Government Consolidation in Property Tax Administration

• Author: Olha Krupa
• Published date: 01 March 2017
• DOI: 10.1177/0160323X16680270
• Date: 01 March 2017
• Subject Matter: Research Notes

Research Note

Government Consolidation

in Property Tax Administration

Olha Krupa

1

Abstract

Government consolidations remain highly controversial, and the proposition that consolidated

governments operate more efficiently than smaller government units is a contested claim. This

research evaluates the outcomes of Indiana property tax consolidation reform of 2008. It docu-

ments 19.0–27.0 percent cost savings from consolidated tax administration and estimates cost

elasticities. The study finds that assessment costs are highly elastic to assessor workloads, wage

levels, and the percentage of agricultural land, but not the assessment quality. Although these

findings may assist other fragmented local government units in evaluating vertical consolidation

proposals, they may not directly generalize to other areas of government.

Keywords

state and local government, government consolidation, property tax, economies of scale, cost

efficiency

Government consolidations are considered a

highly controversial topic in the field of public

administration. Although scholars call for an

equitable and efficient public service delivery,

they disagree about the optimal size of govern-

ment that would deliver that service. Two the-

oretical perspectives, the metropolitan reform

and the public choice theory, rationalize the

desire (and the lack of thereof) to consolidate

government units (Ostrom 1972). Supporters

of government consolidation advocate for the

professionalization of the public service, effi-

cient service delivery, and maximized levels

of output. Public choice scholars oppose this

view by favoring small, fragmented govern-

ments that are close to voters. They posit that

government consolidation results in bureaucra-

tization, reduces the level of responsibility of

public officials, and even discourages citizen

participation and awareness (Ostrom 1972; Lyons

et al. 1989). The extent to which government

consolidations truly reduce costs and increase

equity in public service provision remains an

unresolved question.

This study reviews the outcomes of a recent

government consolidation of property tax

administration in the state of Indiana. Earlier

studies indicate that this government function

has considerable consolidation potential

(Mehta and Giertz 1996; Sjoquist and Walker

1999), because of the following features: prop-

erty tax administration requires little to no tax-

payer involvement (Mikesell 2013), assessors

ought to be extensively trained to perform well

1

Institute of Public Service at Seattle University, Seattle,

WA, USA

Corresponding Author:

Olha Krupa, Institute of Public Service at Seattle University,

901 12th Ave, P.O. Box 222000, Seattle, WA 98122, USA.

Email: krupao@seattleu.edu

State and Local GovernmentReview

2017, Vol. 49(1) 27-36

ªThe Author(s) 2016

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DOI: 10.1177/0160323X16680270

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