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The Politics and Economics of the New City Debt

Published online by Cambridge University Press:  01 December 1986

Elaine B. Sharp
Elaine B. Sharp*
Affiliation:
University of Kansas
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Abstract

This paper contrasts nonguaranteed city debt with taxation and general obligation debt. Drawing upon Bureau of the Census, Advisory Commission on Intergovernmental Relations (ACIR) and Municipal Year Book data, the analysis shows that both per capita tax revenue and outstanding general obligation debt are best explained by background factors such as total population, functional scope, and region, while fiscal strain plays a secondary role. Political structures, in the shape of legal constraints on taxation and debt and of form of government, do not account for patterns of these traditional revenue sources. By contrast, nonguaranteed debt is best explained by a model in which fiscal strain has a paramount role, but with both legal constraints on taxing and regional differentiation contributing significantly to the explanation, at least for data collected prior to 1978. The findings suggest a two-tiered model of the revenue side of fiscal decision making, with historical accommodations to powerful economic and demographic factors dominating taxing and general obligation debt, while nonguaranteed debt serves as a flexible instrument of shorter-term strategy.

Type
Articles
Information
American Political Science Review , Volume 80 , Issue 4 , December 1986 , pp. 1271 - 1288
Copyright
Copyright © American Political Science Association 1986

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