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James Rossi PhD Student Agricultural and Applied Economics. Judith I. Stallmann, Professor Community Development Extension Agricultural and Applied Economics Rural Sociology Public Affairs stallmannj@missouri.edu. Third Class County Budget Trends: 1996-2009.

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james rossi phd student agricultural and applied economics
James Rossi

PhD Student

Agricultural and Applied Economics

Judith I. Stallmann, Professor

Community Development Extension

Agricultural and Applied Economics

Rural Sociology

Public Affairs

stallmannj@missouri.edu

Third Class County Budget Trends: 1996-2009

A gift from Dr. James Ahrenholz contributed to this project

Legislative workshop

Jefferson City

April 15, 2013

slide2

2009 County Classification

Charter, assessed value of >$900M

1st Class assessed value of >$900M

2nd Class, assessed value $600-$900M million

3rd Class, assessed value of <$600M

4th Class, attained 2nd Class prior to August, 1988, assessed values declined to <$600M, follow 2nd Class rules

Township counties

T

http://www.mocounties.com/countyinfo/

New Madrid became 2nd Class in 1999

third class counties
Third Class Counties
  • Majority of counties in Missouri
    • 88 in 2009
    • Several became 2nd class 1996-2009: Lincoln
  • Trends will apply to other local governments located in the third-class counties
    • School districts will have the same (or a part of the county) property tax base
    • City and village property and sales tax bases are a portion of the county’s bases
  • Data availability
trends for individual counties
Trends for individual counties
  • Excel spreadsheet for county budget trends
  • Budget items
    • Revenues
    • Expenditures
    • Tax bases
  • Trends
    • Total and per capita dollars (nominal dollars)
    • Annual and cumulative growth rates
county comparisons
County comparisons
  • County can benchmark itself against another county
    • Need to think about which county would be a meaningful comparison
    • Need to think about why benchmarking—the other county is known for something, is about the same size, etc.
  • Additional detailed data beyond what is graphed so a county can focus on more detailed.
when comparing counties keep in mind
When comparing counties, keep in mind:
  • Special districts versus county wide funding, such as health centers
  • Use of special-purpose sales taxes versus the general fund for the same activity
    • Law enforcement
    • Capital improvement fund that goes to roads
  • The auditor notes that counties classify expenditures differently
  • Some counties do not have data every year
    • Still reporting using paper
using the spreadsheet
Using the spreadsheet
  • “Title Page” tab
  • “How to use” tab
  • “Notes” tab
  • “County Budget Trends” tab
    • Click on the box and select a county
  • Other “trend” tabs
  • County-County Comparison tabs
  • “Data sources” tab
  • Data tabs
user s manual
User’s Manual

http://extension.missouri.edu/p/DM4010

other uses of the data
Other uses of the data
  • Comparing groups of counties.
      • The same cautions apply as for comparing two counties
    • Data are nominal dollars, not real (inflation-adjusted) dollars, unless otherwise stated
    • Overall trends for Third-class Counties
comparing counties by population trends public finance theory
Comparing counties by population trends: public finance theory
  • Smaller governmental jurisdictions are likely to have higher per capita costs because:
    • There are required activities or costs that are spread over fewer residents so per capita costs will be higher
    • As the population decreases the costs of the fixed infrastructure is spread over fewer residents so per capita costs will increase
  • Fast growing counties will exceed their infrastructure capacity and their per capita costs will rise to build new infrastructure
    • Short run versus long run fiscal impacts
county population trends 1996 2009
County Population Trends: 1996-2009

*Pulaski, Webster and Warren not included in later slides due to lack of data

implications
Implications
  • Counties losing population are facing long term fiscal stress
  • Counties with rapid population growth face short-run fiscal stress
    • Longer run their tax bases grow
    • Longer run population grows and per capita costs fall
  • Moderate growth counties have the most stable fiscal outlook
other uses of the data1
Other uses of the data
  • Overall trends for Third-class Counties
    • The same cautions apply as for comparing two counties
  • Data are nominal dollars, not real (inflation-adjusted) dollars, unless otherwise stated
the economy
The Economy
  • Implications for economies of Third-class counties
    • Loss of economic share
    • Population loss versus growth counties
    • Changing economic structure
  • Implications for Budgets
    • Impacts on tax bases
    • Impacts on budgets
implications1
Implications
  • Services are the growing economic sector
    • Changing consumption patterns due to income and demographics
      • Consuming services instead of goods, and many services are not taxed
    • Some of the service growth is due to restructuring of firms that now contract for services rather than having them in-house
    • Technological change, even manufacturing is more service-intensive than it was
  • Services in general are not as capital intensive as manufacturing
    • Implications for property tax revenues
slide35

Year-to-Year Percentage Change in Taxable Sales

(Inflation and Seasonally Adjusted)

1st quarter

1998

4th quarter

2010

Source: DED http://www.ded.mo.gov/researchandplanning/indicators/taxable_sales/index.stm

slide36

Source: Bureau of the Census. “Table 7: http://www.census.gov/econ/estats/

estimate of e retail purchases by missouri residents 2009
Estimate of e-retail purchases by Missouri residents (2009)

E-commerce data from US Census Bureau http://www.census.gov/econ/estats/

*Bruce, Fox and Luna, 2009. Calculated from Tables 3-5. http://bus.utk.edu/cber/ecomm.htm

implications2
Implications
  • Dependence on sales tax revenues
    • Volatile tax base
    • Retail is not growing as a % of the economy
      • Demographic changes
    • Retail gains or losses in a county due to store locations
      • Many of the Third-class Counties lose retail sales to neighboring counties
    • Inflation and its impact on family budgets
    • Internet sales
data sources
Data Sources
  • Bruce, Donald, William F. Fox and LeeAnn Luna. “ State and Local Government Sales Tax Revenue Losses from Electronic Commerce.” .”April 13, 2009. University of Tennessee, Center for Business and Economic Research. http://bus.utk.edu/cber/ecomm.htm
  • Bureau of the Census. “Quarterly retail e-commerce sales, 4th quarter, 2010.” US Census Bureau News, CB11-23. Feb. 17, 2011. US Department of Commerce. http://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf. Accessed 4-29-2011
  • Bureau of the Census. “Table 7: Summary of U.S. Shipments, Sales, Revenues, and E-commerce: 2000-2009.” US Department of Commerce. http://www.census.gov/econ/estats/
  • Bureau of Economic Analysis. “ Regional Economic Information System.” for income and population data. US Department of Commerce. http://www.bea.gov/regional/reis/. Accessed April 12, 2011.
  • Missouri State Auditor
    • 1996-2004 data from “Missouri 3rd Class Counties,” reports. Where possible we used the audited data. http://www.auditor.mo.gov/auditreports/counties.htm Accessed June 18, 2011.
    • 2005-2009 data in spreadsheets from Missouri State Auditor, data are not audited
  • Missouri Department of Revenue. Taxable Sales. http://www.dorx.mo.gov/publicreports/ Accessed April 12, 2011.
  • Missouri State Tax Commission. Assessed values were obtained in spreadsheets.
  • Penton Media, Inc. “Municipal Cost Index.”American City and County. 2011. http://americancityandcounty.com/mciarchive/ Accessed June 11, 2011.