Governance and Opportunity in Metropolitan America (1999) / Chapter Skim
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Metropolitan Limits: Intrametropolitan Disparities and Governance in U.S. Laboratories of Democracy
Metropolitan Limits: Intrametropolitan Disparities and Governance in U.S. Laboratories of Democracy
Pages 253-295
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From page 253... ...
with an acceptable tax level, central-city residents shouldered the service delivery costs of suburban commuters to the central city (especially police, 253
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From page 254... ...
Recent commentaries on metropolitan regions, central-city poverty surrounded by wealthy suburbs, and efficient service delivery arrangements in extramunicipality regions have created a resurgence of interest in metropolitan governance and regional affairs. The purpose of this paper is to review policies and strategies that have been experimented with and whose goals include mitigating intrametropolitan disparities and enhancing metropolitan governance more generally.
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From page 255... ...
Yet if one excludes the 2,830 local governments in Pennsylvania, the 615 cities and school districts in Ohio, the 379 school districts in Iowa, and the 140 local governments in Kentucky that are permitted access to a local-option income or wage tax, the remaining 7 states allow only 157 of their local governments the authority to levy an income tax. Few local governments outside those four states, then, have their states' authorization to tax income or earnings.
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From page 256... ...
Constant Dollars1966-671971-721976-77 1981-82 1986-87 1991-92 Total General Revenue277,441368,756439,482 450,392 523,002 573,255 General Revenue Own sources181,253229,674250,893 263,503 323,811 357,268 Taxes138,514174,278183,731 166,319 201,652 227,099 Property tax119,990145,830147,931 Individual income tax4,4127,8529,210 126,526148,634171,723 8,1389,83411,106a Sales and gross 9,319 14,954 20,319 23,756 31,169 41,263 receipts Charges and miscellaneous 42,739 55,676 67,162 97,184 122,159 130,169 al992-1993 Note: Deflated by state and local implicit price deflator.
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From page 257... ...
Constant Dollars 1983-84 1985-86 1987-88 1989-90 1991-92 Total General Revenue 156,279 170,990 181,597 193,125 199,182 General Revenue Own sources 71,997 76,797 82,720 89,066 91,720 Taxes 53,940 63,612 68,239 72,515 76,619 Property tax 57,499 61,940 66,469 70,713 74,630 Charges and miscellaneous 12,627 13,185 14,485 16,553 15,101 Note: Deflated by state and local implicit price deflator.
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From page 258... ...
METROPOLITAN LIMITS A Nonconstant Dollars 1966-67 1971-72 1976-77 1981-82 1986-87 1991-92 Total General Revenue 12,472 41,441 66,272 101,229 146,495 General Revenue Own sources7,45113,69722,654 38,350 63,989 92,098 Taxes5,70210,07615,865 22,917 37,240 54,926 76.5%73.6%70.0% 59.8% 58.2% 59.6% Property tax5,2538,62512,888 17,711 27,362 40,808 92.1%85.6%81.2% 77.3% 73.5% 74.3% Sales and grossaaa 3,660 7,005 10,155 receipts 16.0% 18.8% 18.5% Other4491,4522,976 886 1,872 2,422 7.9%14.3%18.8% 3.9% 5.0% 4.4% Charges and miscellaneous1,7493,6196,789 15,434 26,748 37,171 23.5%26.4%30.0% 40.2% 41.8% 40.4% B. Constant Dollars 1966-67 1971-72 1976-77 1981-82 1986-87 1991-92 Total General Revenue 59,419 82,873 101,720 106,205 129,020 146,495 General Revenue Own sources Taxes Property tax 35,498 47,992 27,165 25,026 30,221 55,606 61,458 38,942 36,726 31,635 28,383 81,556 92,098 47,464 54,926 34,874 40,808 Sales and grossaaa 5,865 8,928 10,155 receipts Other2,1395,0887,305 1,420 2,386 2,422 Charges and miscellaneous8,33312,680 16,664 24,734 34,091 37,171 a Included in "Other." Note: Deflated by state and local implicit price deflator.
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From page 259... ...
259 A Nonconstant Dollars 1962-63 1966-67 1971-72 1976-77 1981-82 1986-87 1991-92 Total General Revenue 13,127 19,204 34,937 60,921 91,459 130,217 171,618 General Revenue Own sources 10,459 14,121 23,502 36,746 59,823 92,476 123,466 Taxes 7,934 10,445 17,058 26,067 37,077 55,366 75,486 75.9% 74.0% 72.6% 70.9% 62.0% 59.9% 61.1% Property tax 5,807 7,629 10,988 15,657 19,502 27,163 39,706 73.2% 73.0% 64.4% 60.1 % 52.6% 49.1 % 52.6% Sales and gross receipts 1,303 1,673 3,185 5,805 10,195 15,598 20,190 16.4% 16.0% 18.7% 22.3% 27.5% 28.2% 26.7% Charges and miscellaneous 2,519 3,676 6,445 10,678 22,745 37,110 47,980 24.1 % 26.0% 27.4% 29.1 % 38.0% 40.1 % 38.9% B. Constant Dollars 1962-63 1966-67 1971-72 1976-77 1981-82 1986-87 1991-92 Total General Revenue 71,420 91,491 122,414 149,536 146,569 165,966 171,618 General Revenue Own sources 56,904 67,275 82,348 90,196 95,870 117,864 123,466 Taxes 43,166 49,762 59,769 63,984 59,418 70,566 75,486 Property tax 31,594 36,346 38,500 38,432 31,253 34,620 39,706 Sales and gross receipts 7,089 7,970 11,160 14,249 16,338 19,880 20,190 Charges and miscellaneous 13,705 17,513 22,582 26,210 36,450 47,298 47,980 Note: Deflated by state and local implicit price deflator.
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From page 260... ...
1 1 11111 Georgia Cities and Counties No cities or counties levy income taxes Indiana Counties 38 37 38 43 44 45 51 Iowa School Districts 3 21 26 57 57 61 57 Kentucky Cities 59 59 59 61 67 78 85 Counties 8 8 9 11 14 25 School Districts Maryland Counties (and Baltimore City) 24 24 24 24 24 24 24 Michigan Cities 16 16 16 16 16 17 17 Missouri Cities (Kansas City and St.
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From page 262... ...
262 TABLE 5 Continued METROPOLITAN LIMITS B Local Sales Taxes: Number and Type of Jurisdiction State1976197919811984198619871988 Alabama - Total265301321353374382389 Municipalities 270281310323326334 Cities 314043515655 Alaska - Total869392999793101 Municipalities 868592918795 Boroughs 777666 Arizona - Total38395970757781 Municipalities38395970747579 Counties -- -- 122 Arkansas - Total1126078111142 Municipalities112445976100 Counties -- 16193542 California - Total c438441441443444445446 Municipalities 380380380380380380 Counties 585858585858 Special Districts 335678 Colorado - Total121165183205222225235 Municipalities 144159175191193200 Counties 202329303134 Transit District 111111 Special District Florida - Total ~ Counties -- -OO10 Transit District Georgia - Total e1684104133143144155 Municipalities 300000 Counties 80103132142143154 Transit District 111111 Illinois - Total1,3421,3591,3591,3531,3761,3751,383 Municipalities 1,2561,2561,2491,2721,2711,279 Counties 102102102102102102 Transit Districts 112222 Water District Iowa Counties 5 Kansas - Total72040139168168175 Municipalities 153587108108112 Counties 5552606062 Louisiana - Total183217251253287302302 Municipalities 136152158177192193 Parishes 213030636363 School Districts 606665474746 Special Districts 71218232323 Minnesota Municipalities1112133
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From page 264... ...
264 TABLE 5 Continued METROPOLITAN LIMITS B Local Sales Taxes: Number and Type of Jurisdiction State1976197919811984198619871988 Missouri - Total152215333487556657674 Municipalities151214332406458474479 Counties11 8198114120 Nebraska Municipalities-4712162225 Nevada - Total121311577 Municipalities1 Counties111211577 New Mexico - Total329984120134128132 Municipalities 937698101100101 Counties 6822332831 New York - Total68707487818583 Municipalities 252929272628 Counties 454557535854 Transit District -- -1111 North Carolina Counties969999100100100100 North Dakota Municipalities -- -- 334 Ohio - Total33515565768188 Municipalities 505262747983 Counties 133223 Oklahoma - Total356398398447466473479 Municipalities356398398441452457458 Counties -- -6141624 South Carolina Counties South Dakota - Total18466182107111120 Municipalities18466182107111117 Indian Reservations -- -- -- 3 Tennessee115104105102105105106 Municipalities 12118101011 Counties 929494959595 Texas - Total8549469491,1201,0321,0291,107 Municipalities 9219211,1171,0261,0231,023 Counties -- -- -78 Transit Districts 25283666 Special Districts Utah - Total204230n.a.248248248 Municipalities 201n.a.219219219 Counties 2929292929 Transit Districts
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From page 266... ...
But, because cities operate under both differential service responsibilities and state-restricted access to own-source revenues (as well as differential policies governing state aid to local governments) , Ladd and Yinger adjust their standardized measures to create realistic measures of a city's fiscal health.
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taxing authorities and portfolios vary, so do service delivery costs and responsibilities. States establish the service delivery responsibilities of cities through statutory or constitutional means, requiring local governments to perform certain functional activities (such as public safety)
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Consequently, in the U.S. federal system, there is a veritable cornucopia of bundles of services provided by municipal and other local governments, ranging from basic safety functions of police and fire protection to complex arrays of services, including education, welfare, water and sewer, and much more.6 POLICY EXPERIMENTATION AND EFFECTIVENESS Cities, other local governments, and states have experimented with a host of legal or incorporation statutes and revenue-related projects with the intent of minimizing intrametropolitan disparities in services and tax burdens and of enhancing metropolitan governance (U.S.
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. In general, the most popular "political stretching" mechanism is creation of special districts with specific infrastructural responsibilities, which promise efficient, cost-effective service delivery.
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Willing to sacrifice neither their (local governments') autonomy, nor their tax dollars for perceived inner-city problems, suburban and county dwellers have routinely rejected consolidation proposals for the past four decades.
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Even though anticonsolidation forces have been chided in the past few decades for the racist or class overtones to the negative suburban and county vote, arguments have been advanced in defense of fragmented metropolitan governments, and in opposition to consolidated governments (see, e.g., Kenyon and Kincaid, 1991; U.S. Advisory Commission on Intergovernmental Relations, 1992; Schneider, 1989~.
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From page 272... ...
The dissonance between the fragmentation and consolidation forces reached an ironic point when, almost simultaneously with the publication of a study from the U.S. Advisory Commission on Intergovernmental Relations, which documented the efficiency effects of fragmented local governments in Allegheny County and St.
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From page 273... ...
Yet efficiency of service delivery, the principal reason for Unigov's creation in 1969, was proclaimed its major feat even as school districts and townships (which have relief and fire protection responsibilities) remained unconsolidated, as were the four cities with populations greater than 5,000 that were statutorily excluded from the consolidation.
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From page 274... ...
Because representatives are not elected regionally, there still exists the distinct possibility of influencing projects with a clear suburban or anticentral-city flavor. The question, then, is whether or not metropolitan planning organizations are designed and operate with an eye toward reducing intrametropolitan disparities in service delivery and in fiscal burden (see, e.g., Gage and McDowell, 1995; Pagano, 1996; U.S.
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From page 275... ...
First, because communities do not reap the full fiscal benefits of economic development and expansion under tax base sharing, the fiscal imperatives to local governments offering economic incentives (e.g., property tax abatement) are mitigated.
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From page 276... ...
Nevertheless, as a mechanism for reducing intrametropolitan disparities between the wealthiest and the poorest communities in the region, and not just for redistributing wealth to the central city, the Twin Cities program has been an unqualified success. Political Feasibility Consolidation and annexation tools may enhance regional governance, diminish intrametropolitan disparities, and improve efficient service delivery, but they may also marginalize minority voters in the central city.
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From page 277... ...
In order to avoid the popular conception of giving away the store to developers and others, the logic of tax base sharing may become persuasive, so long as the political obstacles can be overcome. If the suburbanites' cynicism that they can and should help the cities does not wane, nor does the central-city residents' fears of diminution in their political power, it is unlikely that regional governance will make much headway in the future (although a few successes are noteworthy, precisely because they have been created in smaller counties)
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From page 278... ...
States have also assigned a dissimilar set of service delivery responsibilities to their local governments, ranging from, in the case of public education, Hawaii's single statewide school system to the 1,053 school districts in Texas. And local governments, as legal creatures of their respective states, are limited constitutionally and statutorily in the composition of their revenue structures.
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From page 279... ...
rather than the property tax rate determines the state' s aid to school districts. Equalization grants are designed explicitly as redistributive grants by linking the value of the grant to the taxable base of the district and to the district's tax effort.
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Although invoked infrequently in this century, most state takeovers in recent years have been directed at local school districts. As a mechanism for alleviating onerous fiscal demands, especially for cities and school districts with high concentrations of impoverished and low-income populations and with unattractive business sites, some argue that the state ought to assume some local government functions.
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From page 281... ...
Larger central cities provide more unreimbursed social services to their residents than smaller cities and suburban cities, according to recent studies. The resulting intrametropolitan disparities (primarily in the form of a higher tax burden for residents of larger cities)
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. Gilbert's evaluation of property tax-sharing schemes, for example, concluded that the benefits of shared property taxes would be relatively small and that "the most effective ways to reduce central city fiscal strains are shifting from local property tax financing to personal income tax financing at the regional and especially at the state level" (Gilbert, 1979:688~.
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The report noted that, if a 1 percent income tax were enacted, the municipal income tax might yield $8-10 million. By 1995, the rate was 2 percent and yielded $80.5 million for the city.
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Political Feasibility Although there are persuasive theoretical reasons for designing state policies that mitigate intrametropolitan disparities, the empirical evidence shows that state beneficence does not manifest itself in times of economic downturns (see the argument linking state aid and business cycles by Gold and Erickson, 1988~. State aid for local governments, especially for general-purpose local governments, tends to decline during times of anemic state fiscal performance.
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From page 285... ...
Indeed, although studies demonstrate that the Twin Cities tax base sharing scheme has reduced intrametropolitan disparities, political agreement among local jurisdictions on what to include in the distribution formula can be expected to be difficult if one jurisdiction feels it is ceding too much. Although a municipal income tax is probably the most effective fiscal stretching policy for reducing intrametropolitan disparities, as long as suburban legislators hold sway in state capitols, a municipal income tax that taxes income at the place of employment has a low probability of being adopted.~5 Until and unless suburban legislators come to the realization that their economic lifeline is dependent in some important and meaningful way on the central city's health and vitality, the prospects of approving municipal income tax legislation that can effectively tax their residents twice is remote.
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From page 286... ...
, residents of these communities who reside within the political boundaries of municipal corporations are receiving in many cases a higher level of services than other residents. Studies of metropolitan service delivery levels and tax burdens routinely ignore these "add-on" services, even when they duplicate or add to existing municipal and local government services (e.g., policing, sanitation, street sweeping, zoning enforcement)
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From page 287... ...
, understate actual contributions for service delivery because these measures do not include contributions to residential community associations. Consequently, without factoring these contributions to a quasi-local government into the measures of fiscal health or disparity, studies that conclude that local services tend to be provided equitably regardless of neighborhood income might not be entirely accurate.
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From page 288... ...
Nevertheless, the powers to change municipal and metropolitan government boundaries rest with states, which have the power to create and alter local governments, and in some cases with local citizens, who have the voting power to make regional governance a reality or not. The prospects of an affirmative action toward metropolitan governance at either place is remote, so long as state legislatures do not represent cities' interests and so long as suburban residents see no relationship between their corporate welfare and the welfare of their central-city brethren (on this point, see especially Orfield, 1997~.
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REFERENCES Akron Chamber of Commerce, Bureau of Research 1959 Municipal Income Tax Study: A Revenue Study of the City of Akron, Ohio. Bahl, Roy 1980 Alternative approaches to regional financing of urban public services.
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1979 Property tax base sharing: An answer to central city fiscal problems. Social Science Quarterly (March)
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Ladd, Helen 1994 Measuring disparities in the fiscal condition of local governments. In Fiscal Equalization for State and Local Government Finance, John E
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Pp. 1-19 in Fiscal Equalization for State and Local Government Finance, John E
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U.S. Advisory Commission on Intergovernmental Relations 1964 The Role of Equalization in Federal Grants.
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Advisory Commission on Intergovernmental Relations, is premised on measuring fiscal capacity as equal tax rates, ignoring tax burden (defined as taxes as a percentage of wealth)
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From page 295... ...
. 15 This is an admittedly very tenuous conclusion because no comprehensive study of the effect of Ohio's municipal income tax on intrametropolitan disparities has been conducted.
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