Short-term effects of a 1990s-era property tax limit: Panel evidence on Oregon's measure 5

Since the early 1990s, a number of states have imposed limitations on local public school revenues and expenditures. I consider the effects of this trend, which has been likened to the "local property tax revolt" of the 1970s, on the provision of local public education. I use a comprehensive panel of school districts from Oregon and Washington, with annual data from before and after Oregon imposed its limitation in 1990. Controlling for unobserved heterogeneity, I find that Oregon student-teacher ratios have increased significantly as a result of the state's tax limitation. However, I find that the ratio of administrative to educational spending has remained unchanged, or may have even increased, in the wake of the tax limit, suggesting that the incidence of the tax limitation has been borne by instruction at least as much as by administration. I also investigate the distributional effects of this limitation.