Population Change and Fiscal Stress in Missouri’s Third Class Counties

Editor’s note
The following abstract describes a publication that is part of the Ballard Local Government Series. This publication is only available as a PDF via the “Download this publication” button.

Judith I. Stallman
Professor emeritus agricultural and applied economics and public affairs
Austin Sanders
Master’s student in agricultural and applied economics

 Executive summary

  • County government fiscal stress is defined as an increasing share of local income going to taxes.
  • A long-term trend of population change may be a source of fiscal stress. To examine the relationship between population change and county fiscal stress, Missouri’s third class counties are classified into four population change categories: high-growth, medium-growth, slow-growth and population-loss.
  • County costs are growing faster than costs in the economy as a whole.
  • Population-loss counties are more likely to face fiscal stress due to increasing per capita costs as population falls.
  • Slow-growth counties may face fiscal stress if costs rise faster than local income.
  • Population-loss and slow-growth counties have increasing revenues per $100 of income. This is an indicator of fiscal stress. In addition, revenues per $100 of personal income are higher than in the other counties over the time period. This suggests that these counties may been in fiscal stress before 1996.   
  • Population-loss counties have higher per capita incomes than the other county types, but they still collect a higher share of income in taxes.
  • High-population-growth counties may outgrow the existing capacity of some services and periodically make large investments to address capacity constraints. These periodic investments may leave high-growth counties temporarily exposed to fiscal stress. This exposure to fiscal stress decreases as the population continues to grow and the tax base increases.
  • The medium-population-growth counties show the most stable tax revenues as a percentage of income.
  • Another source of fiscal stress may be choices that counties make. Sales taxes are less stable than property taxes, but are the largest source of county revenues in all county types.
  • Not all taxes are paid out of local personal income. Property taxes are paid by business and land owners who do not live in the county. Taxable sales may be made to businesses and consumers who do not live in the county. We do not have the data to estimate these outside contributions to local taxes.

Topics

  • Cash balances
  • County budgets
  • County receipts
  • County revenues
  • Fees and charges for services
  • Intergovernmental funds
  • Per capita costs
  • Per capita income and inflation
  • Third class county population change
  • Third class county population growth rates
  • Property and sales tax receipts
  • Tax bases and fiscal stress
  • Tax bases per $100s of income
  • Tax bases per capita
  • Tax base trends

Pages

  • 15