Randall G. Holcombe and DeEdgra W. Williams
The Impact of Population Density on Municipal Government Expenditures
Public Finance Review, 2008, Vol. 36 No. 3, pp. 359-373
Data from 487 municipal governments with populations greater than 50,000 are examined to see the relationship between population density and per capita government expenditures. There is no statistically significant relationship between per capita total government expenditures and operational expenditures for cities smaller than 500,000, and for larger cities, higher population density is associated with higher per capita government expenditures. Infrastructure expenditures tend to decline with increases in population density for cities smaller than 500,000, whereas expenditures on services tend to increase with population density for cities larger than 500,000. The relationship between per capita total expenditures and population density has policy relevance because it indicates that when all government expenditures are taken into account, policies that increase population density will not reduce per capita government expenditures and, in larger cities, will lead to higher per capita government expenditures. (p. 359)
Helen F. Ladd
Population Growth, Density and the Costs of Providing Public Services
Urban Studies, 1992, Vol. 29, No. 2, pp. 273-295
Recent policy interest in managing local population growth has drawn attention to the fiscal pressures that population growth imposes on local governments. This paper uses 1985 data for 247 large county areas to determine the separate impacts on local government spending of two dimensions of residential development patterns, the rapidity of population growth and the intensity of land use as measured by gross residential densities. Based on a regression model that controls for other determinants of per capita spending, this study provides careful estimates of the nonlinear impacts of population growth and population density on three types of local government spending: current account spending, capital outlays and spending on public safety. The study balances the engineering and planning view that greater population density lowers the costs of providing public services by documenting a U-shaped relationship between spending and density; except in sparsely populated areas, higher density typically increases public sector spending. In addition, the results suggest that rapid population growth imposes fiscal burdens on established residents in the form of lower service levels. (p. 273 )
Helen F Ladd
Fiscal impacts of local population growth: A conceptual and empirical analysis
Regional Science and Urban Economics, 1994, Vol. 24, No. 6, pp. 661–686
This paper examines the legitimacy of concerns of local residents about the adverse fiscal impacts of population growth. The conceptual discussion shows that economic theory provides no clear prediction of the impact of population growth on per capita spending. Based on a national data set of large counties, simple d descriptive analysis indicates that greater population growth is associated with higher per capita current spending and interest outlays. More detailed analysis both of 1978–1985 changes and of 1985 levels of current spending indicates that higher growth-related per capita spending primarily reflects the combined effects of greater density and increased local spending shares. In sum, established residents in fast-growing areas may experience declines in service quality as well as rising local tax burdens. (p. 661 emphases added)
Edward H. Heinze
Community Classification and Growth in Effective Property Tax Rates: A Case Study of Rate Divergence in 39 Rhode Island Towns
American Journal of Economics and Sociology, 1978, Vol. 37, No. 3 pp. 309-324
A multiple regression analysis of cross-sectional data for 39 Rhode Island towns indicates that variation in the level of effective property tax rates among communities can be substantially explained. The determinants are a community's population density, median family income, real property per capita, and the ratio of commercial to total property tax revenue. Population density serves as a criterion for judging the "cityness" (1) of a community, that is, its degree of urbanization. A positive relationship exists between population density and effective property tax rate. Communities with the highest population density tend to have the highest tax rates. This relationship is shown in each analyzed year. (p. 309)
William H. Oakland and William Testa
Federal Reserve Bank of Chicago
Economic Perspectives, Vol. 19, No. 2, March 1995
Does Business Development Raise Taxes?
It is noteworthy that new housing capital … is not correlated with any of the [tax] burden measures. This dichotomy with business investment may well reflect the greater expenditure needs that added population places on local government relative to its contribution to government revenues. This finding is in harmony with the view that people "simply don't pay for themselves." (Page 29)