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FOR IMMEDIATE RELEASE: STATE LAWMAKERS WILL TAKE AIM AT SPECIAL DISTRICT LOOPHOLES

October 28, 2014

Contact: Michael Kelley

602-633-8965

FOR IMMEDIATE RELEASE: STATE LAWMAKERS WILL TAKE AIM AT SPECIAL DISTRICT LOOPHOLES

Local Government Taxation on the Rise, as Special Districts Circumvent Spending Limits

>>See the full report here

A shadow government has been growing virtually unnoticed for the past 30 years, and its spending is rising even faster than burgeoning federal and state spending. Yet few taxpayers are even aware of this layer of government that is substantially increasing their own tax bills and crowding out private enterprise.

In a report released Thursday, Goldwater Institute senior economist Steve Slivinski traces the rampant growth of special taxing districts since the 1970s, arguing that significant reforms are needed. Operating behind the scenes, special taxing districts have the power to tax, spend and issue debt just like traditional governments, yet they are far less accountable and transparent.

Typically created to levy new taxes and issue debt, special districts are driving much of the growth of total government spending at the local level, in part because they are not subject to state spending limits. Many of the services offered by special districts are functions that could either remain within the purview of traditional municipal governments or services that can be best provided by the private sector.

Few taxpayers are aware of special district spending, in part because elections for new special districts often occur at non-traditional times of year, when special-interest groups—in particular, labor unions—can rally their supporters to control their outcome. Voter turnout in special district elections rarely exceeds 20 percent.

According to U.S. Census data, total real per-capita local government spending (excluding education) grew 59 percent from 1977 to 2007, during which real per-capita special district spending more than doubled, growing 118 percent.

“If special district spending were a line-item in an average local government’s ledger, it would be the third largest spending item, right behind welfare and education,” said Slivinski. “Conservatives concerned about the overall size and scope of government should turn their attention toward special districts and how they violate the spirit of the government tax and expenditure limits that have been on the books for three decades in many states.”

Slivinski recommends several changes to state law related to special taxing districts, including requiring special districts to be subject to existing constitutional spending limits, increasing transparency safeguards, and ensuring that elections authorizing new special districts occur at times when a significant number of voters are likely to participate.

The Goldwater Institute will work with Arizona legislators this spring to implement several of these reforms.

“Special districts have long enjoyed loopholes that enable them to operate outside normal limits on good government, resulting in excessive tax burdens for hardworking Arizonans,” said Representative Justin Olson, who will introduce legislation this session to curb special district abuses. “It’s time to bring special districts into the light of day.”

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To schedule an interview with Steve Slivinski, please contact Michael Kelly with the Goldwater Institute at (602) 633-8965 or mkelley@goldwaterinstitute.org. The Goldwater Institute has an in-house VideoLink studio for rapid cable hook-up if needed.

 

 

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