Government,Effectiveness, Performance,and Local Property Values

Abstract

We offer a practical measure of local government effectiveness in the provision of public services relating service expenditures to aggregate property value. Building on the work of Brueckner (1979 Brueckner, J. K. 1979. Property values, local public expenditure, and economic efficiency. Journal of Public Economics, 11: 223–246.  Google Scholar], 1982 Brueckner, J. K. 1982. A test for allocative efficiency in the local public sector. Journal of Public Economics, 19: 311–331. Crossref], Web of Science ®] , Google Scholar], 1983 Brueckner, J. K. 1983. Property value maximization and public sector efficiency. Journal of Urban Economics., 14: 1–16.  Google Scholar]) and Henderson (1990, 1995) we present an aggregate property value maximization model where levels of local public services are capitalized into aggregate property values. Using data for Wisconsin municipalities we demonstrate that service expenditure levels, and simultaneously corresponding taxation levels, are suboptimal and should be increased. The aggregate property value maximization test suggests that local public services in Wisconsin are consistently under-provided. By monitoring local property values officials can objectively measure if public services are being provided in an optimal manner.