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Enterprising Government: The Political and Financial Effects of Fee-Supported Municipal Services

Author: HEE SOUN JANG and MYUNGJUNG KWON
Published in PAQ, Vol. 38 No. 2

A market-like service delivery mechanism which shifts tax-supported general fund services to fee-supported enterprise fund services has become a popular strategic tool for cities to achieve more responsive and efficient finance systems. Although the major advantage of fee- supported services is the ability to earn rather than spend, not all local governments utilize them. By employing the two stage Heckman model, this research explores Florida municipalities’ strategic behaviors of introducing and increasing fee-supported services. We found that cities that have limited property tax revenue to provide general fund supported services are more likely to introduce and increase fee- supported services. Another important discovery is that the strong mayor form of government tends to favor the fee-supported services more than council-manager cities.

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