The Fiscal Performance of Overlapping Local Governments

Research on the fiscal consequences of multi-level governance has largely focused on the interaction between federal and state governments. Yet, the federal system in the United States is considerably more complex, and includes the vertical layering of governments at the local level. This research examines the relationship between the overlapping system of local governments and fiscal discipline in the public sector. It focuses on both the static and dynamic aspects of fiscal performance, specifically own-source revenues and debt. Using different measures of the vertical structure of the local governance system, and controlling for the effects of other factors including measures of horizontal competition, the empirical analysis finds that the overlaying of local governments creates a bias for a bigger public sector, but much of the bias can be traced to a specific type of government