Financing Local Government and Development in Canada in the Aftermath of a Global Pandemic: Continuity and Change

En cette période postpandémique, les administrations locales se retrouvent dans un contexte budgétaire difficile. S'appuyant sur les idées formulées au fil des ans par Richard Bird, l'auteur réexamine certains thèmes omniprésents dans les discussions et les analyses des finances municipales, tels que les avantages de l'imposition basée sur les bénéfices réalisés localement, les contraintes hiérarchiques qui pèsent sur la prise des décisions budgétaires, et la réalité d'une crise budgétaire perpétuelle au niveau local. Le fait de devoir financer un large éventail de dépenses pour les services publics au moyen d'une étroite base de recettes a entraÎné des tensions intergouvernementales et un débat persistant sur la capacité de l'assiette de l'impôt foncier à répondre aux demandes qui pèsent sur elle. Le financement des administrations locales peut se décrire au moyen des termes emprunt, dépense et imposition. La pandémie de COVID-19 a eu des répercussions sur chacun de ces aspects du processus décisionnel budgétaire des municipalités. La réglementation en matière d'emprunt est restée limitée par la hiérarchie;la pression pour augmenter les dépenses s'est accrue;et les recettes fiscales et tarifaires ont été défavorablement touchées. De plus, il semble probable que l'assiette fiscale des municipalités sera réduite compte tenu de la controverse entourant les droits d'aménagement. L'auteur utilise des données de l'Ontario pour illustrer les effets de la pandémie sur la santé budgétaire des municipalités. En outre, l'article utilise le tableau de bord de la santé budgétaire urbaine (Urban Fiscal Health Dashboard) de Richard Bird pour illustrer les aspects de la santé budgétaire à long terme des administrations locales de l'Ontario. Tout au long de cet article, l'auteur soulève des questions qui méritent d'être approfondies à la lumière de la contribution de Richard Bird à notre compréhension des mécanismes et des implications de la prise des décisions budgétaires locales.Alternate abstract:In the post-pandemic environment, local governments must confront a challenging fiscal environment. Drawing on insights provided over the years by Richard Bird, the author re-examines certain pervasive themes found in discussions and analysis of municipal finance, such as the merits of benefits-based taxation at the local level, the hierarchical constraints on municipal fiscal decision making, and the reality of a perpetual fiscal crisis at the local level. The underlying issue of having to finance a broad set of expenditures on public services from a narrow revenue base has resulted in intergovernmental tensions and continuing debate over the capacity of the property tax base to meet the demands placed on it. Financing local government can be described in terms of borrowing, spending, and taxing. Each of these areas of municipal fiscal decision making was affected by the COVID-19 pandemic. Borrowing rules remained hierarchically constrained, pressure to increase expenditures grew, and tax and fee-based revenues were adversely affected. Further, it seems likely that the municipal fiscal base will be narrowed given the controversy around development charges. The author uses data from Ontario to illustrate the impact of the pandemic on municipal fiscal health. In addition, the paper includes the Richard Bird Urban Fiscal Health Dashboard to illustrate aspects of the long-run fiscal health of Ontario's local governments. Throughout the paper, the author raises questions that merit further research informed by the perspective that Richard Bird brought to our understanding of the mechanics and implications of local fiscal decision making.

INCENTIVIZING FAIR HOUSING

Restrictive land use regulation has thwarted the upward mobility of many Americans, particularly Americans of color. Local restrictions imposed by affluent municipalities have limited access to safe neighborhoods, better housing, and good schools. Racism and economic self-interest have both played a role in exclusionary practices which have contributed to high housing costs that place a strain on the entire economy. Fair Housing Act litigation has been one weapon in the fight against these practices. Despite the Supreme Court's decision in Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., disparate impact litigation faces significant obstacles that limit its value as a tool to fight exclusionary zoning. First, because restrictive zoning ordinances have such widespread economic effect, it will generally be difficult to prove that their impact on members of protected classes is disparate. Second, municipalities are likely to have successful defenses against disparate impact claims arising from restrictive zoning-including the "business necessity" defense that zoning restrictions are necessary to minimize the tax burden on local residents. Third, litigation sets up an adversarial dynamic that leads municipalities to resist housing initiatives rather than embracing them. By contrast, incentives are better calculated to induce local cooperation in the development of fair housing. The Department of Housing and Urban Development made some use of incentives during the Obama Administration, but those efforts were not ideally designed to promote buy-in by recalcitrant municipalities and were abandoned during the Trump Administration. States, however, are well positioned to use the real property tax system to create substantial incentives for municipalities to abandon exclusionary practices. Using tax incentives rather than mandates would enlist municipal self-interest as a weapon against exclusion.

Property Tax Assessments, Collections, and Revenue Performance in Economic Downturns: An Examination of Large American Cities

As state and local governments plunged into budget crises caused by the loss of sales, income, and other tax revenues in 2020, this study presents an examination of the Great Recession's effects on property tax collections in large American cities. Herein we explore the interactions between property tax components and key socioeconomic indicators in urban economies. In particular, we report how changes in house prices, household incomes, and employment affect the interactions among assessed values, levies, tions, and tax revenues. The stylized model we develop presents how, through property tax levies, valuations, and collection rates, property tax revenues are impacted. To correct for endogeneity among the variables, we use seemingly unrelated regressions and three-stage least squares estimators. The dataset includes financial indicators for the 147 largest American cities collected from 2003-2012. Results show that during recessions, declining house prices reduce assessed valuations, and reduced tax collection rates further compound this negative fiscal effect. The inelastic response of tax revenues to assessed values suggests that jurisdictions take back the difference by re-setting millage rates. Because each part of the levying and collecting process is very sensitive to the economic environment, revenue estimation for large cities becomes more difficult during recessions. OHLA