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Fiscal Aspects of Metropolitan Governance

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Author Info
Richard M. Bird (International Tax Program, Rotman School of Management, University of Toronto)
Enid Slack () (Enid Slack Consulting Inc.)

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Abstract

The aim of this paper is to review from a fiscal perspective the different models of governing structure found in metropolitan areas around the world. While there is considerable dispute in the literature as to exactly how, and how much, the design of governing institutions matters in affecting outcomes, it is indisputable that money matters: who has it, where does it come from, and under what conditions it can be spent and by whom. How public expenditures are financed directly affects the feasibility of any developmental proposal or service provision goal and is thus always a key issue in any city or metropolitan area strategy. In particular, experience suggests strongly that the ability to “self-finance”--that is, to be free to at least some extent from the whims and wishes of others -- is a critical factor in determining which metropolitan institutions live and thrive and which fade away or die in bickering between contending financial supporters. We set out the key parameters of four models of government structure used around the world (one-tier, two-tier, voluntary cooperation, and special districts). We evaluate how these different models work in practice, drawing on real-world examples to illustrate the argument. We consider how well each model achieves coordination of service delivery over the entire metropolitan area, the extent to which they allow for the equitable sharing of costs of services throughout the metropolitan area, and their ability to reduce negative or positive spillovers of service delivery across local boundaries. We examine some aspects of local government expenditures and also look at main sources of revenue, evaluating the advantages and disadvantages of different revenue-raising tools for different governing structures. Finally, we summarize our findings on the fiscal aspects of governance for metropolitan regions around the world and made a few suggestions with respect to possible future fiscal developments in Latin American metropolitan regions.

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Publisher Info
Paper provided by International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto in its series International Tax Program Papers with number 0401.

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Length: 80 Pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:ttp:itpwps:0401

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Related research
Keywords: metropolitan; agglomeration economies; urban government; Latin America;

Other versions of this item:

Find related papers by JEL classification:
R51 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Richard M. Bird, 2003. "Fiscal Flows, Fiscal Balance, and Fiscal Sustainability," International Studies Program Working Paper Series, at AYSPS, GSU paper0302, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  2. Ades, Alberto F & Glaeser, Edward L, 1995. "Trade and Circuses: Explaining Urban Giants," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 195-227, February. [Downloadable!] (restricted)
    Other versions:
  3. Ebel, Robert D. & Yilmaz, Serdar, 2002. "On the measurement and impact of fiscal decentralization," Policy Research Working Paper Series 2809, The World Bank. [Downloadable!]
  4. Borge, Lars-Erik & Rattso, Jorn, 2003. "The Relationships Between Costs and User Charges: The Case of a Norwegian Utility Service," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Richard Bird & Pierre Gendron, 1998. "Dual VATs and Cross-Border Trade: Two Problems, One Solution?," International Tax and Public Finance, Springer, vol. 5(3), pages 429-442, July. [Downloadable!] (restricted)
  6. Bird, Richard & Wallich, Christine, 1992. "Financing local government in Hungary," Policy Research Working Paper Series 869, The World Bank. [Downloadable!]
  7. Massimo Bordignon & Silvia Giannini & Paolo Panteghini, 2001. "Reforming Business Taxation: Lessons from Italy?," International Tax and Public Finance, Springer, vol. 8(2), pages 191-210, March. [Downloadable!] (restricted)
  8. Kitchen, H., 1993. "Efficient Delivery of Local Government Services," Papers 93-15, Queen's at Kingston - School of Policy Studies.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Slack, Enid, 2007. "Managing the coordination of service delivery in metropolitan cities : the role of metropolitan governance," Policy Research Working Paper Series 4317, The World Bank. [Downloadable!]
  2. Richard M. Bird, 2004. "Getting it Right: Financing Urban Development in China," International Studies Program Working Paper Series, at AYSPS, GSU paper0435, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
    Other versions:
  3. Enid Slack, 2006. "Cities in Canadian Federalism," International Tax Program Papers 0603, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto. [Downloadable!]
  4. Richard M. Bird & Francois Vaillancourt, 2001. "Reconciling Diversity with Equality: The Role of Intergovernmental Fiscal Arrangements in Maintaining an Effective State in Canada," International Tax Program Papers 0406, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Apr 2004. [Downloadable!]
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