Responsible researcher: Bruno Benevit
Original title: The Impact of Court-Ordered District Elections on City Finances
Author: Richard T. Boylan
Intervention Location: United States
Sample Size: 1,724 municipalities
Sector: Public Sector Economy
Variable of Main Interest: Allocation of public expenditure
Type of Intervention: District election
Methodology: DID
Summary
Institutional arrangements influence the definition of how public management is carried out. In this sense, electoral rules are decisive both for the representation of the population and for the way in which public resources are allocated. To assess how transitions from general to district elections affect public management, this study examined reforms in municipal council elections implemented by courts of law in the United States starting in the 1970s. Although these reforms were implemented with the aim of improve the representation of minorities, the identified results revealed that such reforms induced the occurrence of the common fund problem, that is, cities that adopted district elections increased their spending in areas outside of infrastructure. The article also suggests that this change may be long-lasting, highlighting the potential conflict between the goals of equal representation and efficient governance.
The institutional arrangement plays a central role in public management, defining the rules and mechanisms by which political decisions are made and how resources are allocated. The form of election directly influences both the representation of voters and the efficiency in the allocation of public resources, which can take place, among other ways, in a general ( at-large ) or district format. In general elections, all city voters vote to choose all council members. In this modality, there is a tendency for representatives to focus on policies of broader interest. In district elections, representatives are elected by specific districts and, therefore, tend to focus more on the demands of their regions, which can increase local representation, but also lead to distributive conflicts within the city (BOYLAN, 2019).
Among these conflicts, the common fund problem represents one of the possible conflicts fostered by the format of district elections. According to the author, when municipal council members are elected by districts, they tend to value the benefits of public spending in their areas more than the total costs for the city (BOYLAN, 2019). This occurs because each representative internalizes only a fraction of the total costs of spending, but receives the full benefits for their district. Representatives have an incentive to promote more spending in their regions, which can lead to an increase in public spending, especially in areas outside of infrastructure, such as various public services.
Thus, the adoption of district elections can have lasting effects on public management. These effects may be different when such a format is imposed by court decisions to correct electoral inequalities, since the reasons for the imposition of these decisions may be associated with different institutional aspects of localities that voluntarily adopted district elections. This reflects both a possible conflict between the objectives of greater political representation of minorities and efficiency in public management, as well as the role of electoral institutions in defining these dynamics. Therefore, it is important to balance the search for equitable representation with the need to avoid excess expenses resulting from the common fund problem.
The institutional chronology of elections in the United States was strongly influenced by the struggle for civil rights, seeking to increase the participation of minorities in the electoral process. In 1964, only 38% of the black voting-age population in southern states was registered. This low turnout was due to local and state policies that prevented voting, such as literacy tests. The Voting Rights Act of 1965 banned many of these practices, resulting in a significant increase in the number of black voters. In response, some cities changed their electoral rules to maintain political control, transforming district elections into general elections. From 1975 onwards, this movement began to be challenged in court, where courts began to declare general elections unconstitutional in municipalities with a history of discrimination against minorities.
In this context, the adoption of district elections in American municipalities could occur in two ways: voluntary or by court order. In the case of cities where district elections were judicially required, the objective was to correct discriminatory practices that, through general elections, prevented minorities from having proportional representation in municipal councils. On the other hand, there were cases in which cities adopted district elections voluntarily, as a way of anticipating demographic changes or reforming local administration, often motivated by fear of future judicial interventions. Although the mechanisms were different, both cases resulted in the implementation of district electoral systems, directly affecting the composition of councils and the distribution of power.
In the study, cities were categorized according to their demographic, economic and regional characteristics. Cities that held general elections tended to experience greater median income growth and were primarily located outside the southern United States, where there was less judicial pressure. Cities that adopted court-ordered district elections generally had larger black populations, were located in southern states and had lower economic growth. This regional and socioeconomic differentiation highlights the heterogeneity of these municipalities, indicating different effects of electoral reforms on the level of public spending and the distribution of resources between different types of cities.
This study was based on a database of 1,809 cities that at some point elected members of their municipal councils through general elections between 1965 and 1974. In this sample, the first adoption of district elections occurred only in 1973. Additionally, it was verified whether these cities adopted district elections until 2002 and whether this adoption was imposed by court order or adopted voluntarily. For the analyses, the variable of main interest considered whether the majority of council members were elected by districts.
The court order enforcement process refers to interventions by court decrees, court settlements, or actions by the U.S. Department of Justice, in cities covered by section 4 of the Voting Rights Act . Voluntary adoptions of district elections were also taken into account, although they often occurred under the implicit threat of legal action or the threat of loss of future representation by the white population (TREBBI; AGHION; ALESINA, 2008).
The metrics used by the author to evaluate the impact of district elections focus on the variation in municipal spending between 1977 and 2002, using fiscal data from the US Census of State and Local Finances . Thus, spending on infrastructure was observed, not related to infrastructure, police, firefighters, highways, health and social assistance, utilities, and others. Cities that had public services, such as hospitals and electricity utilities, often had very volatile expenses, which made direct comparisons with other cities difficult. To reduce volatility in expenditure data, the author adjusted the numbers by subtracting expenditure on electricity and hospitals, given that these expenditures represented a significant portion (more than 80%) of current expenditure in some cities. State spending data was also considered as a robustness test, in addition to other demographic measures of the cities according to census data from 1970 to 2010.
To analyze the impact of district elections on municipal spending, a model was created using a dependent variable that captured the variation in per capita spending between 1977 and 2002 in logarithmic terms. As an explanatory variable, an indicator was considered for cities that had adopted district elections until 2002. In addition, control variables included changes in population, median income and the proportion of black population during the period.
In addition to the base model, a model based on percentiles was used, which compared cities with similar spending levels over the period, aiming to capture differences in spending behavior. Furthermore, an analysis was also carried out considering the moment in which district elections were adopted, differentiating between cities that had implemented the system before and after 1986, the year in which legal changes altered the conditions of discrimination faced by minorities in electoral contexts.
The study also presents a series of robustness tests to investigate possible omitted variables that could influence the results. First, the hypothesis was evaluated that already existing progressive policies in the treated cities could have anticipated changes in electoral rules. To this end, the variation in per capita spending between 1967 and 1977 was analyzed. Additionally, it was examined whether judicially imposed district elections, less influenced by progressive agendas, impacted spending. Another analysis considered the hypothesis that advances in civil rights for minorities explained the increase in spending, using proxies such as school desegregation plans, changes in voter turnout, and residential segregation. The author also tested whether the demand for greater non-infrastructure spending, common among cities in the same state, could be correlated to district elections. Thus, state spending was analyzed as an external variable.
Finally, the analysis used the semiparametric difference-in-differences (DID) estimator, weighting control cities based on the probability of adopting district elections depending on their characteristics. The model considered as selection variables the proportion of the black population in 1977, whether the city was under the jurisdiction of section 4 and the growth of population, income and the black population. The impacts of district and court-mandated elections on non-infrastructure spending were examined, comparing allocations between categories such as fire protection and roads.
Results from the main analyzes indicated that district elections increased non-infrastructure municipal spending by 9.1%. According to the author, these expenses indicated an adjustment of cities initially with lower expenses. In 1977, cities with court orders spent 10% less than cities with general elections, although they reached similar levels in 2002, even with a drop in median income. Furthermore, when evaluating spending in percentiles, it was observed that district elections raised the percentile position of cities by 6 points, confirming that such elections boosted spending not related to infrastructure.
Regarding robustness tests, the results showed that district elections increased municipal spending not related to infrastructure. The model that used percentiles indicated that these elections increased the position of municipal spending by 6 percentage points. When comparing cities that adopted district elections before and after 1986, an increase of 11% in spending was observed for earlier adoptions and 6.8% for later ones, although without a statistically significant difference.
Regarding robustness tests related to possible impacts of social issues and pre-existing progressive agendas, the results showed that the impact of district elections on spending is related to the way council members are elected, aligning with the underlying problem common or minority representation on the board.
Regarding the DID model estimates, evidence indicated that district elections increased non-infrastructure municipal spending. Additionally, results showed that court-ordered and non-court-ordered district elections had similar impacts on overall spending, but allocated resources differently, with greater emphasis on fire protection and less on highways. Spending on health and social assistance was less affected, possibly due to the smaller sample size and the administration of these programs at the state level.
In this article, the author analyzed the effects of district elections on municipal spending, using several empirical approaches to assess how changes in the electoral system impact the allocation of public resources. The results indicated that district elections increased non-infrastructure spending and changed its composition, prioritizing categories such as fire protection over investments in highways. Additionally, it was found that the observed effects were consistent both in cities that adopted the system through judicial imposition and in those that carried out the transition voluntarily.
The evidence from this study offers important support for the formulation of public policies, highlighting the role of the electoral system in managing public spending. Considering the relevance of budgetary decisions for the well-being of the population, policies that promote more efficient planning of resource allocation can be developed based on the identified impacts of district elections.
References
BOYLAN, RT The Impact of Court-Ordered District Elections on City Finances. The Journal of Law and Economics , vol. 62, no. 4, p. 633–661, nov. 2019.
TREBBI, F.; AGHION, P.; ALESINA, A. Electoral Rules and Minority Representation in US Cities * . Quarterly Journal of Economics , vol. 123, no. 1, p. 325–357, Feb. 2008.
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