Search Results
Briefing
Saving costs through regional consolidation: public safety answering points in Massachusetts
As local governments seek to address growing financial challenges, many will consider a variety of cost-cutting measures, including joint service provision with other localities. This policy brief examines the potential savings from large-scale service-sharing arrangements, using the specific example of emergency call handling and dispatch in Massachusetts. The analysis finds that consolidation can significantly reduce costs, and recommends that state policymakers consider options to encourage local consolidation. ; This policy brief builds on the Center?s 2013 research report, ?The Quest for ...
Briefing
A more equitable approach to cutting state aid
Local governments in New England rely on state aid to finance the provision of essential public services. Yet in response to the recent and ongoing fiscal crisis, state governments across the region have cut local aid deeply, often by the same percentage in each community. This across-the-board approach ignores differences in underlying local fiscal health and places a larger burden on many resource-poor communities. To address this concern, this policy brief provides a new, more equitable approach that allocates smaller aid cuts to communities that are in worse underlying fiscal health and ...
Report
The quest for cost-efficient local government in New England: what role for regional consolidation?
In the aftermath of the Great Recession, many local governments have experienced significant financial strain. Local governments? financial challenges are likely to continue in the foreseeable future, as federal deficit-reducing measures trigger cuts in state and local aid and as all levels of government struggle to fund their medical and retirement obligations. In an effort to maintain service provision without significant tax increases, many cities and towns will be forced to consider a variety of cost-cutting measures, including joint service provision with other localities. ; This ...
Working Paper
Designing formulas for distributing reductions in state aid
Local governments depend on state aid to provide residents and businesses with vital public services, such as education, police and fire protection, and safe public roads. However, in response to the recent fiscal crisis, many states are quickly and deeply cutting local aid. The Congressional Budget Office reported that 22 states reduced aid to local governments in FY 2010, and 20 states have proposed additional cuts in FY 2011. ; States tend to cut aid either on an ad hoc basis or across the board, with every community receiving the same percent aid cut. This paper proposes a new, more ...
Working Paper
Tax-exempt bonds really do subsidize municipal capital!
The traditional view of municipal finance holds that the federal tax-exemption of interest payments by state and local (municipal) governments provides a capital cost subsidy to municipal investment equal to the difference between interest rates on taxable and tax-exempt bonds. Recently, a new view has emerged which argues that tax-exemption plays a minor role, if any, in shaping municipal investment decisions. According to this new view, communities will use tax finance at the margin except in the unusual case where only debt finance is used. Thus, tax-exemption is an intramarginal (lump ...
Working Paper
Debt capacity, tax exemption, and the municipal cost of capital: a reassessment of the new view
The Traditional View of municipal investment holds that the federal tax-exemption of interest payments by state and local (municipal) governments provides a capital cost subsidy to municipal investment. Recently a New View has emerged which argues that tax-exemption plays a minor role, if any, in shaping municipal investment decisions. In its simplest version (with municipal debt issued at a constant interest rate), the New View argues that tax-exemption plays a role only for municipalities in which the representative individual has an income tax rate lower than the implicit tax rate on ...
Working Paper
Designing state aid formulas: the case of a new formula for distributing municipal aid in Massachusetts
This paper designs a new equalization-aid formula based on fiscal gaps of local communities. Using conceptual analysis and simulations with Massachusetts data, the authors illustrate the tradeoffs that policymakers face in deciding on the policy variables in the formula and lay out several general guidelines for setting up these variables. When states are in transition to a new local aid formula, the issue of whether and how to hold existing aid harmless poses a challenge. The authors show that previous studies and the formulas derived from them give differential weights to existing and new ...