Measuring Disparities in Non-School Costs and Revenue Capacity among Massachusetts Cities and Towns Measuring Disparities in Non-School Costs and Revenue Capacity among Massachusetts Cities and Towns

By Katharine Bradbury and Bo Zhao

This paper develops new measures of environmental costs and local revenue capacity as the basis for a new municipal aid formula in Massachusetts. On the cost side, unlike previous studies, we quantify the effects on local non-school spending of characteristics related to uncontrollable costs. On the capacity side, we account for the constraints of a tax limitation, for the first time in the literature, by estimating these constraints as a function of residents' incomes. The estimates of costs and capacity indicate substantial inter-local fiscal disparities in Massachusetts. Our approach is potentially applicable to other states.

Also released as New England Public Policy Center Working Paper No. 06-3.

This paper was revised in May 2007.