Rethinking Urban Policy Urban Development in an Advanced Economy (1983) / Chapter Skim
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7 Stabilizing Metropolitan Economies
7 Stabilizing Metropolitan Economies
Pages 135-151
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From page 135... ...
policies aimed at equalizing the fiscal capacity of communities, enabling them to maintain a reasonable level of public services when their economies are under stress.
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From page 136... ...
In light of these realities, measures designed to encourage local economic development and employment opportunities and to stabilize the economy and fiscal system are an integral part of any national urban development strategy. Mobility is not without cost to the individuals, firms, and communities concerned at either end of the migration stream (Bluestone and Harrison, 1982:67-721.
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From page 137... ...
As we have seen, however, many modern firms are not constrained to locate in specific places, although certain local factors are clearly important in attracting them and in providing benefits from the presence of similar and supporting activities. The industrial parks of Silicon Valley and the converted textile mills of New England both house computer firms, but there is a labor force in each region that can adapt to the needs of the industry, a strong university-related research and development complex, good air transportation, and the presence of related industries and services.
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From page 138... ...
The Selby Bindery and similar inner-city enterprises are not models to be specifically copied, but they demonstrate that careful selection of activities geared to local labor force characteristics, when combined with ~ The discussion of the Selby Bindery is based on Bendick and Egan (1982)
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From page 139... ...
Such enterprises are often essential if the labor force is to gain the basic working skills and habits necessary for upward mobility. The Selby Bindery also illustrates how public policy is important in leveraging private capital to create jobs that otherwise would have located elsewhere at substantial social cost in unemployment in the inner city.
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From page 140... ...
These agreements require that both economic development and unemployment programs look beyond the raw numbers of new jobs created to the characteristics of the people who are actually employed (G. Clark, 19831.2 The Use of Public Employment While community integrity strategies emphasize private employment, selective use of public service employment can also play an important role.
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From page 141... ...
By whatever means, an expanded public service and public works program could be beneficial in several ways. It could channel the urban poor and the structurally unemployed who do not find new jobs in the private sector into productive activities.
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From page 142... ...
The nation has had enough experience with public works employment and countercyclical government employment programs to understand both the benefits and problems associated with such efforts. New Deal public works employment programs produced impressive and lasting achievements: 651,000 miles of roads, 16,000 miles of water and sewer lines, 78,000 bridges, 2,300 stadiums, 35,000 public buildings, and 353 airport landing fields (Levitan, 19751.
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From page 143... ...
The issue, then, is what kind of public employment program to have, how large it should be, and how long it should last. From a long-term perspective, direct government employment or private employment that provides public services through contracts or other forms of privatization will surely increase as more and higher-quality services such as education, recreation, and health care are demanded by citizens, although the rate of growth promises to be much lower than in recent decades.
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From page 144... ...
Employment tax credits, if offered at all, should probably be available to construction firms engaged in local public works programs that require employment of the disadvantaged. Certainly there is now enough experience with minority hiring programs in both public and private construction to develop effective hiring and upward mobility programs.
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From page 145... ...
Properly used, public employment programs can help a community avoid some of the most serious consequences for dislocated workers who face no realistic choice but unemployment and for those who have no other realistic point of entry into the labor force. EQUALIZING FISCAL CAPACITY The Need for Local Capacity If we take seriously the admonition that no uniform approach to urban economic development is likely to succeed because of the diversity among the different types of urban areas, the national interest would seem best
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From page 146... ...
This cannot be done if there is no assurance that necessary resources can be made available. Thus, one of the most important aspects of local capacity for adjustment is its fiscal capacity the ability to finance a minimum level of public services and facilities at effective tax rates set near the national average (U.S.
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From page 147... ...
While the use of state power to equalize fiscal capacity within a state is of great importance, for a state that is itself in serious fiscal distress, no amount of reshuffling of boundaries and responsibilities, revenue sharing, or productivity advance will overcome the basic problem of disparity between its major urban units and those in other, more prosperous states that compete for the same economic activities. Without some substantial changes in national policy, interstate disparities are likely to increase rather than narrow during the next decade.
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From page 148... ...
It relieves many governments of a fiscal burden they find difficult to carry, but falls short of ensuring that each unit of government has the fiscal capacity to provide services to its citizens and residents at a level near the national average by applying an average tax rate to the resources available to it. Strategies for Equalizing Fiscal Capacity Fiscal equalization does not mean that all units of government will provide the same level of service or even the same package of services.
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From page 149... ...
Fiscal Equalization: The Experiences of Canada and West Germany Fiscal equalization is used effectively in other federal nations. In Canada, where the national government has traditionally played a far smaller role in local fiscal affairs than in the United States, equalization grants are distributed by the federal government only to those provinces whose fiscal capacity is below the national average.
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From page 150... ...
A state's unrestricted share might also be adjusted according to the degree to which it has independently acted to reduce local fiscal disparities, whether by consolidating local governments, sharing state revenues, or reallocating responsibilities for governmental functions. Fiscal equalization holds promise of providing a solid and understandable basis for long-term fiscal relationships in the federal system.
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From page 151... ...
These agreements provide planning frameworks to help guide public sector investments, with the objective of influencing private sector growth and development. Germany also has a joint federal-state program designed to promote regional economic development (National Research Council, 1982b:5,361.
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