Budget Impact and Voter Response To Tax Limitation Referenda

Abstract

This article analyzes the determinants of voter behavior on three tax limitation referenda on the ballot in Michigan in 1978. A framework based on the demand for and supply of state and local government output is used in analyzing county level cross-sectional data. Many significant relationships are demonstrated between supply and demand variables and voter response to an incremental tax limitation proposal. A somewhat similar outcome is found for a proposal which would have completely reformed elementary and secondary school finance. However, for a proposal which would have slashed property taxes, there were few statistically significant relationships between voting behavior and the independent variables. This may have been due to the great uncertainty which surrounded this proposal's implications. For two of the three proposals, the level of residential property taxes has a significant impact on voter response. However, in no case was the rate of change in these taxes found to influence voter behavior. The results generally indicate the appropriateness of analyzing tax limitation referenda in the traditional context of demand for government output, when the effects of the referenda are relatively clear.

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