Shrinking Local Governments

In President Barack Obama's era of big government, many upset voters have justifiably focused on shrinking federal and state government.  However, voters should also shrink many local governments.  Just consider Montgomery County (Mo Co), Maryland, among America's biggest local governments. 

Compared with the 22 other Maryland counties and Baltimore City, Mo Co is the biggest taxer and spender1.  In 2010, when Mo Co spent $4.5 billion total in its operating budget, Mo Co residents had a local tax/fee burden, which includes local property, income, and other taxes/fees2, of $3,324 per person, and Mo Co spent $4,604 per person.

Table 1 shows Mo Co's taxing and spending rates relative to the rates of other local governments in Maryland with high taxes and spending.  Of these local governments, Howard County's tax/fee burden per person is closest to Mo Co's ($2,826 versus $3,324), while Prince George's County's spending per person is closest to Mo Co's ($3,012 versus $4,604).

Table 1: The Top Five Tax/Fee Burdens per Person* and Spenders per Person+ in 2010 among Maryland's Local Governments

Local Government

Local Tax/Fee Burden (per person)

Local Spending

(per person)

Mo Co

3,324

4,604

Howard County

2,826i

2,857ii

Baltimore City

2,106

2,846

Charles County

2,031

2,089

Prince George's County

1,660

3,012

* To calculate local tax/fee burdens per person, this article 1) added all local taxes and fees, 2) excluded such revenue sources as intergovernmental or state/federal taxes/fees/grants, capital revenues, tobacco settlement payments, video game revenue, and interest on investments, and then 3) divided the total taxes/fees by the local jurisdiction's 2010 total population.

+To calculate spending per person, this article divided total spending by the local jurisdiction's 2010 total population.

iIn 2010 budget, see p. 16

iiSee p. 7

Throughout the United States, property, sales, or income taxes are local governments' biggest sources of tax revenue.  Even though most local governments impose no income tax, of the 4,940 local governments that do, Mo Co has the fourth-highest rate with 3.2%.  Also, Mo Co ranks 86th of 3,000 counties for its 5-year average median property tax of $3,497 per home.  The U.S. Census Bureau, the central source for federal, state, and local tax information, doesn't tally total local tax/fee burdens or spending by local jurisdictions, so it's difficult to know which local jurisdictions have the highest total local tax/fee burdens or spending.  However, using information the Tax Foundation compiled and local governments' 2010 operating budget information, Table 2 shows that relative to the U.S. local governments with the top three highest property, income, or sales taxes, Mo Co has the highest total local tax/fee burden per person and spending per person.  Of these local governments, Chicago's tax/fee burden per person is closest to Mo Co's ($2,404 versus $3,324), and Philadelphia's spending per person is closest to Mo Co's ($2,421 versus $4,604).

Table 2: Local Tax/Fee Burdens per Person and Spending per Person in 2010 by U.S. Local Governments with Highest Property, Income, and Sales Taxes

Highest Property Taxes

Local Government

Median Property Tax Paid on Homes

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Hunterdon County, NJ

$8,216

$571

$734

2. Nassau County, NY

8,206

2,020

2,400

3. Westchester County, NY

8,160

1,278

1,917

    Mo Co

3,497

3,324

4,604

Highest Income Taxes

Local Government

Local Income Tax Rate

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Philadelphia, PA

3.93%

$1,927

$2,421

2. Reading, PA

3.6

1,314

1,364

3. Scranton, PA

3.4

957

1,023

    Mo Co

3.2

3,324

4,604

Highest Sales Taxes (among major cities only)

Local Government

Local Sales Tax Rate

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Birmingham, AL

6%

$1,506

$1,842

2. Montgomery, AL

6

1,024*

1,188+

3. Chicago, IL

3.25

 2,404

 2,265

    Mo Co

0

3,324

4,604

*In 2012 budget, see p. 5

+See p. 46

To put Mo Co's taxing and spending habits further in perspective, consider that Mo Co's spending total of $4.5 billion in 2010 surpassed the 2010 Gross Domestic Products of 40 nations, such as Montenegro ($4 billion), Fiji ($3 billion), and Guyana ($2.2 billion).

Nevertheless, as with most other U.S. local governments, Mo Co spends most of its revenue on education, public works, and other functions.  However, while it's the 39th-most populated U.S. county, Mo Co has the fourth-greatest number of county employees among the most populated U.S. counties.  Also, Mo Co has several agencies not found in most local governments in the United States, such as the following:

  • Office of Human Rights: To "[p]romote...respect for cultural diversity[.]
  • "Commission for Women: "[To] identif[y] inequities in laws[.]"
  • Children, Youth, and Family Services: "[To] [p]romot[e] opportunities for children[.]"

These three agencies are difficult for Mo Co government to justify: Maryland state government has equivalents of these Mo Co agencies3, and Mo Co residents expect Mo Co government to focus on providing traditional county services, such as fire, emergency medical, and police.

 Even Mo Co agencies typical of U.S. local governments have programs, policies, and master plans that are absurd.  For one, the Mo Co Department of Economic Development (DED)'s Farmland Preservation programs have preserved 20% of Mo Co land4 from future development (an additional 20% of Mo Co land is preserved by federal/state programs or is publicly owned).  With 72,000, Mo Co ranks second in U.S. counties for total number of preserved acres of farmland.  According to DED, Mo Co's Farmland Preservation program provides scenic vistas and cleaner air, but "our work is not done."

In another example, the Mo Co Department of Permitting Services imposes absurd requirements on Mo Co residents who add such things as hot tubs, fences, and sheds to their property.  For instance, Mo Co residents must submit "two complete sets of [hot tub] plans assembled in a logical sequence and bound neatly."  Also, Mo Co residents' deer fences cannot exceed eight feet in height, must have clear views through the fences, and must comprise wood, metal, or fiberglass posts.  Mo Co residents can speed the permit-approval process if they "pay a fee for overtime work ... by ... staff ... if staff [is] available." 

As a third example, to reduce Mo Co residents' "carbon footprints," Mo Co's Planning Department and Department of Environmental Protection issued 2008's master plan, titled "A Framework for Action: Healthy and Sustainable Communities."  This plan directs Mo Co officials to do the following:

  • "[R]equire energy efficiency and promote higher [housing] densities"
  • "Encourage residents to reduce the number of [car] trips ... per day"
  • "Reduce parking required for new development to encourage alternative transportation"

Clearly, Mo Co is among America's biggest local governments, especially given Mo Co's taxation, spending, and absurd agencies, programs, policies, and plans.

How can Mo Co residents shrink Mo Co government?  Elect conservatives to Mo Co government to better control taxation, spending, and laws.  For starters, conservatives could (1) abolish Mo Co's income tax; (2) reduce Mo Co's property tax by at least 50%; (3) given these tax cuts, balance Mo Co's budget; (4) abolish Mo Co's Office of Human Rights, Commission for Women, and Children, Youth, and Family Services; and (5) repeal Mo Co's absurd programs, policies, and plans.  By taking such steps, Mo Co could become a model of how voters can shrink big local governments.

Daniel Smyth blogs at LibertyBlog.org and danielsmyth.org.

1See, e.g., pp. 37 and 40 of the Maryland Department of Legislative Services' Overview of Maryland Local Governments: Finances and Demographic Information (2012). 

2Mo Co, as with other U.S. local governments, has revenue sources for its operating budget besides taxes and fees, such as federal and state funds, which this article excludes in estimates of local tax/fee burdens.  Of course, local sales taxes and other taxes impact non-residents in a given local jurisdiction and thus make non-residents share residents' tax burden.  However, this article's estimates of tax/fee burdens include local sales taxes and other such taxes that impact non-residents as these taxes still impact residents.  Nevertheless, readers should view this article's estimates of local tax/fee burdens per person as overestimates.

3The state-level equivalents include the Maryland Commission on Civil Rights, Maryland Commission for Women, and the Governor's Office for Children.

4To get this percentage, add the 8,176 acres that the Montgomery County Agricultural Easement Program (AEP) preserved with the 52,052 acres that the Transferable Development Rights (TDR) Program preserved (AEP and TDR are the two Mo Co and not state/federal programs on the list).  Then, divide this sum by 316,800 acres, the total number of acres in Mo Co, and multiply by 100.

In President Barack Obama's era of big government, many upset voters have justifiably focused on shrinking federal and state government.  However, voters should also shrink many local governments.  Just consider Montgomery County (Mo Co), Maryland, among America's biggest local governments. 

Compared with the 22 other Maryland counties and Baltimore City, Mo Co is the biggest taxer and spender1.  In 2010, when Mo Co spent $4.5 billion total in its operating budget, Mo Co residents had a local tax/fee burden, which includes local property, income, and other taxes/fees2, of $3,324 per person, and Mo Co spent $4,604 per person.

Table 1 shows Mo Co's taxing and spending rates relative to the rates of other local governments in Maryland with high taxes and spending.  Of these local governments, Howard County's tax/fee burden per person is closest to Mo Co's ($2,826 versus $3,324), while Prince George's County's spending per person is closest to Mo Co's ($3,012 versus $4,604).

Table 1: The Top Five Tax/Fee Burdens per Person* and Spenders per Person+ in 2010 among Maryland's Local Governments

Local Government

Local Tax/Fee Burden (per person)

Local Spending

(per person)

Mo Co

3,324

4,604

Howard County

2,826i

2,857ii

Baltimore City

2,106

2,846

Charles County

2,031

2,089

Prince George's County

1,660

3,012

* To calculate local tax/fee burdens per person, this article 1) added all local taxes and fees, 2) excluded such revenue sources as intergovernmental or state/federal taxes/fees/grants, capital revenues, tobacco settlement payments, video game revenue, and interest on investments, and then 3) divided the total taxes/fees by the local jurisdiction's 2010 total population.

+To calculate spending per person, this article divided total spending by the local jurisdiction's 2010 total population.

iIn 2010 budget, see p. 16

iiSee p. 7

Throughout the United States, property, sales, or income taxes are local governments' biggest sources of tax revenue.  Even though most local governments impose no income tax, of the 4,940 local governments that do, Mo Co has the fourth-highest rate with 3.2%.  Also, Mo Co ranks 86th of 3,000 counties for its 5-year average median property tax of $3,497 per home.  The U.S. Census Bureau, the central source for federal, state, and local tax information, doesn't tally total local tax/fee burdens or spending by local jurisdictions, so it's difficult to know which local jurisdictions have the highest total local tax/fee burdens or spending.  However, using information the Tax Foundation compiled and local governments' 2010 operating budget information, Table 2 shows that relative to the U.S. local governments with the top three highest property, income, or sales taxes, Mo Co has the highest total local tax/fee burden per person and spending per person.  Of these local governments, Chicago's tax/fee burden per person is closest to Mo Co's ($2,404 versus $3,324), and Philadelphia's spending per person is closest to Mo Co's ($2,421 versus $4,604).

Table 2: Local Tax/Fee Burdens per Person and Spending per Person in 2010 by U.S. Local Governments with Highest Property, Income, and Sales Taxes

Highest Property Taxes

Local Government

Median Property Tax Paid on Homes

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Hunterdon County, NJ

$8,216

$571

$734

2. Nassau County, NY

8,206

2,020

2,400

3. Westchester County, NY

8,160

1,278

1,917

    Mo Co

3,497

3,324

4,604

Highest Income Taxes

Local Government

Local Income Tax Rate

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Philadelphia, PA

3.93%

$1,927

$2,421

2. Reading, PA

3.6

1,314

1,364

3. Scranton, PA

3.4

957

1,023

    Mo Co

3.2

3,324

4,604

Highest Sales Taxes (among major cities only)

Local Government

Local Sales Tax Rate

Total Tax/Fee Burden (per person)

Total Spending  (per person)

1. Birmingham, AL

6%

$1,506

$1,842

2. Montgomery, AL

6

1,024*

1,188+

3. Chicago, IL

3.25

 2,404

 2,265

    Mo Co

0

3,324

4,604

*In 2012 budget, see p. 5

+See p. 46

To put Mo Co's taxing and spending habits further in perspective, consider that Mo Co's spending total of $4.5 billion in 2010 surpassed the 2010 Gross Domestic Products of 40 nations, such as Montenegro ($4 billion), Fiji ($3 billion), and Guyana ($2.2 billion).

Nevertheless, as with most other U.S. local governments, Mo Co spends most of its revenue on education, public works, and other functions.  However, while it's the 39th-most populated U.S. county, Mo Co has the fourth-greatest number of county employees among the most populated U.S. counties.  Also, Mo Co has several agencies not found in most local governments in the United States, such as the following:

  • Office of Human Rights: To "[p]romote...respect for cultural diversity[.]
  • "Commission for Women: "[To] identif[y] inequities in laws[.]"
  • Children, Youth, and Family Services: "[To] [p]romot[e] opportunities for children[.]"

These three agencies are difficult for Mo Co government to justify: Maryland state government has equivalents of these Mo Co agencies3, and Mo Co residents expect Mo Co government to focus on providing traditional county services, such as fire, emergency medical, and police.

 Even Mo Co agencies typical of U.S. local governments have programs, policies, and master plans that are absurd.  For one, the Mo Co Department of Economic Development (DED)'s Farmland Preservation programs have preserved 20% of Mo Co land4 from future development (an additional 20% of Mo Co land is preserved by federal/state programs or is publicly owned).  With 72,000, Mo Co ranks second in U.S. counties for total number of preserved acres of farmland.  According to DED, Mo Co's Farmland Preservation program provides scenic vistas and cleaner air, but "our work is not done."

In another example, the Mo Co Department of Permitting Services imposes absurd requirements on Mo Co residents who add such things as hot tubs, fences, and sheds to their property.  For instance, Mo Co residents must submit "two complete sets of [hot tub] plans assembled in a logical sequence and bound neatly."  Also, Mo Co residents' deer fences cannot exceed eight feet in height, must have clear views through the fences, and must comprise wood, metal, or fiberglass posts.  Mo Co residents can speed the permit-approval process if they "pay a fee for overtime work ... by ... staff ... if staff [is] available." 

As a third example, to reduce Mo Co residents' "carbon footprints," Mo Co's Planning Department and Department of Environmental Protection issued 2008's master plan, titled "A Framework for Action: Healthy and Sustainable Communities."  This plan directs Mo Co officials to do the following:

  • "[R]equire energy efficiency and promote higher [housing] densities"
  • "Encourage residents to reduce the number of [car] trips ... per day"
  • "Reduce parking required for new development to encourage alternative transportation"

Clearly, Mo Co is among America's biggest local governments, especially given Mo Co's taxation, spending, and absurd agencies, programs, policies, and plans.

How can Mo Co residents shrink Mo Co government?  Elect conservatives to Mo Co government to better control taxation, spending, and laws.  For starters, conservatives could (1) abolish Mo Co's income tax; (2) reduce Mo Co's property tax by at least 50%; (3) given these tax cuts, balance Mo Co's budget; (4) abolish Mo Co's Office of Human Rights, Commission for Women, and Children, Youth, and Family Services; and (5) repeal Mo Co's absurd programs, policies, and plans.  By taking such steps, Mo Co could become a model of how voters can shrink big local governments.

Daniel Smyth blogs at LibertyBlog.org and danielsmyth.org.

1See, e.g., pp. 37 and 40 of the Maryland Department of Legislative Services' Overview of Maryland Local Governments: Finances and Demographic Information (2012). 

2Mo Co, as with other U.S. local governments, has revenue sources for its operating budget besides taxes and fees, such as federal and state funds, which this article excludes in estimates of local tax/fee burdens.  Of course, local sales taxes and other taxes impact non-residents in a given local jurisdiction and thus make non-residents share residents' tax burden.  However, this article's estimates of tax/fee burdens include local sales taxes and other such taxes that impact non-residents as these taxes still impact residents.  Nevertheless, readers should view this article's estimates of local tax/fee burdens per person as overestimates.

3The state-level equivalents include the Maryland Commission on Civil Rights, Maryland Commission for Women, and the Governor's Office for Children.

4To get this percentage, add the 8,176 acres that the Montgomery County Agricultural Easement Program (AEP) preserved with the 52,052 acres that the Transferable Development Rights (TDR) Program preserved (AEP and TDR are the two Mo Co and not state/federal programs on the list).  Then, divide this sum by 316,800 acres, the total number of acres in Mo Co, and multiply by 100.

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