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The Politics and Economics of the New City Debt

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  • Sharp, Elaine B.

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.

Suggested Citation

  • Sharp, Elaine B., 1986. "The Politics and Economics of the New City Debt," American Political Science Review, Cambridge University Press, vol. 80(4), pages 1271-1288, December.
    • Handle: RePEc:cup:apsrev:v:80:y:1986:i:04:p:1271-1288_18
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    Cited by:

    1. Soyoung Kim, 2021. "Integration of Policy Decision Making for Sustainable Land Use within Cities," Sustainability, MDPI, vol. 13(18), pages 1-10, September.
    2. Jungah Bae & Richard Feiock, 2013. "Forms of Government and Climate Change Policies in US Cities," Urban Studies, Urban Studies Journal Limited, vol. 50(4), pages 776-788, March.
    3. Jonathan Q. Morgan & Michele M. Hoyman & Jamie R. McCall, 2019. "Everything but the Kitchen Sink? Factors Associated With Local Economic Development Strategy Use," Economic Development Quarterly, , vol. 33(4), pages 267-278, November.
    4. Skip Krueger & Robert W. Walker, 2008. "Divided Government, Political Turnover, and State Bond Ratings," Public Finance Review, , vol. 36(3), pages 259-286, May.

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