Local governments provide more or less similar and comparable public services like police protection, fire control, roads, water and sewer, parks and recreation, public improvements, planning and zoning, and general administrative services to the residents in their jurisdictions. Yet, there are significant variations in the per capita expenditures of public service expenditures of comparable communities. What are the factors that explain these variations? This study attempts to answer the above questions using an extensive panel data of forty-six fast growing local governments in the State of Michigan. The explanatory variables considered in the study are population size, population growth rate, population density, type of government structure, per capita values of different types of property, and location of community in relation to metropolitan areas. A Fixed Effects econometric model was employed to analyze the data sets. The results showed that: (1) per capita public service expenditures of fast growing communities vary widely, (2) cities and townships of different population sizes have different expenditure patterns, and (3) communities located close to metropolitan districts have higher expenditures than those located farther away. More importantly, while the explanatory power of all variables varied across community groups, the per capita value of total property was found to be a consistently significant variable in explaining the variations in expenditures of local governments. If population growth into smaller size communities is re-directed, the savings that could be obtained from the joint impact of increased population and a dense new residential development could be substantial.


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