Does Centralization Matter? The Equity and Cost Implications of State Property Tax Assessment

• In Event: In Honor of Ronald C. Fisher and His Landmark Text on State and Local Public Finance: Property Value Assessment

Abstract

Property assessment is almost exclusively administered by local governments in the United States. In the 1970s, Maryland transitioned responsibility for this function from counties to the state government. The primary policy goal at the time was to reduce assessment inequities across local assessing jurisdictions. Using the synthetic control method on historical assessment data, we find support for the state’s policy goal. We also find, though, that centralization worsened uniformity within some local areas while improving it in others. We further tested the fiscal effects of centralization using historical assessment expenditures. The data are consistent with centralization costing less than decentralized assessment administration but also creating a budgetary fiscal illusion, allowing local governments to keep the assessor’s budget rather than return it to taxpayers.

Authors

• Geoffrey Propheter, University of Colorado Denver

• Luke Spreen, University of Maryland