Fiscal Decentralization and Natural Disaster Mitigation: Evidence from the United States

How decentralized government structure influences public service delivery has been a major focus of debate in the public finance literature. In this paper, we empirically examine the effect of fiscal decentralization on natural disaster damages across the U.S. states. We construct a unique measure of decentralization using state and local government expenditures on natural resources, which include investment in flood control and mitigation measures, among others. Using state‐level panel data from 1982 to 2011, we find that states that are more decentralized in natural resource expenditures have experienced more economic losses from floods and storms. This effect is only pronounced in states that are at higher risks of flooding. Our findings suggest that fiscal decentralization may lead to inefficient protection against natural disasters and provide implications for the assignment of disaster management responsibilities across different levels of government in the U.S. federal system.     

Managing Fiscal Federalism: Revenue Allocation Issues

Like most federal systems, Nigeria has a revenue distributionsystem in which the national government shares revenues withstate and local governments. Since the early 1970s, the bulkof revenue has been collected by the national government. Muchof this revenue has been derived from petroleum taxes and miningrents and royalties. Various proportions of this revenue havethen been distributed to state and local governments under arevenue allocation system (RAS) using different formulas. Akey problem, however, is that revenue allocations since 1970have been driven largely by political considerations and byformula factors, such as jurisdictional population and stateequality, rather than by factors associated with economic developmentimperatives.     

POLICY-MAKING IN THE AMERICAN STATES: TYPOLOGY, PROCESS, AND INSTITUTIONS

The three levels of government in the U.S. federal system maintain a different set of policy priorities because they operate under varying environmental constraints and resources. Efforts to categorize and specify the politics in terms of policy types have been particularly fruitful at both the federal (e.g., Lowi) and the local (e.g., Peterson) levels. At the state level, however, the typology perspective has yet to be more fully developed. This paper makes a preliminary effort to construct a typology framework in understanding state politics and policy. First, politics can be differentiated between growth and redistribution in the structural economic context. While redistributive politics are largely structured by class-oriented issues, growth politics are predominantly shaped by territorial concerns that temper class and ideological differences. Equally important, the growth-redistribution distinction can be supplemented by the politics of routine services, such as public education. The latter remains dominated by service-provider groups. Moreover, based on an empirical analysis of hundreds of bills in one state legislature, these political differences are found to have contributed to variations in policy consensus among lawmakers as well as interest group representation in agenda setting and legitimation across policy arenas. Our findings also suggest limitations to the typology framework.     

Public Opinion and American Federalism: Perspectives on Taxes, Spending, and Trust--An ACIR Update

The research reported here updates for 1999 some public opiniondata previously provided by the U. S. Advisory Commission onIntergovernmental Relations. The 1999 survey results indicatea general continuation of opinion trends established by thelate 1970s to the mid-1980s. Local government is viewed as givingcitizens the most for their money, followed by state governmentand the federal government. Americans still regard the federalincome tax as the worst tax, followed by the local propertytax. Likewise, Americans express the most trust and confidencein local government and the least trust and confidence in thefederal government, although confidence in all governments increasedover comparable data for 1992. Race and party identificationand, in one case, region are significant factors differentiatingopinions about the federal, state, and local governments andtheir taxes.     

Recent Trends in the Finances of the State and Local Sector

This article reviews recent trends in the finances of the state and local government sector. It finds that the sector has become increasingly self-sufficient, successfully managing its way in the eighties through the back-to-back recessions and the decentralization of the federal role in state and local fiscal affairs. The outlook for the sector now depends more on general economic trends and the actions of state and local governments, than trends in federal aid.     

Public Opinion on Federalism in Canada, Mexico, and the United States in 2003

This research reports on public opinion surveys on intergovernmentaland federal issues conducted in Canada, Mexico, and the UnitedStates in March and April 2003. In all three countries, respondentsmost often see their federal government as being the least effective,least efficient, and least trustworthy. Respondents from Canadaappear least supportive of their federal government and mostsupportive of their local governments; those from Mexico appearmost supportive of their state governments; respondents fromthe United States appear more "balanced" in their support ofthe various orders of government. Also, far greater regionaldifferences in opinion exist in Canada than in Mexico or theUnited States. Support for more decentralized federalism isfound to be strong in all these federal countries. This researchalso updates long-term trend data for the United States. Comparedwith respondents from previous years, U.S. respondents in 2003showed a measurable uplick in support for the federal government,compared with state and local governments. This support seemsto be a carryover from the terrorist attacks of 11 September2001.     

Two Cheers for Paperwork: The Value and Burden of Federal Reporting

In principle, reporting by state and local governments to thefederal government is essential to the design and implementationof national policy. In practice, reporting often engenders resentmentof federal intrusion and is often dismissed as a waste of stateand local resources. Is reporting useless? Does it strengthenthe federal government at the expense of state and local governments?We asked federal, state, local, and site officials about thevalue and burden of five specific reporting systems in elementaryand secondary education. Common assumptions about reportingdid not correspond to respondent reactions. Both value and burdencascade through the intergovernmental system, reaching policymakersin all governments. Although critics seldom discriminate betweentypes of reporting, we found that reporting designed to improvecompliance with federal standards evoked different judgmentsof value and burden than reporting designed for assistance.These results suggest some new approaches to federal policygoverning the collection of information and to the design ofindividual reporting systems.     

From state paternalism to neoliberalism in Australian rural policy: Perspectives from the Western Australian wheatbelt

For much of this century, the rural policies of Australian governments were directed at providing a viable social and economic base for rural communities and country towns. Policies which provided the conditions for stable growth in the agricultural economy, together with equitable levels of access to services such as schools, hospitals and public housing, were seen as instrumental in the development of stable rural communities. More recently, however, the process of global economic restructuring, agricultural adjustment, farm amalgamation and rapid technological change, have contributed to the declining socio‐economic viability of many rural areas. This pattern of decline has been compounded over recent years by the emergence of state and federal government policies based upon the principles of ‘neoliberalism’. The emergence of this approach to rural policy has meant that state and federal governments have, increasingly, withdrawn from effective regional development strategies, rationalised the levels of public service provision, and devolved much of the responsibility for community well‐being to the local level. This paper critically reviews the changing governmental approaches to rural development, and reflects upon some of the outcomes of these policy changes in the wheatbelt of Western Australia.     

Public Opinion on Issues of U.S. Federalism in 2005: End of the Post-2001 Pro-Federal Surge?

This article analyzes public opinion on five areas of federalism-relatedissues in 2005 and compares the results with findings from previousyears. Overall, the results indicate (1) a decline in supportfor the federal government following the increase in supportafter the terrorist attacks of 2001 and (2) an increase in supportfor state and local governments to levels typical of most pre-2001surveys. The local property tax, however, continues to be identifiedmost often as the worst tax, whereas the state income tax isleast often said to be the worst. The federal government is,by far, the level of government most often selected as havingtoo much power today, whereas local government is most oftencited as needing more power. Also evident was a decline since2002 in the public's perception of the respect given to theirstates in the federal system.     

The International Economic Interests of U.S. States

During the 1970s, global interdependence penetrated deeply intothe U.S. economy, drawing state governments into novel internationaltrade and investment activities. State promotional programssought to capture revenue and job creation benefits from exportexpansion and foreign investment inflows, while other stateactions attempted to minimize costly local disruptions associatedwith import competition and foreign control of resources. Asforeign and domestic economic factors intertwined, nationaljurisdiction in matters of foreign affairs increasingly overlappedtraditional state government prerogatives concerning economicdevelopment and citizen welfare. State governments began directlobbying on international issues, leading to both complementaryand conflictual national-state positions. As the United Statesadjusts to an interdependent global economy, a new internationaldimension will be added to federal relationships. National andstate officials must fashion creative new instruments to accommodatediverse domestic political and economic needs while still exertingpositive leadership in international economic forums.     

The effects of fiscal contraction on innovation in the public sector

Beginning in the mid-1970s, fiscal limitation laws, shrinking revenue bases in older cities, and reductions in state and federal grants all have reduced the resources available to carry out the functions of local government. What do these changes portend for the amount of innovation in local government, the types of innovations that are introduced, and the processes of introduction? This paper examines these questions by reviewing the literature on factors related to innovation in public service agencies and reorienting its implications in the new fiscal environment. We conclude that on the whole the innovative process in the public sector has fallen on hard times. Yet, we identify those factors that a creative, innovative administrator can use to advantage in a period of fiscal constraints to bring about innovation. We also identify types of innovations that are likely to succeed.     

State Tax and Expenditure Limitations: There is No Story

Out of the troubled economic atmosphere of the late 1970's grew a discontent with government in general and taxation in particular. The tax revolt took hold at the local level and placed limits on the growth of the property tax through celebrated citizen initiatives like Proposition 13 in California. At the national level, uneasiness with the role of government and a sense that taxation was too high culminated in 1980 with the election of Ronald Reagan. The electorate embraced promises of less government and lower taxes. For states, the tax revolt resulted in a number of state tax and expenditures limitations (TELS). Most had several things in common: they were adopted before 1983, they addressed state appropriations, and they were largely a western phenomenon spreading from California. The overall condition of state economies and structure of state tax systems, in combination with the sensitivity of policymakers to anti-tax sentiment, have done more to limit state spending than have imposed restrictions.     

From Coercion to Partnership in Federal Partial Preemption: SMCRA, RCRA, and OSH Act

This article examines the experiences of three important partial-preemptionprograms—the Surface Mining Control and Reclamation Actof 1977 (SMCRA), the Occupational Safety and Health Act of 1970(OSH Act), and the Resource Conservation and Recovery Act of1976 (RCRA)—over the last two decades to improve our understandingof how federal-state interactions have shaped the regulatorypartnership. The evidence we gather suggests that the controlof regulatory programs has shifted over time back and forthbetween the federal government and the states. In the initialyears of these programs, what the Congress intended to be aregulatory partnership was, in effect, almost total federalpreemption of state authority. Under the Ronald Reagan administration,the opposite occurred; federal regulation in many cases becamede facto state regulation as federal officials essentially abdicatedtheir oversight responsibility. By the end of the 1980s, thefederal government began again to assert greater control overintergovernmental regulatory programs. The regulatory relationshipthat emerged is one in which the federal government and thestates share responsibility and authority for the implementationof these programs.     

Do intergovernmental grants create ratchets in state and local taxes?

A large literature on the ‘flypaper effect’ examines how federal grants to states at time period t affect state spending (or taxes) at time period t. We explore the fundamentally different question of how federal grants at time period t affect state tax policy in the future. Federal grants often result in states creating new programs and hiring new employees, and when the federal funding is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes. Government programs tend to be difficult to cut, as goes Milton Friedman’s famous quote about nothing being as permanent as a temporary government program, suggesting that it is likely that temporary federal grants create permanent (future) ratchets in state taxes. Far from being purely an academic question, this argument is why South Carolina’s Governor Mark Sanford attempted to turn down federal stimulus monies for his state. We examine both the impact of federal grants on future state budgets and how federal and state grants affect future local government budgets. Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.     

Regional coordination of federal programs: Has the difficult grown impossible?

As the various categorical programs of federal assistance proliferated during the 1960s and 1970s, the U.S. government sought to bring about some degree of coordination among the programs in any given region through a network of regional clearinghouses. Operating with inadequate resources, limited authority, and various other difficulties, the clearinghouses nevertheless chalked up some modest accomplishments. In 1982, as a step in the New Federalism concept of the Reagan administration, the clearinghouse system was drastically shrunk back in scope and decentralized in structure. If the concept of regional coordination among federal programs is to survive, it will have to depend on action at the state and local levels; but such action does not seem promising.     

Reform or Resistance? Local Government Responses to State-Mandated Ethics Reform in Kentucky

Although several studies have examined state and federal regulationof political corruption andethics reform, few studies have extendedtheir focus to local governments. In this study, we examinethe local government response to stale-mandated ethics reformin Kentucky during the 1990s. Based on a quantitative analysisof local government ethics codes in 288 cities, we concludethat local compliance with state-mandated ethics reform hasbeen largely driven by local political factors. Cities withrelatively developed democratic institutions, characterizedby high levels of electoral competition and a strong media presence,were significantly more likely to construct strict ethics ordinances,as were cities reflecting moralistic political cultural values.     

Government size and growth: Accounting for economic freedom and globalization

We examine the relationship between government size and economic growth, controlling for economic freedom and globalization, and using Bayesian Averaging over Classical Estimates in a panel of rich countries. Countries with big government have experienced above average increases in the KOF globalization index and in the Fraser institute’s Economic freedom index. To maintain comparability with earlier studies, we use two sample periods: 1970–1995 and 1970–2005. Government size robustly correlates negatively with growth. We also find some evidence that countries with big government can use economic openness and sound economic policies to mitigate negative effects of big government.     

The Federal, and the State and Local Roles in Government Expenditures

This article compares government expenditures by functional category of the federal government relative to state and local governments and the changes in their respective roles since 1955. The article includes a review of the federal role relative to the state and local role on a function-by-function basis for these three and a half decades. This analysis demonstrates considerable stability in the federal sector and the state and local sector, but also the capacity for change.     

The Effects of Changes in Federal Aid on State and Local Government Spending

This study suggests federal grants-in-aid had an important influenceon state and local government spending during the 1960s andmost of the 1970s. This positive stimulation also seems to havecontinued during 1982–1985, despite the Reagan administration'sefforts to cut the level of federal aid to states and communities.The stimulative effect of federal aid, however, was showingsigns of diminishing after 1977 and was conspicuously absentfor the 1977–1981 and 1985–1988 periods.     

WATER RESOURCE DEVELOPMENT

Both the federal and state governments have strong constitutional daims and political resources with which to influence the allocation of water resources. Until the 1970s. federal agencies were able to dominate kr setting goals and objectives. However, when the federal government attempted to implement a national water policy in the 1970s, effective opposition was mounted by the states. Both the states and the federal government now exert decisive influence in water policy.