Special Districts. Special distrrcts are single-purpose governmental entities,
usually created to supply goods that are believed to have natural monopoly, public
goods, or externality characteristics. Such goods are typically local in nature, but
may extend to the state or region. By far the most common use of special districts in
the United States is to provide primary and secondary schooling. Other examples include
air pollution, water, and transportation districts. What are the advantages and
disadvantages of special districts relative to cities and counties? Indeed, we might ask
why we have special districts at all. One advantage of special districts is that they
allow consumers to observe the relationship between service provision and tax-price
clearly. Another advantage is that they can be designed to internalize externalities
that spill across the historically evolved boundaries of local governments. A major
disadvantage is the costs that consumers face in monitoring a whole series of
"minigovernments" for different services: ". . . only for the most important collective
functions will wholly independent organization be justified on cost grounds . . . the
costs of organizing each activity separately would be greater than the promised
added benefits from alternative ~rganization."'~~
An important consideration is that collections of special districts prevent
logrolling across issue areas. As we discussed in Chapter 8, logrolling often leads to
inefficient pork-barrel spending. But it also permits minorities to express intense preferences
that are not registered in majority voting on single issues where the social
1. ,
, -, choice only reflects the preferences of the median voter. The more issues that are
handled independently in special districts, the fewer that remain for possible inclusion
in logrolls. Whether the reduction in logrolling contributes to efficiency and equity
depends on the distribution of preferences in the population.