| Abstract: | America's farmers are facing difficult financial times, andtheir problems are spilling over to rural local governments.Declining farm incomes and farm property values erode the localtax base. At the same time, demand for publicly provided servicesmay increase, creating a squeeze between falling revenues andhigher costs. This article documents the impact the farm crisishas had on local government tax bases in eight multi-countyregions in the Midwest. The impacts found, while severe, wouldgenerally be manageable in the absence of other shocks. However,when changes in the intergovernmental aid system–suchas the elimination of General Revenue Sharing and other cutsin federal aid—are factored in, local governments in agriculturallydependent areas can encounter financial stress. Higher taxesand lower service levels may permanently change the qualityof life in rural America. |
