): 153–168.
- Grossman, Philip J. 1990. “The Impact of Federal and State Grants on Local Government Spending: A Test of the Fiscal Illusion Hypothesis.” Public Finance Quarterly. 18 (3): 313327.
- Hendrick, Rebecca. 2004. “Assessing and Measuring the Fiscal Health of Local Governments: Focus on Chicago Suburban Municipalities.” Urban Affairs Review. 40 (1): 78–114.
- Hirsch, Werner Z. 1959. “Expenditure Implications of Metropolitan Growth and Consolidation.” The Review of Economics & Statistics. 41 (3): 232–241.
- Hoornbeek, John, Tegan Beechey and Thomas Pascarella. 2016. “Fostering Local Government Collaboration: An Empirical Analysis of Case Studies in Ohio.” Journal of Urban Affairs. 38 (2): 252–279.
- Hou, Yilin. 2003. “What Stabilizes State General Fund Expenditures in Downturn Years—Budget Stabilization Fund or General Fund Unreserved Undesignated Balance?” Public Budgeting & Finance. 23 (3): 64–91.
10.1111/1540-5850.2303004 Google Scholar
- Ingram, Deborah D. and Franco, Sheila J. 2014. “2013 NCHS Urban-Rural Classification Scheme for Counties.” U.S. Department of Health and Human Services. Washington, DC. Accessed August 5, 2018. http://www.cdc.gov/nchs/data/series/sr_02/sr02_166.pdf
- Islam, Muhammed N. 1998. “Fungibility of Matching Conditional Grants to Local Governments.” Papers in Regional Science. 77 (4): 361–373.
- Ivacko, Thomas M., Horner, Debra and Crawford, Michael. 2012. “State funding incentives increase local collaboration, but also raise concerns.” Michigan Public Policy Survey. Center for Local, State, and Urban Policy. Ann Arbor, MI. Accessed September 15, 2018. http://closup.umich.edu/michigan-public-policy-survey/15/state-funding-incentives-increase-local-collaboration-but-also-raise-concerns/
- Jordan, Meagan M., Terina Chapin Brooms, Juita-Elena Yusuf and Kaitrin T. Mahar. 2015. “An Illustrated Conceptual Model of Key Factors Impacting Perceived Interlocal Agreement Outcomes.” Public Performance & Management Review. 39 (1): 116–143.
- Joyce, Philip G. and Daniel R. Mullins. 1991. “The Changing Fiscal Structure of the State and Local Public Sector: The Impact of Tax and Expenditure Limitations.” Public Administration Review. 51 (3): 240.
- Jung, Changhoon and Juchan Kim. 2009. “Patterns and Determinants of Interlocal Cooperation in American Cities and Counties.” International Review of Public Administration. 14 (1): 11–25.
- Jung, Changhoon and Seong-Ho Jeong. 2013. “Effects of Service Characteristics on Interlocal Cooperation in U.S. Cities: A Pooled Regression Analysis.” International Journal of Public Administration. 36 (5): 367–380.
10.1080/01900692.2013.767273 Google Scholar
- Krueger, Skip and Ethan M. Bernick. 2009. “State Rules and Local Governance Choices.” Publius: The Journal of Federalism. 40 (4): 697–718.
- LeRoux, Kelly and Jered B. Carr. 2007. “Explaining Local Government Cooperation on Public Works: Evidence from Michigan.” Public Works Management & Policy. 12 (1): 344–358.
10.1177/1087724X07302586 Google Scholar
- MacManus, Susan A. and Kiki Caruson. 2008. “Financing Homeland Security and Emergency Preparedness: Use of Interlocal Cost-Sharing.” Public Budgeting & Finance. 28 (2): 48–68.
10.1111/j.1540-5850.2008.00905.x Google Scholar
- MacManus, Susan A. and William J. Pammer. 1990. “Cutbacks in the Country: Retrenchment in Rural Villages, Townships, and Counties.” Public Administration Quarterly. 14 (3): 302–323.
- Maher, Craig S. 2015. “A Longitudinal Analysis of the Effects of Service Consolidation on Local Government Expenditures.” Public Administration Quarterly. 39 (3): 393–425.
- Maher, Craig S., Sungho Park and Ji Hyung Park. 2016. “Examining Nebraska's County Finance Picture: Trends in Revenues, Expenditures, Debt and Reserves from 2001-2015.” The Nebraska State and Local Finance Lab, University of Nebraska. Omaha, NE.
- Marlowe, Justin. 2005. “Fiscal Slack and Counter-cyclical Expenditure Stabilization: A First Look at the Local Level.” Public Budgeting & Finance. 25 (3): 48–72.
10.1111/j.1540-5850.2005.00367.x Google Scholar
- McAfee, R. Preston and John McMillan. 1995. “Organizational Diseconomies of Scale.” Journal of Economics & Management Strategy. 4 (3): 399–426.
- Mitchell, David and Kurt Thurmaier. 2012. “Currents and Undercurrents in Budgeting Theory: Exploring the Swirls, Heading Upstream.” Public Administration Review Foundations of Public Administration Series. American Society for Public Administration. Washington, DC.
- Morgan, David R. and Michael W. Hirlinger. 1991. “Intergovernmental Service Contracts: A Multivariate Explanation.” Urban Affairs Quarterly. 27 (1): 128–144.
- Morton, Lois W., Yu-Che Chen and Ricardo S. Morse. 2008. “Small Town Civic Structure and Interlocal Collaboration for Public Services.” City & Community. 7 (1): 45–60.
- Nebraska Auditor of Public Accounts. 2001–2013. Basic Budget Data Query. Accessed August 12, 2018. http://www.nebraska.gov/auditor/reports/index.cgi?budget=1
- Nebraska Department of Revenue. 2001–2013. Valuation, Taxes Levied, and Tax Rate Data. Accessed August 12, 2018. http://www.revenue.nebraska.gov/PAD/research/valuation.html
- Nebraska Revised Statutes.“Power to tax; election; when required.” Chapter 13, Section 2507.
- Nebraska Revised Statutes.“Use of Interlocal Cooperation Act; public hearing; contract authorized.” Chapter 13, Section 3210.
- Nelles, Jen. 2013. “Cooperation and Capacity? Exploring the Sources and Limits of City-Region Governance Partnerships.” International Journal of Urban & Regional Research. 37 (4): 1349–1367.
- Orazem, Frank and Ronald G. Trostle. 1972. “Evaluation of Local Nonproperty Taxes for Rural and Urban Areas in Kansas.” American Journal of Agricultural Economics. 54 (4): 635–638.
- Park, Sungho. 2018. “The Impact of State-Imposed Fiscal Rules on Municipal Government Fiscal Outcomes: Does Institutional Configuration Matter?” State & Local Government Review. 50 (4): 230–243.
10.1177/0160323X18823245 Google Scholar
- Park, Sungho, Craig S. Maher and Carol Ebdon. 2018. “Local Property Tax Limits in Nebraska: Within-State Variations in Effects.” Public Administration Quarterly. 42 (3): 43–86.
- Plummer, Elizabeth and Robert J. Pavur. 2009. “The Effects of Rate Limits on Property Tax Revenues and School Expenditures: Evidence from Texas.” Journal of the American Taxation Association. 31 (2): 81–107.
10.2308/jata.2009.31.2.81 Google Scholar
- Provan, Keith G. and H. Brinton Milward. 2001. “Do Networks Really Work? A Framework for Evaluating Public-Sector Organizational Networks.” Public Administration Review. 61 (4): 414–423.
- Shank, N. 2014. “Inter-local Agreements: A Tool for Expanded Learning Opportunities?” Issue Brief 2014-01, University of Nebraska Public Policy Center, Lincoln, NE. Accessed October 7, 2018. http://ppc.unl.edu/wp-content/uploads/2017/07/Inter-Local-Agreements-A-Tool-for-Expanded-Learning-Opportunities.pdf
- Shrestha, Manoj K. and Richard C. Feiock. 2011. “Transaction Cost, Exchange Embeddedness, and Interlocal Cooperation in Local Public Goods Supply.” Political Research Quarterly. 64 (3): 573–587.
- Snow, Douglas, Gerasimos A. Gianakis and Jonathan Haughton. 2015. “The Politics of Local Government Stabilization Funds.” Public Administration Review. 75 (2): 304–314.
- Sonenblum, Sidney, John J. Kirlin and John C. Ries. 1977. How Cities Provide Services: An Evaluation of Alternative Delivery Structures. Cambridge, MA: Ballinger.
- Stallmann, Judith I. 2007. “Impacts of Tax and Expenditure Limitations on Small Local Governments: Lessons from Colorado and Missouri.” Journal of Regional Analysis & Policy. 37 (1): 62–65.
- Stephens, G. Ross and Nelson Wikstrom. 2000. Metropolitan Government and Governance: Theoretical Perspectives, Empirical Analysis, and the Future. New York, NY: Oxford University Press.
- Surveillance, Epidemiology and End Results (SEER) Program. 2011–2013. SEER Research Data. Accessed April 23, 2018. http://seer.cancer.gov/resources/index.html
- Swann, William L. 2017. “Examining the Impact of Local Collaborative Tools on Urban Sustainability Efforts: Does the Managerial Environment Matter?” The American Review of Public Administration. 47 (4): 455–468.
- Thurmaier, Kurt and Curtis Wood. 2002. “Interlocal Agreements as Overlapping Social Networks: Picket–fence Regionalism in Metropolitan Kansas City.” Public Administration Review. 62 (5): 585–598.
- Tiebout, Charles M. 1956. “A Pure Theory of Local Expenditures.” Journal of Political Economy. 64 (5): 416–424.
- Tyer, Charlie B. 1993. “Local Government Reserve Funds: Policy Alternatives and Political Strategies.” Public Budgeting & Finance. 13 (2): 75–84.
10.1111/1540-5850.00976 Google Scholar
- United Nations Development Programme. 2006. “Inter-Municipal Cooperation in Planning and Service Delivery: Analysis and Recommendations.” United Nations Development Programme, New York, NY.
- U.S. Bureau of the Census. 2014. The Census Survey of State and Local Finances. Accessed August 8, 2018. https://www.census.gov/govs/local/
- U.S. Bureau of Labor Statistics (BLS). 2001–2013. Labor Force Data by County. Accessed August 8, 2018. http://www.bls.gov/data/#employment
- Virginia Joint Legislative Audit and Review Commission. 2012. “Encouraging Local Collaboration through State Incentives.” Virginia Joint Legislative Audit and Review Commission, Richmond, VA.
- Visser, James A. 2004. “Townships and Nested Governance: Spoilers or Collaborators in Metropolitan Services Delivery?” Public Performance & Management Review. 27 (3): 80–101.
- Wildavsky, Aaron B. 1986. Budgeting: A Comparative Theory of the Budgeting Process. New Brunswick, NJ: Transaction Publishers.
- Wolkoff, Michael. 1987. “An Evaluation of Municipal Rainy Day Funds.” Public Budgeting & Finance. 7 (2): 52–63.
10.1111/1540-5850.00743 Google Scholar
- Zampelli, Ernest M. 1986. “Resource Fungibility, the Flypaper Effect, and the Expenditure Impact of Grants-in-Aid.” The Review of Economics & Statistics. 68 (1): 33–40.