Policy Feedbacks and the Social Construction of Urban Fiscal Crisis

Daniel R. Alvord, Northeastern University
Jennifer Nations, University of California, San Diego

Under what conditions do cities pursue tax increases? This paper addresses this question with reference to municipal fiscal officers’ subjective assessment of city fiscal conditions and the likelihood of proposing tax increases in 2006 and 2009. Using an original dataset of fiscal conditions in California cities, local tax measure outcomes, and city fiscal officer opinion polls, we show that municipal fiscal officers’ assessment of city fiscal condition was unrelated to the budgetary conditions of their city in two time periods between 2006 and 2009. We also show that a negative assessment of city fiscal conditions by municipal officers was not reliably associated with the decision to propose a new tax, all else being equal. However, in cities where a tax had been previously proposed, municipal officials’ views of local fiscal conditions were impacted, although this relationship differed by time period. In 2006, prior to the Great Recession, municipal officers reported a more optimistic outlook for city finances in cities where no tax had been proposed to voters, net of political, budgetary, economic, and population controls. In contrast, in 2009, in the middle of a recession-generated fiscal crisis, municipal officers were more likely to have an optimistic outlook of city finances when new taxes had been proposed in the previous one or two years, net of controls. Thus, we argue that assessment of urban fiscal crisis is socially constructed and context-dependent. In line with literature on policy feedback, it is prior political and policy decisions to propose new taxes, along with the broader political and economic context, that alters the views of municipal fiscal officers. However, neither subjective views nor seemingly objective measures of municipal fiscal crisis provide sufficient incentive for municipal leaders to propose new taxes given other local political, economic, and demographic characteristics.

No extended abstract or paper available

 Presented in Session 35. Measuring the Fisc