Factors influencing the extent of local public spending through contracting-out and intermunicipal contracting in New York: focusing on institutional constraints, histories, and fiscal capacity

Abstract

This research considered levels of public service spending according to the alternative service arrangements, and examined how the property tax cap as an external constraint, local histories, and local fiscal capacity are related to the spending in the context of the state of New York. This study provides empirical evidence that the property tax cap positively influenced local spending through contracting out, while the same variable negatively affected the spending through intermunicipal contracting. Second, the previous level of public spending was positively associated with the current level of public spending through contracts with other municipalities, but this is not the case for contracts with nongovernmental providers. In addition, in deciding the extent of public spending through contracting out, local government officials were influenced by the factors of fiscal capacity, indicated by budget solvency and tax revenues.