Fiscal Health for Local Governments

by Honadle; Cigler; Costa

• ISBN13: 9780123547514
• ISBN10: 0123547512
• Format: Paperback
• Copyright: 2003-12-11
• Publisher: Elsevier Science

Summary

This examination of the fiscal health of local governments offers a "how-to" approach to identifying and solving financial problems. It will serve as a primer for readers interested in understanding financial processes and alternatives, and as a practical guide for those who need access to fiscal measurement tools. Its principal selling point lies in its assumptions: instead of using the vocabulary and research agendas of economists (such as Musgrave, Fisher), finance scholars (Ladd/Yinger) and political scientists (Peterson/Strachota), it will appeal to readers who lack sophisticated knowledge in these areas and nevertheless need practical advice. The book stems from the "Fiscal Health Education Program," an applied economics program at the University of Minnesota. It uses three measures of fiscal healthfinancial condition, trend analysis, and financial trend monitoring systemas the basis for advocating particular fiscal strategies. The book examines the tools that can be used to assess the condition of a local government's fiscal health and some of the policy causes or remedies for certain situations, as well as some of the strategies governments can pursue to maintain and improve health.

Table of Contents

Preface and Acknowledgments	vii
Foreword	xi
1. Introduction and Overview	1	(16)
Scope of the Book and Audience	2	(2)
Why Fiscal Health Matters	4	(1)
Factors Affecting Local Government Fiscal Health	5	(5)
The Fiscal Manager's Situation	10	(2)
A Fiscal Capacity Framework	12	(1)
Summary	12	(2)
Discussion Questions	14	(1)
References	15	(2)
2. Fiscal Health Literature: Drifts and Reflections	17	(22)
What Is Fiscal Health? A Look at the Terminology	17	(5)
Influences on Fiscal Health Revisited	22	(2)
Measuring Fiscal Health	24	(7)
What Governments Do About Fiscal Problems	31	(2)
Conclusion	33	(1)
References	33	(6)
3. Macro Trends Affecting Local Governments	39	(26)
Demographic and Social Trends	40	(6)
Telecommunications Infrastructure, Technology, and the Global Economy	46	(1)
Institutional and Policy Fragmentation	47	(3)
Increased Problem Complexity	50	(2)
Increased Demand for Services	52	(1)
Increased Citizen, Group, and Elected Official Activism	53	(1)
Increased Interest in Regional Issues	54	(1)
Looming Structural Budget Gaps	55	(5)
Conclusion	60	(1)
Discussion Questions	60	(1)
References	61	(4)
4. Financing Trends and Options	65	(42)
Fiscal Federalism	66	(2)
Size of Government	68	(5)
Local Response to the Macrotrends	73	(5)
Local Revenue Sources	78	(3)
Regional Sprawl and Local Finances	81	(2)
Intergovernmental Assistance	83	(2)
Changing Patterns of State Assistance	85	(1)
Local Tax Options	86	(3)
Property Tax Revisions and Improved Administration	89	(3)
User Charges and Fees	92	(2)
Restructuring the System of Local Government	94	(1)
Public Authorities and Special Districts	95	(1)
Tax-Base Sharing	96	(2)
Transfer of Powers and Intergovernmental Agreements	98	(1)
Trends Interacting with Revenue Diversification	99	(1)
Conclusions	100	(1)
References	101	(6)
5. Alternative Service Delivery (ASD) Options	107	(32)
Types of Alternative Service Delivery (ASD) Options	109	(1)
Criteria for Evaluating ASD Options	110	(3)
Perceived Barriers to Intermunicipal Cooperation	113	(8)
Assessing Alternative Service Delivery Options	121	(4)
Contracting Options	125	(1)
Subsidy/Fees Options	125	(2)
Analysis of Current Operations	127	(1)
Cost Comparisons	128	(1)
Outsourcing Principles	129	(1)
Principles of Successful Contracting	130	(3)
Contract Preparation and Negotiation	133	(2)
Conclusion	135	(1)
Discussion Questions	136	(1)
References	136	(3)
6. Tools for Analyzing Local Fiscal Health	139	(38)
Tool #1: Ten-Point Test of Fiscal Condition	140	(4)
Application of the Ten-Point Test to Pleasant County	144	(7)
Tool #2: Fiscal Capacity Analysis	151	(1)
Tool #3: The Financial Trend Monitoring System	152	(17)
Conclusion	169	(1)
Discussion Questions	170	(1)
References	171	(6)
7. Analysis and Interpretation	177	(18)
Case Study I: Glendon County	178	(5)
Case Study II: Sharpelle County	183	(4)
Case Study III: The City of Meirwood	187	(5)
Discussion Questions	192	(3)
8. Fiscal Effects of Local Government Boundary Adjustments	195	(24)
Mixed Lessons from Experience	195	(2)
A General Framework	197	(2)
A Case Example	199	(17)
The Prediction	201	(9)
Intergovernmental Aid Impact	201	(2)
Impact of Consolidation on Debt Burden	203	(1)
Property Tax Impact	204	(2)
Impact on North Branch Area School District zo	o5
Impact on Costs Associated with Detachment and Annexation	206	(1)
Impact of Consolidation on Local Service Costs	206	(3)
Impacts on Farmers	209	(1)
The Reality	210	(6)
Intergovernmental Aid Impact	210	(2)
Debt Burden	212	(1)
Property Tax Impact	212	(1)
Expenditures Since Consolidation	213	(1)
Staffing Changes	214	(1)
Summary and Conclusions of the Case Study	214	(2)
General Considerations	216	(1)
Discussion Questions	217	(1)
References	217	(2)
9. Practical Strategies for Local Fiscal Health	219	(22)
Be More Efficient	228	(1)
Expand the Tax Base	229	(2)
Reduce the Demand for Services	231	(1)
Shift Costs to Nonresidents	232	(1)
Secure New Sources of Revenue	233	(1)
Increase Spending Flexibility	234	(1)
Improve Management of Existing Resources	235	(1)
Diversify Revenue Sources	236	(1)
Summary and Conclusion	237	(1)
Discussion Questions	238	(1)
References	239	(2)
10. Conclusion	241	(10)
References	251	(2)
About the Authors	253	(4)
Index	257