City-State Ideological Incongruence and Municipal Preemption

A growing concern among municipal officials across the United States is that their policymaking capacity is under attack by state legislatures who are increasingly likely to preempt those municipalities. However, determining the extent to which municipalities are preempted is challenging. We overcome this by surveying a large sample of municipal officials from across the United States. We find that officials from municipalities that are more ideologically distant from their state overall are more likely to report being preempted by their state government. Moreover, this pattern is driven by more liberal municipalities in both Republican and Democratic states reporting higher rates of preemption. Additionally, municipalities under unified state governments are more likely to report preemption, especially those under unified Republican control. These findings have important implications for the quality of representation in our federalist system and indicate that preemption is not just an issue between Republican states and liberal urban cities.     

Common pool effects and local public debt in amalgamated municipalities

This paper investigates whether the large scale municipal amalgamations in the German state of Baden-Wuerttemberg in the early 1970s led to considerable common pool exploitation. Through amalgamation the resources of several municipalities are pooled together disclosing the former independent municipalities a larger source of funds. Additionally, the pooling also decreases the cost of local public goods, as those have to be borne by the whole of the amalgamated municipality. By exploiting the huge variance in the amalgamation process in terms of number of participating municipalities, but also in municipality size or amalgamation strategy, we identify considerable common pool effects. Amalgamated municipalities show considerably stronger acceleration in debt accumulation compared to non-amalgamating municipalities. This common pool exploitation is stronger if more municipalities participate and when municipalities amalgamate by annexation.

     

Survival of the Fairest: Examining HUD Reviews of Assessments of Fair Housing

ABSTRACT

In 2015, the U.S. Department of Housing and Urban Development (HUD) issued the Affirmatively Furthering Fair Housing (AFFH) Rule, arguably the most significant federal effort in a generation to address place-based disparities in access to opportunity and to advance fair housing. In 2018, HUD suspended the rule, it said in part because of the resources it was expending to implement it and in part because of the large share of municipal plans that HUD determined had failed to meet the rule’s requirements. In this article, we present the first analysis of the fair housing plans that HUD did not accept, examining how municipalities failed to meet the rule's requirements, what those failures imply about advancing fair housing, and the extent to which HUD’s enforcement strategy was working before the suspension. Our analysis shows that HUD engaged in detailed reviews of municipalities’ Assessments of Fair Housing and provided constructive feedback. The most common issue with which municipalities struggled was setting realistic goals that would actually advance fair housing and creating measurable metrics and milestones to gauge progress. Several municipalities neglected to conduct thorough regional analyses or analyses of all relevant disparities in access to opportunity. Both shortcomings reflect broader challenges municipalities face in advancing fair housing, particularly in identifying strategies that address interconnected causes of disparities in access to opportunity and in building regional support to address those causes.     

Taxation and the Unequal Reach of the State: Mapping State Capacity in Ecuador

Even though the unequal reach of the state has become an important concern in the literature on developing democracies in Latin America, empirical measures of intracountry variation in state capacity are scarce. So far, attempts to develop valid measures of the reach of the state have often been hampered by inadequate data. Leveraging insights from national‐level scholarship, this article proposes a tax‐based measure to capture such intracountry variation. Drawing on a comprehensive data set of municipal finance and estimates of economic activity derived from nighttime lights, it maps state capacity in Ecuador. The article validates the measure on the basis of survey data collected by the Latin American Public Opinion Project. A multilevel analysis demonstrates that citizens tend to be more satisfied with the services provided by the state in municipalities with higher state capacity, which strengthens confidence that the measure picks up relevant differences.     

Regionalisation in Belgium

Abstract. Despite recent decentralisation moves, Belgium continues to face a constitutional crisis involving problems of identity and legitimation amongst the Flemish and Walloon communities. These problems not only involved habitual difficulties of language, but also the effects of industrial decay in traditional primary economic sectors and a concern with the legitimacy of central government power. These difficulties are reflected in the complex constitutional and administrative arrangements designed to increase the autonomy of sub-national levels, in which dominant regional parties have seen power shift to regional levels at the expense of municipalities. This development of the regional level has produced pressures which encourage the emergence of a federal state, whilst pressures from the municipalities support the continuance of a unitary state. In the absence of any clear solution, the small Belgian state remains in crisis.     

Remunicipalization in German cities: contesting neo-liberalism and reimagining urban governance?

After two decades of widespread privatization, German municipalities have started to re-purchase privatized companies. At the same time, social movements are campaigning for remunicipalization, promoting it as a means of achieving greater urban democracy, though these objectives are often divergent from those of municipalities concerned with reasserting local state autonomy. With reference to Berlin, the paper discusses how remunicipalization campaigns might contribute to post-neo-liberal urban governance. It presents a preliminary frame for developing progressive remunicipalization movements centred on three elements of contestation: rejection of neo-liberalism; connection to other and broader struggles; and commoning as an alternative form of urban governance.     

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     

Urban local government finance in Nigeria: The case of Lagos municipal area

One of the most important results of the global reform of local governments in Nigeria in 1976 was to initiate a progressive increase in the amount of monetary transfers to local governments (LGs) by federal and state governments (especially the former). The proportion of federally collected revenues devoted to LGs increased rapidly from less than 2 per cent in 1976 to 15 per cent in 1990. This has enabled Nigerian LGs to play a more visible role in total public expenditures. On the other hand, huge federal transfers have led to sharp declines in absolute and relative terms in locally generated revenues. The two Lagos municipalities are able to generate up to 50 per cent of their total revenues. In contrast, the average for all local governments in the country is 4–5 per cent. The relatively large internal revenue sources in the two Lagos municipalities results in generous surpluses, which they are able to channel into capital development or special project expenditures. The single most important internal revenue source is the property tax, which is not even collected in some other large cities, such as Kano, Ogbomosho and Sokoto.     

Explaining Interest Rates in Local Government Borrowing

ABSTRACT

This article analyzes the usefulness of municipal accounting information in the interest rates agreed on by financial institutions in the European context. Most of the literature has focused on municipal bonds, mainly in the United States. Our core contribution is to study which factors determine the interest rates on bank loans to municipalities. This framework is different, since there is neither a secondary bond market nor credit ratings, and therefore information asymmetry is higher. Specifically, we investigate if municipal financial indicators and financial reports’ quality have an influence on interest rates paid by Spanish municipalities in the period 2001–2008. Our empirical results indicate that, in general, the municipal financial situation exerts an influence on the credit policy of lenders, who charge a risk premium to those municipalities with less current surplus, which is an indicator of the municipality's saving ability. Furthermore, there is also some inertia in the municipal annual interest rate (year t ? 1 interest determines around 27% of year t interest). Other findings indicate that high levels of expenditures and debt per capita increase the interest cost of municipal borrowing. Finally, municipalities that disclose full detailed financial reports pay less interest because information asymmetry and transaction costs are lower.     

Sunlight or Window Dressing? Local Government Compliance with South Africa's Promotion of Access to Information Act

Institutional reforms often face challenges of poor compliance and implementation at the local level. I analyze these in a context where weak state capacity and limited enforcement make widespread compliance unlikely. South Africa's 2000 Promotion of Access to Information Act tasked the South African Human Rights Commission with monitoring and promoting compliance, but with limited resources and no authority to sanction. I argue that local political competition can generate endogenous incentives for compliance, even under conditions of weak capacity and limited external enforcement. Using data on 234 South African municipalities over 10 years, I find higher levels of compliance among more politically competitive municipalities. The results are not simply a function of differences between African National Congress–governed municipalities and others, and are robust to numerous controls for different forms of local state capacity.     

New Public Management in Swiss municipalities

Swiss municipalities are being stretched to their limits. In the years from 1995 to 1997, 32% of all Swiss municipalities closed with a deficit. In response to this situation, numerous reforms have been introduced since the start of the 1990s in order to improve the performance capability of the municipalities. Aside from intermunicipal cooperation, New Public Management (NPM) is the reform project that is currently being discussed most in the Swiss municipalities. Recent data shows that every fourth municipality has already taken first steps with NPM. Many kinds of activities are understood as being encompassed by NPM, even when not all aspects of NPM are implemented. Only one fifth of the municipalities that have introduced NPM are already working with key elements such as product definitions, performance agreements, and global budgets, which are necessary for an orientation toward output and outcome. In municipalities of less than 1,000 inhabitants NPM is still hardly an issue, while a number of towns with over 10,000 inhabitants are looking into NPM quite intensively. NPM programs are being developed primarily in municipalities that are part of German-speaking Switzerland. Municipalities that offer a wide range of services consider new steering models, such as NPM, far more frequently than those with a narrower range. The financial situation has little influence on whether NPM is introduced.     

Simulating Massachusetts Municipalities' Recession Readiness: Early Warning of a Perfect Storm?

We simulate effects of two recessions on Massachusetts municipalities in light of their relative dependence on state aid, capacity to increase property taxes under Proposition 2½ constraints, growth, and nondiscretionary costs. We also explore the efficacy of local government stabilization funds in light of current literature on stabilization funds, slack resources in general, and the state–local fiscal relationship. We found substantial variance in Massachusetts municipalities' recession readiness. Fifty‐five (16 percent) municipalities have insufficient resources to weather a severe recession scenario without significant sacrifice due to reliance on state grants‐in‐aid, low property tax revenue growth, erosion of property tax revenue increments by increases in nondiscretionary expenditures, and inadequate stabilization funds.     

An evaluation of the application of the new public management principles in the South African municipalities

New public management (NPM) was introduced in the western world with a sole purpose of reforming the public sector and its approaches in managing affairs of the state. These reforms were later adopted in some parts of the African continent including in the sub‐Saharan Africa trying to emulate the successes of the developed economies of the world. South Africa as one of the countries in Africa also sought to shift from its apartheid bureaucratic, inefficient and rule driven management of public affairs. To this end, the democratic South Africa aligned its constitutional provisions with the principles of NPM which include but are not limited to participatory planning, decentralisation, performance management, effectiveness and efficiency. These principles were introduced precisely to better manage the state and its resources including at the local sphere of government. Local government in South Africa is underpinned by its own sets of policy frameworks. This conceptual paper seeks to evaluate the application of NPM principles in the South African municipalities. The said evaluation was undertaken through a review of existing literature. The paper concludes that the application of the said principles in the South African municipalities is confronted by some challenges including lack of political will, corruption as well as lack of skills and capacities. Necessary recommendations have been developed to enhance the performance of municipalities so as to achieve the otherwise good intended provisions of the NPM.     

The robustness of quadratic voting

Combining local council election data with fiscal data on grant allocations in a German state, we study partisan favoritism in the allocation of intergovernmental transfers within a quasi-experimental framework. We hypothesize that state governments pursue two distinct goals when allocating grants to local governments: (1) helping aligned local parties win the next election and (2) buying off unaligned municipalities that may obstruct the state government’s policy agenda. We argue furthermore that the relative importance of these two goals depends on local political conditions. In line with this argument, we show empirically that the effect of political alignment on grant receipts varies depending on the degree of local support for the state government. While previous contributions find that aligned local governments always tend to receive larger transfers, our results imply that the political economy of intergovernmental transfers is more intricate.     

Life at the Bottom of the Fiscal Food Chain: Examining City and County Revenue Decisions

Any shifting of responsibilities from the state or federal governmentsto local governments would fall mostly on the shoulders of general-purposegovernments, namely, cities (municipalities) and counties. Thisstudy explores city and county revenue decisions associatedwith general funds—the governmental fund most likely tobe affected by state requirements for greater local financingresponsibility for new or devolved programs. The results suggestthat state control over local revenue authority affects decisionsregarding the imposition of financial burdens on residents,and that intergovernmental aid to cities and counties does notnecessarily mitigate those burdens. Despite evidence of healthyfinancial reserves, especially for cities, shifting responsibilitiesfrom the state to city or county governments could place citiesand counties in difficult fiscal positions. Given the importanceof own-source revenues to current budgets, and in view of thequestionable impact of intergovernmental aid on city and countyresidents' revenue burdens, questions persist about the abilityof city and county governments to maintain (and, if necessary,to expand) services during economic recession.     

A systematic approach to study electoral fraud

Integrity of elections relies on fair procedures at different stages of the election process, and fraud can occur in many instances and different forms. This paper provides a general approach for the detection of fraud. While most existing contributions focus on a single instance and form of fraud, we propose a more encompassing approach, testing for several empirical implications of different possible forms of fraud. To illustrate this approach we rely on a case of electoral irregularities in one of the oldest democracies: In a Swiss referendum in 2011, one in twelve municipalities irregularly destroyed the ballots, rendering a recount impossible. We do not know whether this happened due to sloppiness, or to cover possible fraudulent actions. However, one of our statistical tests leads to results, which point to irregularities in some of the municipalities, which lost their ballots: they reported significantly fewer empty ballots than the other municipalities. Relying on several tests leads to the well known multiple comparisons problem. We show two strategies and illustrate strengths and weaknesses of each potential way to deal with multiple tests.     

How Municipal Property Tax Responded to State Aid Cuts: The Case of Massachusetts Municipalities in the Post‐2001 Fiscal Crisis

This empirical study examines municipal property tax responses to state aid cuts during the post‐2001 fiscal crisis. Using panel econometric techniques on annual changes in property tax levy by 351 incorporated Massachusetts municipalities in the period of 2002–2006, the results suggest that municipal governments offset about 9 cents of each dollar of net state aid cut through the increase of their property tax rates. It contributes to public finance literature on the extent to which local property tax can be used to stabilize municipal revenues when the intergovernmental revenue shrinks.     

Policy diffusion in subnational governments: State–local relationships in the Brazilian education policy

Intergovernmental relations play a key role in policy diffusion among constituent units. Federal governments have adopted different mechanisms to guarantee minimum standards across the countries, but historical trajectories and widely shared policy ideas are also mentioned as relevant in diffusion processes. This paper focuses on the influence of federalism in policy diffusion at the subnational level in Brazil. The 1988 Constitution consolidated decentralization of the Brazilian education policy but required cooperation between states and municipalities. The lack of a national definition resulted in a great variety of cooperative programmes and coordination arrangements, allowing the identification of similarities and differences among their diffusion processes. This article shows that state governments are the main policy-makers regarding cooperation, which highlights that the role of the federal government does not entirely explain these processes. Nevertheless, policy trajectories and the movement of ideas and people municipalities were keys for policy diffusion.     

Mexican Municipalities and the Flypaper Effect

We investigate the phenomenon of flypaper effect and its relationship with the local tax effort by using a panel data comprising approximately 48 percent of the Mexican municipalities. Our estimations based on the fixed effect and difference GMM estimators confirm the existence of flypaper effect. Moreover, we find evidence to suggest that the richer municipalities are likely to experience substitution effect, i.e., the lower levels of tax effort. We also find that the magnitude of the flypaper effect is a decreasing function of the economic wellbeing of municipalities. This calls for an overhaul of the allocation mechanism of unconditional grants to the Mexican municipalities.     

The impact of incumbency on turnout. Evidence from Italian municipalities

We analyse how the presence of an incumbent among candidates at an election affects electoral turnout. We use a rich data set which provides information on the results of Italian municipal elections over the period 1993–2011. We find that the impact of incumbency is heterogeneous across geographical areas: incumbency produces a positive effect on turnout in the South of Italy, whereas we find a negative and statistically significant effect in the North. We speculate that the north-south divergence is related to differences in social capital and in clientelistic relationships established by incumbent politicians. Our conjecture finds support when we look separately at municipalities in the lower and upper quartile of the social capital distribution and at municipalities with high or low densities of organised crime.