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Did property tax caps lead to a decline in the perceived quality of public safety?

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Dr. Charles Taylor
Ball State University

During the 2008 legislative session, the Indiana General Assembly enacted property tax caps that were first implemented in 2009 and fully phased-in for 2010. Tax cap opponents argued that they would lead to a decline in the quality of public services as local governments would be forced to cut spending in response to the reduced revenues. Proponents argued that local governments could eliminate wasteful spending and increase efficiency, allowing them to maintain service quality even with declining revenues.

The Hoosier Survey, conducted annually by the Bowen Center for Public Affairs beginning in 2008, includes questions asking Indiana citizens whether they think the quality of various public services have gotten better, gotten worse, or stayed about the same over the most recent year. One of the public service questions asks about changes in the quality of police and fire protection.

Combining data from survey responses about police and fire protection with information about the varying levels of tax cap impact on local government revenues across the state, allows us to determine if citizens in communities experiencing large reductions in revenue are more likely to report declining public safety service quality than those in communities where tax cap impacts are small. Associate professor of political science, Charles Taylor, conducted this type of analysis using data from Hoosier Surveys conducted through 2011, the second year in which tax caps were full phased-in.

The results of that analysis were recently published in the American Review of Public Administration and provide evidence that tax caps influenced citizen perceptions of service quality. Urban survey respondents in communities with relatively large tax cap impacts were more likely (10% vs. 7%) to report that the quality of police and fire protection had declined and less likely (20% vs. 26%) to report that quality had improved than similar respondents in communities where tax cap impacts were minimal.

Does this mean that tax caps led to an actual decline in service quality? Not necessarily. The typical citizen doesn’t routinely interact with their local police or fire department in a way that would allow him or her to evaluate those services directly. Citizens do, however, have other ways to gather information about public safety service quality. For example, they pay attention to public officials, such mayors, city council members, and police and fire chiefs when they are quoted in the news media discussing the effect of tax caps on service quality. It may be statements by officials about the impact of tax caps that have influenced citizens’ perceptions.

Research by other scholars demonstrates that citizen dissatisfaction with public service delivery is associated with diminished trust in government. For this reason, public officials should recognize that citizen perceptions – accurate or not – are an important part of their management environment. Officials should be prepared to have an open and transparent dialogue with citizens about the quality of public services.

Anyone who would like to read the full analysis can email Charles Taylor (cdtaylor@bsu.edu) for a copy of the study.