© 2000, Regional Research Institute, WVU. No portion of this Web site can be reproduced on paper or electronically without express permission from the Regional Research Institute. An Introduction to State and Local Public Finance Thomas A. Garrett, Assistant Professor Department of Agricultural Economics 306A Water Hall Kansas State University Manhattan, Kansas 66506 (785) 532-3526 Fax: (785) 532-6925 email: tgarrett@agecon.ksu.edu John C. Leatherman, Assistant Professor Department of Agricultural Economics 331F Waters Hall Kansas State University Manhattan, Kansas 66506 (785) 532-4492 Fax: (785) 532-6925 email: jleather@agecon.ksu.edu Table of Contents Overview PART 1 - GOVERNMENT GROWTH, TAXES AND TAX THEORY I. The Growth of State and Local Governments - Revenues and Expenditures     A. Evidence on the Growth of State and Local Governments     B. Explaining the Growth of State and Local Governments     C. The Changing Responsibilities of State Governments         i. Education         ii. Highways         iii. Public Welfare         iv. Health Care         v. Corrections         vi. Other Expenditures     D. Conclusion II. Funding State and Local Government - State and Local Taxes     A. State and Local Government Revenue         i. State Government Revenue         ii. Local Government Revenue     B. The Sales Tax         i. State Sales Taxes         ii. Local Sales Taxes         iii. Generating Sales Tax Revenues - Issues for State and Local Governments                a. Taxing Electronic Commerce                b. Cross-Border Shopping     C. The Personal Income Tax         i. The Marginal Tax Rate         ii. The Average Tax Rate         iii. Tax Incidence                a. Regressive, Progressive and Proportional Taxes     D. The Corporate Income Tax     E. Excise Taxes     F. Property Taxes         i. Computing the Property Tax         ii. Advantages and Disadvantages of the Property Tax     G. Other Revenue Sources - Intergovernmental Revenue, User Fees and State Lotteries     H. Conclusion    A. Distributional Effects of Taxation - Tax Incidence         i. Single-Market Analysis of Tax Incidence                a. A Unit Tax on Buyers and Sellers                b. A General Rule of Tax Incidence     B. Efficiency         i. Computing the Efficiency Loss From a Tax                a. Efficiency Loss from a Unit Tax                b. Efficiency Loss from an Ad Valorem Tax         ii. The Efficiency/Equity Tradeoff    C. Two Models of Optimal Taxation         i. The Ramsey Rule        ii. Tax Rates, Tax Bases and Tax Revenues - The Laffer Curve                a. Empirical Estimation of the Optimal Tax Rate using the Laffer Curve    D. Conclusion PART 2 - SELECTED APPLICATIONS IN PUBLIC FINANCE IV. Revenue Forecasting    A. Introduction    B. The Forecasting Process    C. Forecasting Methods         i. Qualitative Forecasting Methods                a. Judgemental Forecasting         ii. Quantitative Forecasting Methods                a. Time Series Approaches                b. Descriptions of Time Series Forecasting Models                     1. Naive Forecasting                     2. Moving Average Models                     3. Exponential Smoothing Models                     4. The Holt Model                     5. Damped Trend Exponential Smoothing                     6. Holt-Winter’s Linear Seasonal Smoothing                     7. Box-Jenkins ARIMA Models                     8. Causal Models    D. Conclusion V. Cost-Benefit Analysis    A. Steps in Performing Cost-Benefit Analysis         i. Identifying Stakeholders to the Analysis         ii. Identify Alternative Policies to be Included        iii. Identify Likely Physical Impacts and Indicators         iv. Predict the Impacts over the Life of the Project        v. Monetize All of the Impacts        vi. Find the Present Value of Dollar Amounts        vii. Add up the Costs and Benefits         viii. Perform a Sensitivity Analysis         ix. Select the Preferred Alternative     B. Theoretical Foundations in Cost-Benefit Analysis    C. Net Present Value     D. Estimating Values         i. Social Surplus         ii. Estimating Values in Cost-Benefit Analysis                a. Values from Observed Behavior                     1. Project Revenues as Benefits                     2. Estimating Demand Curves                     3. Market Analogy                     4. Intermediate Goods                     5. Asset Values                     6. Hedonic Pricing                     7. Travel Cost Method                     8. Defensive Expenditures                b. Contingent Valuation               c. Shadow Prices    E. Common Errors in Cost-Benefit Analyses         i. Errors of Omission         ii. Forecasting Errors        iii. Measurement Errors         iv. Valuation Errors         v. Indirect Impacts         vi. Double-counting        vii. The Value of Labor     F. Conclusion VI. Fiscal Impact Analysis     A. Planning Approaches         i. Projecting Population        ii. Projecting Costs         iii. Projecting Revenues         iv. Considerations In the Use of Planning Methods    B. Case Study Approach         i. Summary of Procedures     C. Econometric Approaches         i. Econometric Specification of Public Sector Supply and Demand         ii. Conjoined Modeling Approaches    D. Conclusion VII. Chapter Conclusion References Back to List of Contributions Back to Web Book