NCPA - National Center for Policy Analysis

Special Taxing Districts Circumvent Spending Limits

January 24, 2014

Special taxing districts have multiplied because they allow local governments to skirt spending limits, says Stephen Slivinski, a senior economist at the Goldwater institute.

  • For example, when Maricopa County, Arizona, needed funding for one of its county hospitals (a local task force determined that funding was insufficient due to county expenditure limits), the county's Board of Supervisors placed a "new hospital district" on the ballot, and voters passed the proposition in a special election in 2003.
  • Turnout was very low, and ultimately only 2 percent of the county's registered voters were responsible for the district's creation.

By creating the district, Maricopa County was able to take general funds that had previously been spent to subsidize the hospital ($178 million since 1994) and use those funds for other purposes. The special district would now pay for the hospital.

Thousands of special districts just like the one in Maricopa County have been created.

  • In 2012, there were 38,266 special taxing districts in the United States.
  • Many of these have taxing and spending powers.
  • They are the fastest growing form of government, yet they are less accountable than traditional government bodies. In fact, special district elections are usually held in non-traditional voting periods (in odd numbered years, for example, or in the summer).

Legislatures should make these districts more accountable. Most localities have spending caps, and those caps should also be imposed on these special districts. More transparency would also help: frequent audits and publicly-available reports on spending and debt levels should be instituted. Lastly, their elections should take place in November, along with the rest of the government.

Source: Stephen Slivinski, "Out of Sight: How Special Taxing Districts Circumvent Spending Limits and Decrease Accountability in Government," Goldwater Institute, January 9, 2014.


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