Polycentric governance and the impact of special districts on fiscal common pools

Abstract

Local government services are increasingly being provided in fragmented polycentric systems where the overlapping jurisdictions draw resources from the same fiscal base. Developing optimal policies for the efficient management of fiscal resources requires a consideration of the total underlying fiscal pool. In this study, we evaluate the impact that special purpose districts have on debt ratios at the county "common pool" level in the State of Georgia (U.S.) between 2005 and 2014. Empirical findings suggest that inclusion of all general government and special purpose debt for each county may at times result in a greater burden on fiscal common pool than existing rules permit. These results call into question the efficacy of fiscal policies in a polycentric governance system that neglect to account for debt levels for all actors within the confines of a single fiscal common pool unit. Results also show that total debt ratios are significantly affected by special districts that operate within boundaries of a single county. We find no evidence that independent special districts have a differential impact on fiscal common pools compared to their dependent counterparts.

Who owns the pipes? Utility ownership, infrastructure conditions, and methane emissions in United States natural gas distribution

“…Further, the presence of multiple service districts promotes overuse of the "fiscal common pool"-the economic base service providers rely upon (Berry, 2008;Greer, 2015). Density of general and special purpose entities has been shown to correspond to higher public debt levels (Greer et al, 2018). While gas utilities are not strictly overlapping geographically, regional operators are nonetheless reliant upon a common economic base, including both rate-paying customers and state safety grants (PHMSA, 2019).…”

Income sorting by specialized services: Service differentiation by overlapping governments

“…Special districts have proliferated rapidly since the 1970s and driven the fragmented local landscape of the U.S. special districts that are created for various reasons, such as general‐purpose governments’ circumvention against state fiscal limitations (Carr and Farmer 2011; Billings and Carroll 2012), cost‐management of local service (Park and Park 2021), extension of public service provision at the remote areas (Frant 1997), and meeting overall service demand (McCabe 2000). Consequences of special district creation include higher debt burdens of overlapping governments than permitted level (Greer, Moldogaziev, and Scott 2018), larger government with regards to public employment, revenue, and spending level (Berry 2008; Schneider 1989), population growth (Goodman 2020), and lower service quality despite higher service cost (Berry 2009).…”

When Push Comes to Shove: The Effect of Economic Crisis on the Spending of Government Savings

“…For example, using city data, Baqir (2002) finds a higher level of government spending when more legislators seek funding programs benefitting their districts. There is an active effort in applying the insights from the common-pool resource literature to the study of fiscal health (Baqir, 2002;Greer, 2015;Greer et al, 2018;Tang et al, 2014;Von Hagen, 2006).…”