Abstract

This empirical study pursued three objectives. First, it sought to determine whether there is a statistically significant difference in environmental spending between coastal and not coastal counties. It also investigated whether there is a statistically significant difference in the intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural), and how this changes controlling for political orientation. T-test analysis found that coastal counties spend significantly more on environmental protection efforts than their non-coastal counterparts. Further, from the surveyed counties, one-way analysis of variance (ANOVA) and ANCOVA tests showed that there was no statistically significant difference in intergovernmental revenue growth by county type (metro/suburban/rural) even after adjusting for political orientation. The study used data from the Florida County Government survey, which incorporated 30 counties ranging from metro, to suburban and rural. The findings of the study will go a long way towards informing policy decisions on intergovernmental revenue at both local and state levels.

A study on Environmental Spending and Intergovernmental Revenue Growth by County Type: A Case of Florida

The past few decades have seen a trend towards decentralization of revenue-raising and spending responsibilities from the national government to subnational levels, which are state and local governments (Minassian, 2003). Sources identify several reasons for this trend. First, Minassian (2003) argues that such decentralization enhances more participatory and democratic forms of government, making political leaders at the subnational level more accountable and responsive to the people who elected them. When revenue-raising and spending decisions are made at the subnational level, elected leaders have more room to influence the composition, quality, and quantity of public goods and services in line with the needs of their electorate (Minassian, 2003). Proponents also argue that such decentralization fosters efficiency in the allocation of resources (Minassian, 2003).

At the same time, decentralization has its share of challenges. First, subnational governments have an edge in the provision of public services, while the central government has an edge when it comes to revenue-raising as it has access to more productive revenue sources (Kim & Smoke, 2001). Thus, subnational governments face a mismatch between available local resources and expenditure that the public expects them to undertake (Kim & Smoke, 2001). Further, subnational jurisdictions have different revenue-raising capacities (Kim & Smoke, 2001). Thus, if decentralized units were to operate exclusively on revenues generated locally, less wealthy states and counties would be disadvantaged and may be unable to provide essential services and infrastructure to their electorate (Kim & Smoke, 2001). This raises equity concerns and affects the efficient use and allocation of public resources. Thirdly, due to limitations in revenue-raising sources, subnational units may not adequately meet basic national priority needs such as provision of sanitation facilities, roads, education, and health, which may ultimately increase poverty rates (Kim & Smoke, 2001).

All these challenges point to the need for subnational governments to increase their revenue sources to be more effective in meeting the needs of their electorate. According to the United States Census Bureau, one way by which subnational jurisdictions could increase their revenue is through growing their intergovernmental revenue (US Census Bureau, n.d.).

Using the State of Florida as a case study, this study seeks to determine the factors influencing intergovernmental revenue growth in county governments. The findings will go a long way towards informing policy at the state and national government levels. Policymakers will have clearer insights on where to focus their efforts to ensure that counties move at par in intergovernmental growth and are able to meet basic national priority needs. The national priority need selected for analysis in this study is environmental sustainability.

The study seeks to answer three research questions:

RQ 3: Is there a significant difference in the percent of total spending that is environmental spending between coastal counties and non-coastal counties?

RQ 4: Is there a significant difference in the intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural)?

RQ 5: Controlling for political orientation (political), is there a significant difference in the intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural)?

Literature Review

This literature review is divided into three sections. The first section covers the definition of intergovernmental revenue and what categories of funds are reported as such revenue. The second section reviews literature on the factors influencing government spending on environmental protection, while the final section reviews literature on the factors influencing revenue mobilization and growth in counties.

What is Intergovernmental Revenue?

The US Census Bureau defines intergovernmental revenue as all funds received from other jurisdictions, including shared taxes, grants, proceeds of reimbursement for services performed for other governments, advances from other governments towards particular functions, advances from other governments received as general financial support, and contingent loans received from other governments to run projects in the receiving jurisdiction (US Census Bureau, n.d.). Funds received from other governments for utility services and property sales are not categorized as intergovernmental revenue as they are reported in a different category of revenue (US Census Bureau, n.d.). Intergovernmental revenue does not also include insurance trust funds or funds paid to the recipient government as the employer share of pension contributions (US Census Bureau, n.d.). Governments classify intergovernmental revenue by the origin of funds - that is local, state, or federal (US Census Bureau, n.d.). Funds received by local governments from the federal government through the state government are recognized as state intergovernmental revenue (US Census Bureau, n.d.).

Factors Influencing Attitudes towards Environmental Protection and Spending

Studies identify different factors that influence a jurisdictions attitudes towards the environment and consequently, environmental spending. In one of the earliest studies, Foster and McBeth (1996) measured attitudes towards environmental quality of life and economic development among 187 development officials drawn from a range of urban and rural cities. The study characterized an urban city as one with a population exceeding 50,000 and rural cities as those with populations below 50,000. Respondents answered a series of questions assessing the importance of the environment in relation to economic development. Results of the chi-square test of association showed a statistically significant difference between developers in rural and urban areas, with the former demonstrating a greater appreciation for environmental protection than their urban-based counterparts. The study found the finding interesting given that urban-based developers were younger and more educated, and hence, expected to be more concerned about the environment (Foster & McBeth, 1996).

A primary weakness of the study by Foster and McBeth (1996) is that it covers policy developers, rather than actual rural and urban populations. Salka (2003), partly addresses this weakness in their study that focused on identifying why some counties put more emphasis on environmental protection than others when voting. The study compared respondents concern for environmental protection based on whether they lived in an urban or rural county, individual attributes, party affiliation, economic conditions, and age. Regression results showed that all the factors strongly predicted residents focus on environmental protection. Respondents were drawn from counties across five states Oregon, Michigan, Florida, Colorado, and California. Differently from Foster and McBeth (1996), this study found that urban counties were more supportive of environmental issues than their rural counterparts. The researchers attribute this finding to higher levels of education among urban residents. However, the effect of a countys rurality was minimal compared to other factors such as economic conditions and individual attributes.

To some extent, these findings mirror those of a study by the Duke Nicholas Institute for Environmental Policy Solutions, which sought to understand the attitudes of rural residents towards environmental conservation (Bonnie et al., 2020). Using survey data gathered from 606 urban-based voters, 1,005 rural-based voters, as well as interviews with 36 community leaders from rural counties; the study measured the extent to which rural citizens prioritize environmental protection issues relative to their urban counterparts. Results of ordinary least square regression showed that generally, Democrats paid more attention to environmental conversation than Republicans and independents. However, the study did not find any significant differences in environmental attitudes between urban and rural voters. Thus, the researchers concluded that an individuals place of residence did not influence their attitudes towards environmental conversation. Like Salka (2003), this study concluded that county of residence was a weaker predictor of environmental attitudes than individual attributes such as political affiliation.

Other studies have gone beyond residents characteristics to focus on entire jurisdictional or county economies. Zhang et al. (2019), for instance, conducted a study to determine how foreign direct investment (FDI) influences jurisdictions spending on environmental protection. The study compared expenditure on environmental protection (EPEE) between 2007 and 2016 with the FDI trend over the same period for 30 administrative regions in China. Using the spatial correlation test,...…plots indicates that the groups have different variations around the mean. If the groups had equal adjusted means, the plots would be of the same length. However, the differences in means across all groups are small, one would expect the one-way ANCOVA test to yield a statistically insignificant result.

Table 6. Univariate Analysis of Variance for Intergovernmental Revenue Growth Rate (IRG) and County Type, Controlling for Political Orientation

Between-Subjects Factors`

Value Label

N

Metro, Suburban, or Rural County

1.00

Metro County

30

2.00

Suburban County

12

3.00

Rural County

18

Table 7. Tests of Between-Subjects Effects for Intergovernmental Revenue Growth Rate (IRG) and County Type, Controlling for Political Orientation

Source

Type III Sum of Squares

df

Mean Square

F

Sig

Corrected Model

.332a

3

.111

1.984

.127

Intercept

.016

1

.016

.289

.593

Political

.028

1

.028

.502

.482

County Type

.328

2

.164

2.944

.061

Error

3.121

56

.056

Total

3.457

60

Corrected Total

3.453

59

The Row from the source Political gives the significance level for the adjusted IGR growth rates by county after factoring in political orientation. Since p =0.482, which is greater than the significance level of p =.05, the study rejects the null hypothesis and concludes that controlling for political orientation, there is no significant difference in the intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural).

Discussion

This empirical study sought to determine whether: i) there is a statistically significant difference in environmental spending between coastal and not coastal counties, ii) there is a statistically significant difference in the intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural), and iii) there is a statistically significant difference in intergovernmental revenue growth rate (IGR) based on county type (metro/suburban/rural) controlling for political orientation.

The findings from the empirical tests carried out show that there is a statistically significant difference in environmental spending as a proportion of total spending between coastal and not coastal counties, with the latter reporting a higher mean on environmental spending. This finding is in line with Zhang et al. (2019), who found a positive correlation between FDI (foreign direct investment) and government spending on environmental protection, both in terms of quality and quantity (Zhang et al., 2019). Regions with high FDI equally spend more on environmental protection. Coastalregions report higher than not coastal counties due to the influx of international tourists. Tourists force an additional expenditure on environmental protection as investors and tourists use this as an assessment standard (Zhang et al., 2019). Thus, the central government could support coastal counties by increasing supervision of environmental protection policy and increasing intergovernmental revenue to go towards enforcing such policies.

The study finds that there is no statistically significant difference in intergovernmental revenue growth rate by county (metro/suburban/rural) even after adjusting for political orientation. This finding contradicts that reported by Veneri and Ruiz (2016), who found that urban and suburban areas have better opportunities for revenue growth and economic development than rural areas. A possible reason for this observation could be that the presence of coastal counties along the urban-rural continuum of counties surveyed affected the relationship. Coastal counties categorized as rural report high revenues from FDI, which reduces their dependence on intergovernmental revenue. From the revenues they raise through FDI, such counties are able to implement a variety of local development and extra-economic activities such as industrial foundations, county fairs, annual festivals, community beautification clubs, county strategic plans, and community visioning programs, all of which increase local revenues and make them less dependent on intergovernmental revenue growth (Dawees et al., 2003). Political orientation has a minimal effect on intergovernmental revenue growth, contrary to Baskaran and Hessamis (2015) finding. A possible reason is that to maintain themselves as attractive opportunities for FDI, these self-sustaining counties will make policy and spending decisions based on globally accepted standards rather than political influence.

Conclusion

In conclusion, this study found that coastal counties spend significantly more on environmental protection efforts than their non-coastal counterparts. Further, from the surveyed counties, the study found that there was no statistically significant differences in intergovernmental revenue growth by county type (metro/suburban/rural) even after adjusting for political orientation. The study findings provide crucial insights for policymakers at both the local and state levels. At the local level, the findings provide an avenue for policymakers to enhance their focus on environmental protection as a means to increase FDI since studies have already shown a positive association between FDI and environmental spending. At the same time, the findings provide avenues for state policymakers in Florida to increase support for local governments through increased intergovernmental revenue targeting expenditure in specific areas such as promotion of clean energy and environmental…