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The Impact of Mandates and Tax Limits on Voluntary Contributions to Local Public Services: An Application to Fire Protection Services

Douglas C. Bice and William Hoyt ()
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Douglas C. Bice: Eastern New Mexico University

Public Economics from University Library of Munich, Germany

Abstract: The past twenty-five years have seen a tremendous increase in interventions by state governments into local public service provision through mandates related to employee compensation and production processes and tax and spending limitations. Reflecting this phenomena, a substantial literature has arisen examining the impact of these mandates on both spending on and the quality of public services. Here, we focus on another impact of mandates on public services, the use of volunteers and fund-raising by local governments. We develop a model of contributions to local public services, which predicts that tax limits increase both the use of volunteers and fund-raising and mandates increase the use of volunteers. These predictions are then tested using data on 1,846 fire-protection departments in twenty-eight states in 1993. Specifically, we examine how the existence of mandates and tax limits influences the type of department (volunteer; paid; or combined) as well as on the extent of fund-raising. The results of our empirical work generally support our theoretical predictions. The existence a tax limit makes it 11% more likely that a department (of mean characteristics) is volunteer and 10% more likely that it engages in fund-raising. A mandated pension increases the probability that a department is volunteer by 13% and increases the likelihood that it engages in fund-raising by approximately 7%.

JEL-codes: H7 L3 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1997-04-16
Note: Type of Document - Binary Word for Windows (V.6/7) document; prepared on IBM PC Compat.; to print on HP LaserJet; pages: 37
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