For better or worse, fiscal decisions made through property tax refere
nda allow local political markets to work. Demand, supply, and voting
process components of such markets are estimated for those Oregon K-12
school districts that held referenda between 1981 and 1986. Various a
ttributes of the median voter were related to school spending, but sup
ply decisions by school boards and administrators were also important.
Large districts used state aid to substitute for local property tax r
evenues on nearly a one-for-one basis, while relying on reversion budg
ets (inadequate property tax bases and implicit threats of school clos
ures) to extract greater-than-desired spending levels from the median
voter.