Rebecca Hendrick

Assessing and Measuring the Fiscal Heath of Local Governments Focus on Chicago Suburban Municipalities

This study presents a framework for assessing the financial condition and fiscal health of municipal governments, develops indices for some dimensions of the framework, and applies the indices to 264 suburban municipalities in the Chicago metropolitan region. The framework is based on a systems view of local government financial condition. It shows that fiscal health is a complex and multidimensional concept with varying time frames. Furthermore, the dimensions are related but often in indirect or nonlinear ways, indicating they must be measured separately rather than combined into a comprehensive indicator of fiscal health. Indices developed here for targeted dimensions of the framework are assessed and compared to alternative indicators of fiscal health developed by others in the field.

Revenue Diversification: Fiscal Illusion or Flexible Financial Management

This study examines the trends in revenue diversification in approximately 240 suburban municipalities in the Chicago metropolitan region between 1988 and 1997. It then tests a model of revenue diversifications impact on tax effort using data from 1993 to 1997, and separated by home rule and non-home rule municipalities. Trends show that suburbs with higher increases in diversification tend to be home rule, younger, less residential, experiencing more growth, less reliant on property taxes, and more reliant on sales taxes. Model estimates show that communities with more revenue diversification have lower tax effort when controlling for other determinants of tax effort, and this effect is stronger in non-home rule municipalities.

Does Local Government Fragmentation Reduce Local Spending

This study uses multiple measures of fragmentation and decentralization to assess the effects of these conditions on total local spending in 126 metropolitan regions and 538 counties in the same regions in 2002. The measures are derived from a recognized scheme that distinguishes among total, horizontal, and vertical dimensions of these conditions, and the models control for other causes of total local spending, including sprawl and interlocal spending. The study finds support for the claim that total spending by local governments is higher in regions and counties with more single purpose governments (vertical fragmentation), but also jurisdictions where a greater percentage of spending is done by counties (centralization). Findings also vary by unit of analysis and type of special purpose government, which suggests that the effects of governing structure are not as straightforward as theory suggests.

An Information Infrastructure for Innovative Management of Government

Many management trends are currently sweeping the public and private sectors. One popular approach, called total quality management (TQM), focuses on improving the quality of services or products in die private sector through total organizational commitment, worker participation, and rigorous attention to inputs, outputs, and processes (Walters, 1992; Milakovich, 1991; Carr and Littman, 1990). Many TQM ideas have been adapted to the public sector, under the label entrepreneurial government, in a book that has been widely acclaimed by public administration practitioners, elected officials, and other knowledgeable observers of government (Osborne and Gaebler, 1992). Examples of other approaches are process innovation (Davenport, 1993) and managing behavior results (Brumback, 1993). Although each innovative management approach emphasizes different methods, they all advocate activities such as planning, analysis and monitoring, informed decision making, and identifying missions and objectives as well as improving products and services. Furthermore, underlying all approaches is an unwritten assumption that the information infrastructure necessary to perform key activities is present. This study presents a framework for such an infrastructure in the public sector that integrates the information requirements of innovative management (IM), methods of program assessment and monitoring, and the structure of information systems. If IM is to achieve its objective, information must be available about its operations and environment that is accurate, timely, accessible, comprehensive, and continuous. This, in turn, requires an integrated and coordinated information system for collecting, organizing, and storing data. It also requires a system that creates meaningful information from the data and then presents that information in useful ways. Developing such a system - which is much more than computers, databases, and the personnel who handle them - is a tall order for any organization. The private sector, however, has a distinct advantage over the public sector in this area. First, the private sectors experience with and knowledge of information systems is much more advanced. There is a vast and well-developed literature, both theoretical and applied, on information systems in private organizations; and business schools graduate thousands of specialists in this area each year. Second, the design and development of information systems in the private sector is simpler and more straightforward. Although some may argue that the differences between business and government are blurring, in general, government processes, structures, functions, and products vary greatly in comparison to business. Moreover, the objectives of government are less dear, clients and stakeholders are more diverse and numerous, and concepts such as quality are more complex (e.g., accountability). Despite these hurdles, if IM is to be implemented successfully in government, a great deal more attention must be paid by practitioners and scholars to developing good information systems in government. One manifestation of the well-developed literature in business is that numerous frameworks for information systems exist in private sector organizations that link the systems to organization and managerial functions, information attributes, decisions, and technical characteristics (Blumenthal, 1969; Gorry and Scott Morton, 1971; Lucas, 1973; Nolan and Wetherbe, 1980; Sprague, 1980). However, the differences between government and business imply that these frameworks will not automatically translate to government. The framework presented here recognizes these differences. It is based on the assumption that there are two inextricably related components of an information infrastructure within government: (1) assessment and monitoring and (2) information systems. On a basic level, assessment and monitoring (which comprise program evaluation) specify what information about government products and services is important; and they provide plans for obtaining that information. …

Is Government Consolidation the Answer

The Great Recession that started in late 2007 is threatening to alter the local government landscape in the United States. With the steep decline in property and sales taxes, a number of state governments are now reviewing how their local government systems can be restructured to improve service delivery. Scholars from two camps—the advocacy of regional versus multiple centers of local government—have proposed contrasting visions of how the local public sector should be organized. The century-old debate between regionalists and localists has generated a considerable body of theoretical and empirical literature from which state governments can draw as they consider the most effective way of organizing their local governments. This essay discusses the different arguments for local government fragmentation versus consolidation, reviews the empirical evidence, and identifies future areas of research. It focuses on the impacts of the local public sector structure on service delivery, social class and racial segregation, and urban sprawl.

Expenditure Tradeoffs in the American States: a Longitudinal Test, 1948-1984

Over the years, numerous scholars have explored the degree to which there are tradeoffs between defense and domestic (mostly welfare) spending in the United States and other Western democracies (Russett 1970, 1982; Perroff and Podalak-Warren 1979; Domke, Eichenberg, and Kelleher 1983; Fischer and Kamlet 1984; Kamlet and Mowery 1987; Mintz 1989). While there is substantial scholarly disagreement about how tradeoffs among expenditure categories are best measured in the first place (cf., Berry and Lowery 1990), there seems to have emerged in the extant literature a consensus that calls into question the degree to which systematic tradeoffs exist between defense and domestic expenditures. Such a finding would seem to be at odds with some journalistic and historical accounts that claim evidence for tradeoff effects in the decision process for defense and domestic spending. Scholars have suggested that the lack of an observed pattern of tradeoffs may be due to the ability of national governments to avoid making hard decisions about trading spending for one expenditure area off against spending for another by financing new spending through either increased taxes or larger budget deficits (Domke et al. 1983; Mintz 1989). To date, there has been virtually no attempt to examine the degree to which tradeoffs occur among spending categories within the American states. To be sure, there are no spending categories analogous to defense and domestic spending found in the American states; it is clear that one cannot frame the question of expenditure tradeoffs in

Variation in State Economic Growth: Decomposing State, Regional, and National Effects

Previous research on the impact of the political system on economic conditions in the American states has assumed the dominance of endogenous factors (i.e., those unique to the states) in determining levels of economic growth. However, because state economies are interdependent and responsive to national and regional economic trends, such an assumption is unrealistic. In this paper we employ the variance components approach utilized in research on electoral nationalization by Stokes (1967) and others to decompose variance in state economic growth from 1945 to 1984 into its national, regional, and state components. Our findings suggest that the state component of state economic growth is dominant for the period of our study, but that the state component declined sharply during the 1960s as the national and regional components were increasing. We conclude that a substantial proportion of the variance in state economic growth is unique to each state, but that in the postwar era exogenous national and regional factors have a strong, growing impact on state economic performance.

Tax Competition Among Municipal Governments: Exit Versus Voice

This research examines the incidence of property and sales tax competition among municipal governments in the Chicago metropolitan region and investigates whether the underlying mechanism is exit or voice. First, the research estimates a model with a spatial lag component that relates each municipalitys tax or revenue burden to that of its neighbors, controlling for other factors. The results show that tax competition exists for property taxes, which suggests that the competition is based on voice rather than exit. Second, assessment of preferences and attitudes toward sales and property taxes and competition also demonstrates the importance of voice in establishing tax rates and levies.

Top-Down Budgeting, Fiscal Stress and Budgeting Theory

Recent budgeting literature argues that many governments budget in a top-down manner, especially under fiscal stress, and that incremental budgeting theory is accurate only for bottom-up budgeting procedures when resources are plentiful. However, few studies systematically compare changes under different conditions to assess their claims. This study addresses this problem by testing a model that contains both managerial and incremental indicators of behavior. The model is estimated using pooled, cross-sectional, time-series analysis under four different environmental conditions: fiscal austerity/top-down budgeting, fiscal austerity/bottom-up budgeting, fiscal prosperity/top-down budgeting and fiscal prosperity/bottom-up budgeting. The results indicate that incremental decision making may still operate under austerity and top-down budgeting, but that more detailed decision making criteria are also important under these conditions. Furthermore, agencies seem less sensitive to fiscal conditions than upper-level officials, while agencies are more sensitive to organizational procedures.

Macro-Level Determinants of Local Government Interaction How Metropolitan Regions in the United States Compare

Empirical and theoretical research on government competition and collaboration identifies several important macro-level characteristics that can affect these forms of interaction between local governments within the same large jurisdiction. These characteristics are fragmentation of governments, fiscal dispersion of governments, sorting of population by governments, and decentralized fiscal responsibility between state and local governments. This study presents indices to measure these characteristics and examines how metropolitan regions in the United States with populations greater than one million are distributed on these indices. The study also examines how these regions compare on conditions that are likely to motivate sales tax competition between municipal governments.