Geography/Planning 379:

1
Geography/Planning 379 Urban Growth
DevelopmentLecture 20 Urban Government and
Political Fragmentation

• 1. Local Government Responsibilities / Revenue
  Sources
• 2. Political Fragmentation
• 3. Resulting Problems of Finance and Governance
• 4. Some Solution Strategies
• a. Fiscal Reform
• b. Transfer of Responsibilities
• c. Government Area Reforms
• READING
• Required Textbook Ch 12, 309-335
• Optional Leinberger and Lockwood
• A billion dollars isnt what it used to be.
• Nelson Bunker Hunt

2
Local Government Responsibilities and Revenue
Sources

• Whats the biggest city in the 48 contiguous
  United States?
• Basic problem for local govt responsibilities
  have grown far faster than revenue sources
• In USA, local governments have more
  responsibilities than in other countries

(By land area Jacksonville, FL)
3
Top Ten Local Government Expenditure Categories

• (Source 2002 Census of Governments)
• Education 411 Billion (States 152)
• Police 51 Billion
• Hospitals 46 Billion
• Interest on Debt 43 Billion
• Highways 41 Billion (Transit 252 million cf
  states fed )
• Welfare 37 Billion (States 220 billion)
• Sewerage 27 Billion
• Fire Protection 25 Billion
• Housing Com Dev 24 Billion
• Parks Rec 23 Billion

4
Local Government Responsibilities and Revenue
Sources

• Where does all the money come from?
• Local govt revenue sources suggest some of the
  problems
• Top Local Government Revenue Sources(Source
  2002 Census of Governments)
• State Govt Transfers 340 Billion
• Property Taxes 253 Billion
• Utility Revenue 89 Billion
• Sales Taxes 62 Billion (44 B Genl Purpose)
• Interest Earnings 42 Billion
• Federal Govt Transfers 36 Billion
• Whats the biggest revenue source for the federal
  govt?
• Local income taxes 18 Billion
• Problems with property taxes
• Regressive
• Assessments rise rapidly with inflating property
  values
• Unfair collected for small units due to extreme
  political fragmentation

5
2. Political Fragmentation

• Number of Governmental Units in the USA by Level
• (Source 2002 Census of Governments)
• Type
  Number of Units
• Federal 1
• States 50 (51?)
• Local Government Units 87,849
• General Purpose Local Governments 38,971
• Counties 3,034
• Municipalities (Cities, Towns,
  Villages) 19,431
• Townships 16,506
• Special Purpose Local Governments 48,878
• School Districts 13,522
• Special District Governments 35,356

6
2. Political Fragmentation

• Changes During Last 50 Years in the Number of
  Local Governmental Units by Type
• (Source 2002 Census of Governments)
• General Purpose Local Governments
• Counties Little change
• Municipalities (Cities, Towns, Villages) 2,624
  (16)
• Townships -696 (-4)
• Special Purpose Local Governments
• School Districts -53,833 (-80)
• Special District Governments 23,016 ( ca.
  300)

7
2. Political Fragmentation

• Reasons for Political Fragmentation
• Annexations by central cities halted by 50s in
  most metro areas
• Move to suburbs ? lower taxes, better school
  districts, less diversity
• Profusion of special districts
• More than 1,000 local units of Govt in Greater
  Chicagoland Area most of those are special
  districts

8
3. Resulting Problems of Finance and Governance

• Fiscal Imbalance
• Effective property tax rates vary widely across
  metro areas
• Move to suburbs ? lower taxes, better school
  districts, less diversity
• Effective tax rate Total taxes levied / total
  assessed value of property
• Greater numbers of jurisdictions in a metro area
  greater fiscal imbalance

No. of jurisdictions increase
100
Percent of Metro land area in largest jurisdiction
50
0
Effective tax rate
9
Resulting Problems of Finance and Governance

• Especially severe fiscal problems of central
  cities
• They have more restricted revenue sources plus
  higher service demands
• More Severe Revenue Limitations for Central
  Cities
• Wealthier residents have moved out to suburbs
  property taxes paid where you live
• Retailing has decentralized also sales taxes at
  suburban malls
• City commuter or income taxes cause job losses

10
Resulting Problems of Finance and Governance

• Higher Service Demands for Central Cities
• High crime rates ? higher police costs
• Old building stock, high density, tall bldgs ?
  higher fire protection costs
• High concentrations of poor ? higher welfare
  human services costs(welfare 5 of expenditures
  for all local govts nationwide, but 25 for ccs
  of MSAs)
• Many services provided serve entire metro area
  e.g., transit
• Daytime service population gt nighttime resident
  pop

11
Resulting Problems of Finance and Governance

• Fiscal Zoning
• Commercial and Industrial land uses contribute 2
  to 3 times cost of services demanded
• Lower-income, big families big net cost to a
  jurisdiction
• Result Vicious competition for property and
  sales tax revenues
• Big breaks given to commercial developments even
  though retailing is essentially a fixed pool
• Sacrifices efficient land use patterns, promotes
  sprawl

12
Resulting Problems of Finance and Governance

• Overlapping Special Districts
• They often have conflicting interests with
  overall public good
• Case study NY Port Authority
• Low Overall Level of Public Awareness and Control
• Low turnouts for local elections
• Easier for special interests to control
  decision-making

13
Some Possible Solutions to Problems Caused by
Political Fragmentation

• Three main categories of proposals
• Fiscal reform Get local governments more money
• Transfer of responsibility Move some powers
  away from local level
• Government Area Reforms Change geographical
  arrangement of metro political space

14
Some Possible Solutions to Problems Caused by
Political Fragmentation

• Fiscal reform
• Increase grants from states and federal govt
• Case study Nixons General Revenue-Sharing to
  CDBG to community charitable organizations
• Tax-base sharing (Minneapolis St. Paul)

Pool of revenues allocated back out to
jurisdictions based on population and tax need
Each locality contributes 40 of all increase tax
revenues from new non-residential uses
15
Some Possible Solutions to Problems Caused by
Political Fragmentation

• Transfer of responsibility
• Rarely have local powers been taken away
• American belief in local govt being closest to
  the people
• But which level do we pay most attention to these
  days?
• Some things, like transportation and zoning maybe
  could be better done at the state or a higher
  level
• Government Area Reforms
• For some local functions, small units sensible
• Needless duplication for others
• Concept of economies of scale
• Small savings for human intensive schools,
  police, fire protection
• Large savings for hospitals, sewerage, water,
  higher education etc

16
Some Possible Solutions to Problems Caused by
Political Fragmentation

• Government Area Reforms
• Many metrowide Special Districts respond to these
  needs
• But two more radical possibly better ideas
• Unification or Consolidation
• (City governs countywide)
• FederationAdd new levelMetro Govt

Tried in various areas, including Jacksonville,
FL!
METRO GOVT
CC
CC
17
POP QUIZ Name _____________

• The 2002 U.S. Census of Governments found that
  the category with the largest number of local
  units of governments was
• Special Districts
• Counties
• Cities
• Townships