Fiscal effects of local option sales taxes on school facilities funding: The case of North Carolina

Abstract States have long used the sales tax as a revenue source. Since the 1970s states started granting localities the option of levying local sales taxes to enrich their revenue portfolio. Local sales taxes are often structured to reduce local property taxes; in most localities this strategy prevails in referendum. Since sales taxes are more elastic than property taxes, substituting away from the latter poses the threat of increased revenue volatility. We employ a panel dataset of counties in the state of Georgia to examine the effects of local option sales tax on own-source revenue volatility. We decompose volatility into the long- and short-run, use a mean-variance approach in considering correct revenue portfolios across tax-instruments, and find that substitution towards sales tax amplifies revenue variability. Our study fills a niche in die revenue volatility literature; our results imply that sales taxes may have been overweighed in current revenue portfolios.

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Local Option Policies and Alcohol Availability in North Carolina Counties

Journal of Public Health Policy ◽

10.2307/3343330 ◽

2000 ◽

Vol 21 (3) ◽

pp. 328

Author(s):

Ronda C. Zakocs

Keyword(s):

North Carolina ◽

Alcohol Availability ◽

Local Option

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A Study of Disparities among School Facilities in North Carolina: Effects of Race and Economic Status

Educational Policy ◽

10.1177/0895904899013002003 ◽

1999 ◽

Vol 13 (2) ◽

pp. 280-295 ◽

Cited By ~ 3

Author(s):

Ramona L. Burton

Keyword(s):

North Carolina ◽

Economic Status ◽

School Facilities

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LOST and Found Tax Dollars: Local Option Sales Taxes, Property Taxes, and Own Source Revenue

SSRN Electronic Journal ◽

10.2139/ssrn.2228236 ◽

2013 ◽

Cited By ~ 1

Author(s):

Whitney Afonso

Keyword(s):

Property Taxes ◽

Sales Taxes ◽

Lost And Found ◽

Local Option

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Afterschool shared use of public school facilities for physical activity in North Carolina

Preventive Medicine ◽

10.1016/j.ypmed.2014.10.003 ◽

2014 ◽

Vol 69 ◽

pp. S44-S48 ◽

Cited By ~ 10

Author(s):

Michael A. Kanters ◽

Jason N. Bocarro ◽

Renee Moore ◽

Myron F. Floyd ◽

Troy A. Carlton

Keyword(s):

Physical Activity ◽

North Carolina ◽

Public School ◽

School Facilities

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Local option sales tax, state capital grants, and disparity of school capital outlays: The case of Georgia

Journal of Public Budgeting Accounting & Financial Management ◽

10.1108/jpbafm-27-02-2015-b001 ◽

2015 ◽

Vol 27 (2) ◽

pp. 129-152 ◽

Cited By ~ 1

Author(s):

Zhirong Jerry Zhao ◽

Wen Wang

Keyword(s):

Spatial Data ◽

Black Population ◽

School Facilities ◽

Poverty Rate ◽

Spatial Data Analysis ◽

Inequality Decomposition ◽

Local Option Sales Tax ◽

Local Option ◽

State Capital ◽

School Capital

In recent years, the disparity of school capital outlays has received increasing attention as many schools are facing challenges to meet increasing capital needs. With data of Georgia county school districts during FY2003-2008, this study examines how the disparity of school capital outlays is affected by the mix of capital revenues. Using multiple methods including spatial data analysis, quartile analysis, and inequality decomposition, we find that (1) school capital outlays in Georgia counties are negatively associated with the percentage of black population and the poverty rate, (2) state capital grants do not play an equalization role in school capital outlays, and (3) the use of ESPLOST has some equalizing effects on the funding for school facilities, contrary to earlier findings in the literature.

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