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User Charges to Fund State and Local Infrastructure Services

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  • Robert D. Ebel

    (International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State Univeristy)

  • Yameng Wang

Abstract

Twenty years ago, current user charges accounted for 17.7% of United States state and local general revenues from own-sources. That put it well behind the revenue importance of both the sales and gross receipts (24.8%) and property tax (22.5%) categories and (nearly) the same as the sum of the individual and corporate income tax (17.8%). Today, current charges account for 21.1% of state/local own source general revenues—eclipsing the income taxes (18.6%), nearly on par with the property tax (21.2%) and closing in on the sales and gross receipts category (23.6%). Looking ahead, there are four reasons why this trend is likely to continue. The first is the generally recognized need to improve the nation’s physical infrastructure and the recent literature on how to pay for it (e.g., Pagano, 2011, McNichol, 2016; McKinsey, 2017; Geddes, 2017; McBride, 2018; Schanzenbach, Nunn and Nantz, 2017). Second is the “fiscal squeeze” as the relative revenue productivity of the former “big three” (income, sales, and property) are being eroded due to a combination of short-term-after-short-term direct discretionary tax base reductions and the long term effects of changing economic, demographic and institutional trends (Tannenwald, 2001; Brunori, 2012, Luna and Murray, 2015; Wallace, 2012, 2015). Third, in contrast to, or maybe due to, the present a citizen “anti-tax” mood, state and local policymakers have become more permissive to the enactment of local fees and charges (Sjoquist and Stoycheva, 2012) . And, fourth, the technology for employing new charges is improving particularly in the area of motor-vehicle-related activities as revenue collection is facilitated--e.g., smart parking meters that allow governments to accurately monitor and report on the use of public spaces; GPS tracking of vehicle weights and distances driven, emerging modes of road and congestion pricing (Gifford, 2012; Basso and Duvall, 2013; Geddes, 2015).

Suggested Citation

  • Robert D. Ebel & Yameng Wang, 2018. "User Charges to Fund State and Local Infrastructure Services," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1813, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  • Handle: RePEc:ays:ispwps:paper1813
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    File URL: https://icepp.gsu.edu/files/2018/07/paper1813.pdf
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    References listed on IDEAS

    as
    1. Robert D. Ebel & LeAnn Luna & Matthew N. Murray, 2016. "State General Business Taxation One More Time: Cit, Grt, or Vat?," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 739-762, December.
    2. Kim, Jaehoon & Kim, Sangsin, 2015. "2012년 국회법 개정의 효과 연구 [A Study on the Effect of the 2012 National Assembly Act Amendment]," KDI Research Monographs, Korea Development Institute (KDI), volume 127, number v:2015-03(k):y:2015:p:1-1.
    3. Dick Netzer, 1992. "Differences in Reliance On User Charges By American State and Local Governments," Public Finance Review, , vol. 20(4), pages 499-511, October.
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