Measuring the impact of community development block grant spending on urban neighborhoods

Abstract

Regression analysis of Community Development Block Grant (CDBG) spending in 17 large cities reveals strong statistical associations between spending from 1994 to 1996 and changes in three indicators of neighborhood conditions: the home purchase mortgage approval rate, the median amount of the home purchase loans originated, and the number of businesses. However, there is no consistent association between spending and indicators of subsequent neighborhood change unless CDBG spending is sufficiently spatially targeted that it exceeds a threshold of the sample mean expenditure and is measured relative to the number of poor residents. In addition, associations vary according to neighborhood trajectories before investment and changes in the local economy.

Nevertheless, even in the least hospitable contexts—highly concentrated neighborhood poverty, preexisting declines in home values, weak city job growth—our estimates are consistent with the hypothesis that above‐threshold CDBG spending produces significant neighborhood improvements. We discuss the implications for such spatially targeted spending and connections between our work and the emerging literature on the dynamics of poor neighborhoods.     

Community Development Block Grant: The Role of Federal Requirements

The CDBG program provides an excellent opportunity to studywhat local governments do to carry out national policy whenit is stated in general terms and they are left to their owndevices, and what they do differently when policy is interpretedin explicit regulations which are enforced. This article reviewswhat happened with two major legislative guidelines (low incometargeting and community participation) during the first sixyears of the CDBG program, including a period during which HUDinterpretations and enforcement varied greatly. It appears thatstrong federal enforcement caused a small increment in low incometargeting overall; but rigorous HUD direction and enforcement,combined with strong citizen participation, was necessary forsome jurisdictions to emphasize targeting. The research is pertinentin the present era of attempts toward major relaxation of federalgrant conditions and enforcement programs.     

Devolution of the Small Cities CDBG Program in Mississippi

In 1982 responsibility for HUD's Small Cities Community DevelopmentBlock Grant program was transferred to state governments aspart of President Reagan's New Federalism initiatives. Devolutionwas designed to (1) implement a new vision of American federalism,(2) shift control over a significant source of financial resourcesfor nonmetropolitan areas, and (3) end the bypassing of stategovernment officials in community development decisionmaking.This article uses the eleven year (1975–1985) historyof Small Cities CDBG awards in Mississippi to assess the consequencesof the program's devolution. Changes in the pattern of stateCDBG awards indicate that the program's devolution produceda policy redirection that channeled CDBG funds to a larger numberof the smallest municipalities and permitted more local discretionin project design. As a result, HUD no longer dictated communitydevelopment policy to small cities. Instead, community developmentpriorities in Mississippi emerged out of an award process thatinvolved interaction among state and local officials.     

Government Finances In Declining Central Cities

The relationship between population decline and changes in therevenue and expenditure patterns of 318 U. S. central citiesduring the 1970s are examined using both static and dynamicmodels. Declining cities experienced less growth in revenues,especially own-source revenues than growing cities. Decliningcities became more dependent upon other governments for fiscalrelief. But declining central cities were more successful atreducing the rate of growth in their expenditures. Populatindecline was not found to have any significant independent impacton changes in municipal taxing and spending levels. A city'sage was the most important predictor of fiscal change.     

How the spending patterns of cities change: Budgetary incrementalism reexamined

Do city governments generally behave in keeping with the assumptions underlying the incremental model when they allocate their resources among competing activities? That is to say, do they try to maintain everyone's historical “fair share” of the budget in order to minimize disputes among rival participants in the decision process? Earlier studies have lacked sufficient data to address this question. However, with data from 105 West German cities, the present study is able to provide an answer. The resource allocation behavior of many of those cities seems to conform with the incremental model's assumptions. Yet for other cities, major changes in expenditure patterns from one year to the next are common. The differences in the variability of expenditure patterns across the cities studied are far from random. They are systematically associated with certain characteristics of the municipal environment. These associations, in turn, offer plausible hints about the process that leads to change in cities' spending patterns.     

Redistributive policies in decentralised systems: The effect of decentralisation on subnational social spending

This article uses cross‐national data to examine the effects of fiscal and political decentralisation on subnational governments’ social expenditures. It revisits the benefit competition hypothesis put forward by fiscal federalism research, which posits that subnational governments in decentralised countries match welfare benefit reductions by their peers to keep taxes low and avoid an in‐migration of welfare dependents. As a consequence, subnational social expenditures are assumed to plateau at similar and low levels. Using a new cross‐national dataset on social expenditures in 334 subnational units across 14 countries and 21 years, the author explores whether benefit competition causes subnational governments to converge on similar levels of social spending. The analysis reveals that as countries decentralise, subnational social spending levels begin to diverge rather than converge, with some subnational governments reducing their social expenditures and others increasing them. Furthermore, decentralisation is not likely to be associated with lowest common denominator social policies, but with more variability in social expenditure. The article also examines the effects of other macro‐level institutions and demonstrates that policy coordination influences the relationship between decentralisation and subnational social spending levels.     

Factors Underlying the Growth of Local Government in the 19th Century United States

Early in the 19th century local governmentsspent less than either the federal or stategovernments. By the end of the 19thcentury local governments spent more thanthe federal and state governments combined. This growth is obviously related to thegrowth of cities, but cities continued togrow in the 20th century, while the localgovernment share of total governmentexpenditures fell, so the growth of citiescannot be the complete answer. Anexamination of expenditures and revenues intwo cities – Boston and Baltimore –suggests that no one component ofexpenditures was responsible for increasesin total spending. Rather, it appears thatthe primary causal factor was revenuegrowth. Cities rely heavily on propertytaxes, and the increasing value of taxableproperty allowed cities to raise increasingamounts of revenue, leading to increasedgovernment spending.     

Decentralization, Local Priorities, and the Community Development Block Grant Program in Milwaukee

This article analyzes the geographic distribution of CDBG fundsacross twenty-three neighborhoods in Milwaukee, Wisconsin, bycomparing federal, city, and neighborhood responses to localneed and by testing the impact of these responses on the finalfunding allocations. In Milwaukee, decentralizing decisionmakingto the city improved the program's responsiveness to local need.However, the funding decisions made by local officials did notalways direct funding exclusively to the most extreme need;nor did they distribute funding proportionately with respectto need, even though the city's targeting mechanisms were closelyrelated to the measure of need used in this analysis. We concludethat Milwaukee's program results were obtained through a mixtureof targeting rules and political competition over program decisions.     

A Political Perspective on Contracting Out: The Politics of Good Times. Experiences from Danish Local Governments

Privatization has been on the political agenda for the last two decades. The literature points to two major explanations of privatization. One explanation is political-ideological, considering privatization to be a Liberal-Conservative strategy. Economic crisis or fiscal stress is the other main explanation of privatization. The two theses are investigated by evaluating the determinants of contracting out in Danish local governments. The analysis shows that fiscal stress is strongly, but inversely related to contracting out, while Liberal-Conservative political leadership is not associated with higher levels of contracting out than Social Democratic governance. Thus, the richer a local government becomes, the more it contracts out. Although party politics is not decisive for contracting out, the motivation seems to be political rather than economical. Specifically, it is argued that in a strongly decentralized public sector with influential public employees, contracting out is possible in good times when revenue and public expenditure are easier to increase, which reduces public employee resistance to contracting out.     

Decentralizing Community Development Decisions: A Study of Oklahoma's Small Cities Program

Decentralization of the CDBG Small Cities program in 1981 gavestates great latitude in deciding how to allocate grant funds.Consequently, scholars expressed concern that, understate control,fewer CDBG funds would be expended for low- and moderate-incomebenefits via housing rehabilitation. Research on the Small Citiesprogram in Oklahoma indicates a definite shift in spending priorities.Since 1982, Oklahoma localities diverted CDBG funds primarilyto infrastructure andeconomic development instead of housing-relatedactivities, and channeled a larger amount of dollars into moderate-and median-income areas. As a result, the Small Cities programin Oklahoma, under state control, was found to provide lessdirect and immediate housing aid to lower income citizens.     

财政分权与地方政府行政管理支出——基于中国省级面板数据的实证研究

行政管理支出具有双重属性:过多的支出不利于经济增长,使地方政府在竞争中处于劣势而不利于官员的晋升,同时有违中央政府的宏观政策目标;但能直接提高地方政府官员个人的福利水平。所以,地方政府及官员对行政管理支出存在两难选择。本文利用我国30个省(自治区、直辖市)1998—2006年的面板数据对财政分权与行政管理支出的关系进行实证研究和稳健性检验。主要结论是:在中国特色财政分权的制度环境下,地方政府在财政支出自由裁量权扩大时,总体效应是加大了行政管理支出的规模。同时,行政人员规模与行政管理支出存在显著的正相关关系。地区经济发展水平、资源禀赋、社会结构等因素对行政管理支出也有显著性的影响。在公共财政体制改革的背景下,其他公共财政支出项目(社会保障支出除外)对行政管理支出存在显著的"挤出"效应。     

The politics of social spending after the Great Recession: The return of partisan policy making

Prior research shows that the effect of partisanship on social expenditure declined over time in Organisation for Economic Co‐operation and Development (OECD) countries. In this article, the author argues that the 2007/2008 recession resulted in the reemergence of partisan policy making in social spending. This was a result of mainstream parties needing to respond to the growing challenge from nonmainstream parties as well as demonstrating that they responded to the economic crisis by offering different policy solutions. Using a panel of 23 OECD countries, the author shows that since the Great Recession, partisan effects on social spending are once again significant. These effects are more likely to be observed where the salience of the Left–Right dimension is higher. In accordance with classic theories of economic policy making, left‐wing governments are more likely to increase social spending when unemployment is higher and right‐wing governments restrain social expenditure when the budget deficit is greater.     

The impact of government structure on local public expenditures

Though the relationship between local government structure and expenditure has received considerable attention, there is little consensus as to how the features of representative government affect local expenditure. An exception is city council size, which has consistently been found to be positively related to spending. Previous results rely on cross-sectional estimation which may be subject to omitted variable bias. This paper analyzes three components of municipal governments—the form of government, the size of the city council, and the election method of city councilors. Once fixed effects estimation is employed, the positive relationship between city council size and expenditure disappears.     

Municipal Expenditures Through Thick and Thin

This article examines changes in the revenue and expenditurepatterns of twelve major cities (six fiscally healthy; six fiscallydistressed) from fiscal years 1964 to 1979. The purpose of theexaminatin is to determine whether resource scarcity resultsin significantly different expenditure patterns, especiallyfor essential services (police, fire sanitation, and sewerage),social services (welfare, health, hospitals, and public housing),capital spending, and personal sevices (salaries). The resultsshow that changes inrevenue patterns are not significantly relatedto changes in expenditrue patterns, with the exception of capitalspending. The results support the theory that cutback budgetarystrategies are not significanely different from expansionarybudgetary strategies. Incrementalism (decrementalism) prevails.     

Public spending interactions and local politics. Empirical evidence from French municipalities

This paper aims at testing whether there exist spending interactions between French municipalities by estimating a dynamic panel data model. Our results suggest that there are some interactions between neighbouring municipalities as regards primary and investment expenditures. A positive relationship between municipalities’ wage bill and unemployment rates is likely to stress a rise of temporary employment in those municipalities that suffer from social troubles. Further, the estimation results show that these interdependences also exist between cities whose mayors have the same partisan affiliation. Finally, our results confirm the opportunistic behaviour of local governments, which increase all categories of public spending in pre-electoral periods     

Constitutional Tax and Expenditure Limitation in Colorado: The Impact on Municipal Governments

Tax and expenditure limitations (TELs) have become a pervasive influence on local government fiscal affairs. Explanations for the spread of TELs suggest that voters thought local government was growing more than needed. Thus, TELs were intended to constrain growth and reduce the size of local governments. This article's purpose was to determine the impact of two separate kinds of TELs, one a property tax measure, and the other a comprehensive revenue and expenditure limit, upon the growth of municipal governments in Colorado. Using a panel data set on municipal budgets (1975–1996), the article demonstrates three major points: 1) the effectiveness of a TEL in achieving reductions in local government revenue and spending growth depends upon the nature of the TEL; 2) the comprehensive TEL did effectively constrain growth and reduce local government reliance on the property tax, despite the local options for exemption; and 3) TELs do not have uniform impacts among governments of different population.     

Race, “Deservingness,” and Social Spending Attitudes: The Role of Policy Delivery Mechanism

This paper examines how the means through which social benefits are delivered—either through a direct government program, or through a tax expenditure program—affects how citizens view social welfare programs and their beneficiaries. Attitudes toward social spending in the United States are strongly conditioned by both racial considerations and perceptions of the deservingness of recipients. We argue that the political cues given by spending conducted through the tax code differ from those given by direct spending in a way that both de-racializes spending attitudes and changes the lens through which citizens evaluate the deservingness of beneficiaries. Through a series of survey experiments, we demonstrate that social benefits delivered through the tax code are less likely to activate racialized thinking than similar or identical benefits delivered directly. This is true, at least in part, because recipients of tax expenditures are perceived as more deserving than recipients of otherwise identical direct spending.

     

Tax and expenditure limitations and the fiscal relationships between state and local governments

This paper uses comprehensive data on state and local tax and spending limitations for forty-nine states between 1976 and 1990 to estimate the effects of these limits on the fiscal relationships between state and local government. Results indicate that tax and spending limits on local governments are only partially effective in reducing revenues because political agents bypass limitations by transferring revenue reliance to unconstrained revenue sources, or because unconstrained levels of government take on additional revenue responsibilities. In particular, the empirical analysis demonstrates that binding local government fiscal constraints are associated with reductions in local revenues and increases in state aid to local governments. In contrast, state government limitations are related to reductions in both state and local own source revenues.     

City Finances and the National Economy

City governments were better prepared to face the 1990–1992recession than were state governments, and they adjusted theirbudgets with relatively less fanfare. The absence of widespreadbankruptcy notwithstanding, the fiscal position of cities hasdeterioratedandsome ofthe necessary adjustments were painful.Services were reduced as real per capita expenditure growthdeclined, taxes were increased, and the entire local governmentsector remained in deficit during the past six years. The problemhas not been softened by federal or state policies; in fact,the flow of both federal and state aid slowed markedly duringthe late 1980s. A combination of economic and social forcessuggests that many of the nation's older cities will not outgrowthis fiscal stress and their budgetary well-being will be moredependent on state and federal policies.     

Tax Expenditures for Local Governments

Foregone revenues of state and local governments have been mostly unreported. This is still a neglected subject in governmental accounting. Such significant amounts can make a difference in the choice between direct and indirect spending, and more budget officers are expected to consider the tax expenditure report as a supplement to budget documents.