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8. State-Local Partnership: Problems and Possibilities
Pages 202-227

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From page 202...
... It can be assumed, then, that the problems those programs were designed to address were largely perceived as national issues requiring action by the national government in partnership with state and local governments.
From page 203...
... The paper explores the experiences and initiatives of eight states in attempting to forge a new partnership with local governments. (The next paper in this volume examines the same subject from the perspectives of a large city in each of these eight states.)
From page 204...
... During this period, federal aid to local governments rose 143.4 percent, nearly twice the growth rate of state aid. Yet despite the increase in federal aid to local governments, in terms of actual dollars, state aid to local governments, excluding passed-through federal aid, topped federal aid by over $19 billion (USACIR, 1982)
From page 205...
... It is not surprising, then, that the growth in state aid to local governments has been uneven over the past few years. The Joint Economic Committee surveys (U.S.
From page 206...
... address proposed no new taxes but also offered no new tax reductions. State Community Assistance Aside from state financial aid to local governments to help fund certain ~traditional.
From page 207...
... In economic development, 16 states direct state aid for industrial or commercial development; 11, for the development of small businesses; and 11 states target industrial revenue bonds. Sixteen states focus capital improvement programs on distressed areas, and 14 states operate neighborhood improvement programs.
From page 208...
... First, in their new role as the initial recipient of block grants, states have the opportunity to pass along increased flexibility in reporting and application requirements to the recipient local governments. Second, in response to the cuts in federal funding levels, states may respond by replacing lost federal dollars or by allowing local governments greater flexibility to raise revenue in order to replace those cuts.
From page 209...
... The eight states, their political cultures, and their level of replacement of federal funds are shown in Table 8-1. The eight states' fiscal capacities and willingness to raise revenue vary greatly.
From page 210...
... (The ACIR's index of tax capacity is a fiscal yardstick that measures a state's capability to raise revenues, so that one state's tax base can be compared with that of another, regardless of the actual types of taxes levied. The tax effort indicates the actual burden of the total tax base, with 100 being the national average.)
From page 211...
... Massachusetts reacted to the devastating effects of Proposition 2 1/2 by increasing state aid to local governments at the expense of instituting additional policies in response to the federal cuts. New Jersey instituted state aid to 28 cities to enable the cities to avoid the layoff of police and firemen.
From page 212...
... This sentiment was reflected in appropriations language passed by the legislature in 1981, affecting fiscal years 1982 and 1983, which did not permit the state to operate a program that had not already been authorized or appropriated. This language, in effect, prohibited Texas from assuming the Community Services, Small Cities Community Development, and Primary Care block grants (MacManus, 1982)
From page 213...
... For California, with its budget under stress, taking over these block grants included assuming most of the cuts in funding. The Democratic governor and largely Democratic legislature preferred having these programs and their funding reductions under federal control, channeling any public outcry to Washington, D.C.
From page 214...
... Some states have passed along some of the increased flexibility associated with the block grants to the recipient local governments. Where it exists, the increased flexibility is related to decreased reporting requirements or eased application processes, but the record in this area is mixed indeed.
From page 215...
... The state economies, with strong petroleum industries, were healthy. Both states have traditionalistic-individua~istic political cultures and fairly conservative spending philosophies.
From page 216...
... In 1982 Massachusetts provided an additional $265 million in state funds to local governments, hurt by Proposition 2 1/2's effect on property taxes (Bradbury, 1983)
From page 217...
... New Jersey, the nation's most urbanized state, has taken other actions with respect to its cities. The state instituted an urban enterprise zone program, and Governor Kean has proposed the establishment of a state transportation finance fund and an Urban Development Corporation, which would coordinate state agency actions in an effort to rebuild cities.
From page 218...
... Insofar as the responsibility for low-income groups is concerned, the focus seems to be to improve the state and local economies, and the benefits of the improved economies will be felt by all, including low-income groups. The interest in economic development and job creation can be found in both block grant policies and other state initiatives.
From page 219...
... After three vetoed oversight bills in 1982, for example, the New Jersey legislature gained appropriations authority over federal funds through language included in the appropriations bill. The Oklahoma legislature attempted to gain greater oversight responsibility over federal funds and increased appropriations authority over state funds with mixed success.
From page 220...
... New Jersey's governor established a science and technology commission, designed to attract industries through labor-pool development and research activities, and a management improvement commission, geared to battling inefficiencies in government; he also proposed the establishment of an Urban Development Corporation to coordinate state agency efforts to rebuild urban areas. In December, the state also responded to concerns of 28 cities that police and fire-fighter layoffs were forthcoming, due to capped property taxes, by making S7.4 million available to the 28 cities Afield associate interview and New York Times, 1984)
From page 221...
... . Of the eight states under discussion, five had adopted some type of urban enterprise zone initiative as of 1983 (Revzan, 1983)
From page 222...
... Through the combined efforts of the HFA and local governments, Florida issued bonds for financing single family housing to the full extent allowed by the federal government, $547 million in 1983 alone. The Housing Finance Agency has narrowed the target population for its single-family program by reducing the income eligibility level from 150 percent to 120 percent of the median family income.
From page 223...
... Indeed, state responses to local government can take such polar forms as increased state aid, as in Massachusetts and Florida, or of state retrenchment, as in Washington. In struggling to contend with statewide issues, a state's actions may not paint a coherent picture of its responses to local government.
From page 224...
... _ The states have improved their capabilities and have shown some willingness to respond to the problems of local government through the development of a wide variety of initiatives. The mechanisms the states develop will probably increasingly include management initiatives, a focus in both block-grant policies, such as Illinois' emphasis on the proven effectiveness of programs in refunding decisions under the CSBG, and other state programs, such as New Jersey's Urban Development Corporation.
From page 225...
... 219-281 in U.S. Congress, Joint Economic Committee, Hearings Before the Joint Economic Committee, Part 1.
From page 226...
... 1983 Enterprise zones: present status and potential impact. Governmental Finance 12(4)
From page 227...
... U.S. Congress, Joint Economic Committee 1982 Trends in the Fiscal Condition of Cities: 1980-1982.


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