Changing Revenue and Expenditure Structure and the Reliance on User Charges and Fees in American Counties, 1972-2002

Abstract

This article examines changing revenue and expenditure structures in a panel of 2,698 American counties during the past 30 years (1972-2002) at 5-year intervals. It also investigates factors affecting the degree of reliance on user charges in counties. The findings show that property taxes and total taxes as a percentage of total own source revenue began trending downward, whereas sales tax, user charges, and other taxes trended upward since 1977. The downward trend of property taxes and total taxes increased rapidly in the wake of tax and expenditure limitation (TEL) movements, which started in the late 1970s. With respect to the county expenditure structure and the growing role of counties as service delivery agents, the relative share of spending on traditional county services decreased slightly, whereas the share of municipal-type (local services) and regional-type services in general increased slightly. The findings also show that the presence of binding local TELs and the presence of state-level TELs led to an increase in the share of user charges and fees for traditionally charge-financed services. The findings also show that a modernized county structure led to an increase in the degree of reliance on user charges in counties.