The Effects of Property Tax Levy Limits on School Infrastructure Assets and Expenditures: The Case of New York

Phuong Nguyen-Hoang and Yoon-Jung Choi
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Phuong Nguyen-Hoang: School of Planning and Public Affairs, University of Iowa
Yoon-Jung Choi: Department of Public Policy and Administration, Florida International University

International Center for Public Policy Working Paper Series, at AYSPS, GSU from International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University

Abstract: This is the first study to examine the potential effects of property tax levy limits on school infrastructure assets and expenditures (IAE). Specifically, we examine how the limit on school districtsÕ property tax levy in New York may affect school IAE. Although this limit imposes a restriction only on operating, rather than capital, property tax levy, we hypothesize that the limit may have spillover effects on school IAE. We examine this hypothesis by employing a difference-in-differences estimation approach together with an event-study design on a panel of school districts between 2011 and 2020. We find that at-limit school districts that exhaust their limit, especially urban high-need districts, reduce the expenditures on machinery and equipment. In addition, the limit has a negative effect on rural high-need infrastructure assets captured by the building value. We also find that at-limit school districts do not issue more debt and that urban high-need districts seek out more matching state infrastructure aid. All these results indicate that school districts that are most likely to be constrained by the limit treat operation and capital resources as complements, rather than substitutes.

Pages: 47 pages
Date: 2023-12
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