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This study examines five national public policy areas where states and local governments received grants-in-aid from the federal government; these grants approximate a…
This study examines five national public policy areas where states and local governments received grants-in-aid from the federal government; these grants approximate a fifth of their yearly revenue budgets. Knowing the historical trends and concentrations can minimize expectation errors of practitioners and policy makers and facilitate future revenue planning. The grants examined between 1940 and 2010 include income security, health, education and training, economic and regional development, and transportation. The study uses agency theory to rationalize relationships among the governments, and applies statistical modeling, multiple means comparisons and discriminant analyses to test whether there are distinct policy concentrations and differences among policy regimes. Our findings show transfers were continuous, physically important and unaffected significantly by adjustments due to size and prices. The study found concentrations and differences among policy regimes.
The relationship between the local option sales tax (LOST) and property taxes and own source revenue is not well documented in the literature. This may be due in part to…
The relationship between the local option sales tax (LOST) and property taxes and own source revenue is not well documented in the literature. This may be due in part to the aggregated nature of the data, which fails to capture different motivations for adoption of LOSTs. Using county-level data from 35 states, this study finds that LOSTs increase own source revenue and in some circumstances decrease property tax burdens. The primary contribution of this research is that it uses a policy variable, the LOST rate, to distinguish between the two types of counties that use their LOST revenues differently. This research represents the first step in bridging the gap between the LOST literature and the tax mix choice literature.
This paper reviews Korean intergovernmental relations in the 1990s with an emphasis on fiscal relations among the different levels of the government. In the 1990s, Korea…
This paper reviews Korean intergovernmental relations in the 1990s with an emphasis on fiscal relations among the different levels of the government. In the 1990s, Korea reinvigorated its system of local autonomy first established in the sixties. A major issue in the implementation of this system is the presence of vertical and horizontal disparities in local fiscal capacity. Although some efforts have been made to transfer tax sources from central government to local governments or establish local transfer (block grants), fiscal autonomy still remains below expectation, jeopardizing the realization of full local autonomy. This paper is an effort to look into these issues and search for solutions.
This paper analyzes the impact of economic downturns on the revenue and expense sides of city financing for the period 2003 to 2009 using a convenience sample of the…
This paper analyzes the impact of economic downturns on the revenue and expense sides of city financing for the period 2003 to 2009 using a convenience sample of the audited end of year financial reports for thirty midsized US cities. The analysis focuses on whether and how quickly and how extensively revenue and spending directions from past years are altered by recessions. A seven year series of Comprehensive Annual Financial Report (CAFR) data serves to explore whether citiesʼ revenues and spending, especially the traditional property tax and core functions such as public safety and infrastructure withstood the brief 2001 and the persistent 2007 recessions? The findings point to consumption (spending) over stability (revenue minus expense) for the recession of 2007, particularly in 2008 and 2009.
Increases in urbanization and mobility, as well as local government fiscal crises have altered the financing of local government expenditures. Intergovernmental transfer of funds has evolved as a major source of revenue for local government units. Intergovernmental transfers to subordinate governments are enacted by various fsical instruments: (1) direct transfer of funds through loans, categorical grants, and unrestricted grants; (2) sharing of the tax base through tax supplements, tax deducations, and tax credits; and (3) intergovernmental coordination of activities. Federal grants to state and local governments have rapidly increased: federal aid as a percentage of state and local sources of general revenue was 8 percent in 1942, 11 percent in 1948, 15 percent in 1965, and 20 percent in 1967. During this same period, the amount of annual state payments to local governments increased from 3.2 billion dollars to 19.1 billion dollars (although throughout the period the payments were a consistent fraction of the national total of states' expenditures). Local government finances for 1972–73 substantiate the importance of intergovernmental funding directed to the local public sector. The total intergovernmental revenue received by all local governments in the United States was 28.6 billion in 1972–73 with 23.3 billion emanating from state governments and 5.3 billion from the federal government. In 1972 Texas state government expenditure in transfers totaled 1.2 billion dollars.
Changing political landscape often renews the call for dramatic changes to federal community and economic development grant-in-aid programs. The most dramatic proposal in…
Changing political landscape often renews the call for dramatic changes to federal community and economic development grant-in-aid programs. The most dramatic proposal in recent years was President Bush’s 2006 call to consolidate federal assistance programs for communities into a new block grant known as the Strengthening America’s Communities Initiative (SACI). This conceptual study reviews key characteristics of intergovernmental transfers including grant types, features, changes in the intergovernmental fiscal environment, the fungibility/flypaper debate, and the symmetry/asymmetry response of governments to declining intergovernmental revenue. The effects of intergovernmental transfers on state and local governments are connected to differences in grant design features. Potential fallout from proposed or similar changes to grant structure is discussed using the SACI proposal as an example.
The purpose of this paper is to analyze late disbursements for service delivery by focusing on donors’ General Budget Support disbursement to Tanzania and on the…
The purpose of this paper is to analyze late disbursements for service delivery by focusing on donors’ General Budget Support disbursement to Tanzania and on the intergovernmental money flows in Tanzania.
The authors examined empirical analysis using statistics of intergovernmental transfers in Tanzania.
This paper shows that such center-local transfers are significantly correlated with the timing of local government expenditures in general and health expenditures in particular. It also shows that development expenditures are more affected than recurrent expenditures by delays in the transfer.
In order to improve service delivery on the ground, the transfers from donors to the central government and from the central government to local governments need to be timely.
The authors examined empirical analysis using statistics of intergovernmental transfers in Tanzania so as to see whether timing of transfers matters or not, which has not been considered thus far.
The impact of fiscal decentralization on equalization between regions has received significant attention but there has been much less research of the impact of…
The impact of fiscal decentralization on equalization between regions has received significant attention but there has been much less research of the impact of decentralization on equalization within regions. Theory suggests that the tradeoff between local fiscal autonomy and equalization ought to be most pronounced at the sub-region level where rural-urban disparities in the level of development are substantial. This paper is an empirical analysis of the impact of fiscal decentralization on equalization within one Russian region, Leningrad (State). We show that the regional government uses a mixture of fiscal instruments to strike a balance between giving more budgetary autonomy to local governments and eliminating the disparities among them. We also develop a method for studying this tradeoff between decentralization and equalization when only limited data are available. Finally, we argue and demonstrate that without a detailed understanding of the institutional arrangement for intergovernmental fiscal relations, one cannot evaluate the equalization or decentralization implications.
This paper investigates the impact of state governments’ “Tax and Expenditure Limits” (TELs) on their tax progressivity and redistributive spending. A two stage least…
This paper investigates the impact of state governments’ “Tax and Expenditure Limits” (TELs) on their tax progressivity and redistributive spending. A two stage least squares (2SLS) regression model of data covering 1985-2007, was employed to allow for simultaneity in the relationships between intergovernmental transfer, tax progressivity, expenditure progressivity, and labor mobility. This model tested whether high- or low income residents had paid for and benefited from these fiscal institutions. As a result we find that TELs significantly decrease tax progressivity and increase poverty rate. These two policy effects should be explicitly accounted for in the design or revision of TELs.