Urban Change and Poverty (1988) / Chapter Skim
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Urban Fiscal Conditions
Urban Fiscal Conditions
Pages 33-41
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From page 33... ...
RECENT FISCAL TRENDS A city's fiscal health depends on the balance between the costs of the services it provides and its ability to raise revenues.7 The ability of a city to raise revenues through taxes and user charges in turn depends on the level of economic activity taking place within 7 The complexities of defining and measuring local government fiscal capacity are discussed in Ladd et al.
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From page 34... ...
and the belief that urban economies were cyclically unstable, several anticyclical aid programs were adopted; the Antirecession Fiscal Assistance Program, the I,ocal Public Works Program, and the Public Service Employment Program of the Comprehensive Employment and Training Act (CETA) provided more than $13 billion to state
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From page 35... ...
(Most of the reduction $3.7 billion was accounted for by the ending of the CETA Public Service Employment Program.) The recessions and federal aid cuts led many observers to predict that cities in general, and especially large central cities in the older regions with their declining economies and higher dependence on federal aid, would experience fiscal crises.
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From page 36... ...
Peterson suggests that the prospect of federal aid in the 1974 recession, most of which was not approved until 1976, led states and localities to wait for federal help instead of moving quickly to raise taxes and cut expenditures. In 1981 they did not expect countercyclical aid and anticipated additional federal aid cuts; therefore, they moved quickly to balance their budgets through local actions.
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From page 37... ...
aCities did not necessarily have a deficit on their general fund balance sheet because they could use carryover surpluses to make up for the gap between current-year revenues and expenditures. SOURCE: Dearborn (in this volume:Table 23.
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From page 38... ...
TABLE 11 General Fund Unreserved Surpluses in Selected Major Cities: 1982, 1983, and 1984 Surplus (in millions Percentage of Year of dollars) Revenues 1982 336.1 1.1 1983 247.1 0.9 1984 364.7 1.2 NOTE: The selected major cities were the 30 largest cities in 1970 (except Honolulu, the District of Columbia, and San Jose)
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From page 39... ...
Federal grants typically were handled through separate funds and were used to finance auxiliary activities whose spending could be adjusted upward or downward to reflect federal assistance levels. By 1981, for example, almost all cities had moved their Public Service Employment workers out of general government services, in anticipation that federal funding for the program would be terminated at some point.
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From page 40... ...
State aid to local governments increased from $82.8 billion in 1980 to $99.5 billion in 1983, a 20 percent increase; but state aid as a percentage of local revenues decreased from 35 percent in 1980 and 1981 to 34 percent in 1982 and 33 percent in 1983 (U.S. Department of the Treasury, 1985:Tables V.13 and V.14~.
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From page 41... ...
Others have had problems for most of the period. The cities that have consistently enjoyed good fiscal conditions are San Francisco, Minneapolis, Indianapolis, Jacksonville, Milwaukee, Atlanta, and San Diego (and probably Los Angeles, although its financial reports cannot be analyzed well enough to find out)
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