County Governments and Democratic Decision Making: Explaining Why Counties Seek Approval of Local Option Sales Taxes

Local option sales taxes have become an important source of local revenue across the United States. Thirty-three of the 50 states have granted authorization to their counties or cities (or both) to levy local option sales taxes, and said taxes generated nearly $50 billion in 2005, which accounted for 11% of all local tax revenue nationwide. Even though local option sales taxes have significant impacts on a county's ability to fund programs and services, little has been written about the decisions of counties to place such taxes on the ballot. Using demographic, fiscal, and political variables, a model is developed that explains the decision to place a county transportation sales tax on the ballot. Modeling and analysis reveal that counties behave strategically as the impact of demographic, fiscal, and political factors on the decision to place a local option sales tax on the ballot is shaped by whether the county is making an initial attempt to adopt, a subsequent attempt to adopt after voter rejection, or a renewal attempt when an existing local option sales tax is nearing its sunset date.