An Exploration of Revenue Structure Characteristics in Rural Municipalities

• DOI: 10.1177/0160323X19846928
• Published date: 01 March 2019
• Date: 01 March 2019
• Author: Geoffrey Propheter
• Subject Matter: Research Note

Research Note

An Exploration of Revenue

Structure Characteristics

in Rural Municipalities

Geoffrey Propheter

1

Abstract

This article tests for differences in revenue structure between small rural and nonrural munici-

palities. Colorado serves as a case study owing to its large number of small municipalities. Empirical

analyses indicate that rural municipalities are less likely to adopt a local option sales tax, receive a

smaller share of their total revenue from intergovernmental aid, and have less diversified tax systems

compared to similarly sized nonrural municipalities. The article also shows these conclusions are

sensitive to how one defines ruralness, indicating that what scholars know about public finance in

rural communities is sensitive to the definition as well.

Keywords

municipal finance, rural, spatial, local government

Most of the general purpose, subcounty govern-

ments in the United States are lo cated outside

metro areas. According to data from the U.S.

Census Bureau compiled by the author, only

about 3,600 of the approximately 36,000 sub-

county governments are in urban centers.

Despite the abundance of subcounty govern-

ments outside of metropolitan area s, however,

the literature on fiscal policy and outcomes in

rural jurisdictions remains underdeveloped,

with more attention recently being given to

public finance in large cities (Ross, Yan, and

Johnson 2015; Chernick, Langley, and

Reschovsky 2015). Among the studies that

explore public finance matters in small towns,

scholars have directed relatively little attention

toward understanding the rural context.

This study is an effort, building upon Helpap

(2017), to invigorate rural public finance

research. The contribution to the local govern-

ment public finance literature is twofold. First,

previous studies in this literature draw insuffi-

cient, if any, distinction between rural towns

and small towns, the concern of which is erro-

neously generalizing conclusion s about one to

the other. All rural towns are small, but not all

small towns are rural. It is an empirical ques-

tion if small, nonrural towns and rural towns

differ in terms of their fiscal choices and out-

comes, which the literature has not yet

explored. Second, existing research inade-

quately defines ruralness. While most authors

acknowledge the complexity of defining the

1

School of Public Affairs, University of Colorado Denver,

Denver, CO, USA

Corresponding Author:

Geoffrey Propheter, School of Public Affairs, University of

Colorado Denver, 1380 Lawrence St., Suite 500, Denver,

CO 80204, USA.

Email: geoffrey.propheter@ucdevern.edu

State and Local GovernmentReview

2019, Vol. 51(1) 46-56

ªThe Author(s) 2019

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DOI: 10.1177/0160323X19846928

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