User Charges to Fund State and Local Infrastructure Services (original) (raw)

2018

Abstract

Twenty years ago, current user charges accounted for 17.7% of United States state and local general revenues from own-sources. That put it well behind the revenue importance of both the sales and gross receipts (24.8%) and property tax (22.5%) categories and (nearly) the same as the sum of the individual and corporate income tax (17.8%). Today, current charges account for 21.1% of state/local own source general revenues—eclipsing the income taxes (18.6%), nearly on par with the property tax (21.2%) and closing in on the sales and gross receipts category (23.6%). Looking ahead, there are four reasons why this trend is likely to continue. The first is the generally recognized need to improve the nation’s physical infrastructure and the recent literature on how to pay for it (e.g., Pagano, 2011, McNichol, 2016; McKinsey, 2017; Geddes, 2017; McBride, 2018; Schanzenbach, Nunn and Nantz, 2017). Second is the “fiscal squeeze” as the relative revenue productivity of the former “big three” (...

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