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Tax and expenditure limitations (TEL) on stateand local governments have been passed with the presumptionthey will limit the growth of government,raise government efficiency, and increase direct democracyby requiring voter approval of tax increases.Both the popular press and the academic literaturefocus on the impacts of TEL on state budgets. Yet at atime when decentralization and devolution are increasingdemands on local government, TEL provisionsare in some cases causing rigidity in local budgetsand subsequent fiscal stress. The smaller thebudget, the more significant the potential adverse effectsof TEL, and small governments tend to be ruralgovernments. While there is some evidence that governmentsunder TEL become more efficient, governmentstypically look for ways to circumvent the restrictionsas they become more severe, increasing inefficienciesand reducing both representative and directdemocracy, the opposite of the intended effects of TELlaws. States would be wise to avoid TEL and insteadutilize stricter reporting and auditing requirements.The latter are a more direct means of monitoring publicsector management while allowing local governmentsthe flexibility to adjust to local fiscal circumstances

Subject(s): Community/Rural/Urban Development

Financial Economics

Issue Date: 2007

Publication Type: Journal Article

PURL Identifier: Published in: Journal of Regional Analysis and Policy, Volume 37, Issue 1

Journal of Regional Analysis and Policy Page range: 62-65

Total Pages: 4

Record appears in: Mid-Continent Regional Science Association > Journal of Regional Analysis and Policy

Autor: Stallmann, Judith I.


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