Work

Effect of local government taxes and spending on the redevelopment of commercial property

Year: 2026

Type: article

Abstract: We provide the first causal evidence of the effect of taxation and spending on the redevelopment of commercial property. We analyze a unique dataset of local government property tax levies to renew current expense funding for general operating purposes. Our regression discontinuity approach finds cities that vote to renew taxes and spending have more redevelopment of commercial property than cities that cut balanced-budget funding by an average of 21%. Demolition doubles, and new construction increases an average of 48%. The results hold for cities in urban areas, service sector-oriented cities, and cities with above-median population growth. We even find that renewing funding for local government services spurs more commercial redevelopment in cities with declining populations, but only in a sample that allows outliers. Firms seem to value local government spending more than cutting taxes.

Source: Regional Science and Urban Economics

DOI: 10.1016/j.regsciurbeco.2026.104202

Authors: David M. Brasington, Daniel P. McMillen, Evan Carson

Institutions: University of Cincinnati, University of Illinois Chicago

Language: English

Topic: Local Government Finance and Decentralization

Subfield: Political Science and International Relations

Field: Social Sciences

Domain: Social Sciences

SDG: Sustainable cities and communities

Open Access status: hybrid

Estimated APC paid: $3,600