The Intergovernmental Fiscal Effects of the Clean Air Act

Abstract

The impacts of air quality regulations under the Clean Air Act extend beyond directly regulated polluting industries; these regulations also affect the tax bases of local governments. To assess the local fiscal effects of nonattainment regulations under the Clean Air Act, this article analyzes revenue data spanning twenty years for counties throughout the entire United States. Attainment status for ozone, total suspended particulates (TSP), particulate matter smaller than 10 μm (PM10), and sulfur dioxide (SO2) is found to affect local governments' own source or property tax revenues. Nonattainment for these criteria pollutants results in regulations focusing on local industries. These findings indicate declining revenues in ozone, TSP, and PM10nonattainment areas and suggest suppression of growth during the nonattainment period for SO2.