Competition and Property Tax Limit Overrides: Revisiting Massachusetts’ Proposition 2½
Lead Investigators: Zackary Hawley and Jon Rork (Reed College)
This research looks at the role of spatial proximity of other town’s decisions to hold an override vote on the decision of a Massachusetts town to hold an initial override vote under Proposition 2 ½. We find that if a neighboring town has already held a vote at some point in the past, a town’s likelihood of holding an initial vote increases by 10-15 percent. A prior vote being successful has a strong impact, whereas losing votes are relatively ignored. The presence of spatial dependence remains when we look at the specific purpose of override vote, or at the annual number of votes that have occurred between 1982 and 2010. We argue that this evidence points to a case where tax/yardstick competition is alive and well in Massachusetts, manifesting itself through the override vote, as opposed to the property tax rate. This research is published in Regional Science and Urban Economics (http://dx.doi.org/10.1016/j.regsciurbeco.2015.02.006) and has been presented at several conferences including the Lincoln Institute of Land Policy’s public finance and urban economics conference.