Date of Award

August 2019

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Administration

Advisor(s)

Yilin Hou

Keywords

Local Public Finance, Medicaid, Property Tax, Public Financial Management, Public Health Insurance, Tax Administration

Subject Categories

Social and Behavioral Sciences

Abstract

This dissertation is comprised of three essays on real property tax administration and related state-local fiscal relations. All three essays exploit variation in state policies as natural experiments to study the various features of the property tax system.

The first essay examines how county governments respond to a state policy that reduced counties' share of state Medicaid costs, in a state where counties are mandated to financially contribute to the state program. The key motivation of this study is to understand the consequences of a change in the way a large public insurance program is co-financed by different levels of governments. This paper intends to fill the gap in the literature by providing empirical evidence on how local governments respond to a sudden decrease instead of an increase in the outlay of a large mandatory spending category. Utilizing the plausibly exogenous decline in county Medicaid spending in New York between 2005 and 2006, I estimate its impact on various fiscal outcomes including non-Medicaid budget and effective property tax rate, by using difference-in-differences and event study estimators. I find no income effect on other spending but evidence of significant property tax relief among affected counties in New York. The findings suggests that reallocation of limited state and local resources or fiscal responsibility through changes in cost sharing may have spill-over effects on local fiscal decisions.

The other two essays examine the effects of two key institutional elements of the real property tax on the cost and outcome of property assessment – the size of tax assessment jurisdictions and the length of property assessment cycles. The second essay estimates the returns to scale in property assessment. This essay focuses on tax assessing jurisdictions in New York that unified assessing functions with neighbors, forming a coordinated unit in response to state aid. Using a cost function framework, this essay tests whether merging assessing functions among assessing jurisdictions leads to cost savings. We employ multiple instruments to address the potential selection bias of each jurisdiction's decision to form a coordinated unit. The instruments are based on spatial intersection across jurisdiction boundaries and the history of inter-municipal cooperation among neighboring jurisdictions.

The third essay examines the effect of regular, short cycles on assessment performance, by using two separate case studies of assessing jurisdictions in a representative strong "dillon state", Virginia and a strong "home rule" state, New York. Outdated property assessment is widely believed to undermine equity and cost efficiency in administering the property tax. This essay first tests the effect of frequent mass appraisal on assessment uniformity, using exogenous variations in the timing of reassessment across assessing jurisdictions in Virginia. Then it examines whether more frequent (consecutive annual reassessment, in particular) leads to improvement in horizontal equity among assessing jurisdictions in New York, employing two stage-least square and semi parametric event study estimators.

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