STATE AID TO OFFSET FISCAL DISPARITIES ACROSS COMMUNITIES

摘要: Both the availability of taxable resources and costs producing local services vary widely across jurisdictions. This situation is regarded as inequitable, many state aid programs have been designed to offset fiscal disadvantages faced by jurisdictions with relatively low or high costs. Existing , however account for these disparities in an ad hoc manner particularly on cost side. paper defines concept uncontrollable costs, presents a regression-based method measuring differences, calculates community *s disadvantage function its resources, designs this disadvantage. The approach presented here based simple concepts can be implemented readily available data. It was developed part debate over Massachusetts where modified version has recently enacted. ONE United most States dramatic system features Stat s sy em governments that residents some face significantly higher tax burdens receive lower levels public (or both) than other blessed more feature raises important set equity concerns policymakers. Even substantial redistribution income among individuals, it likely people those who discrimination housing market will live juris*Federal Reserve Bank Boston. **Kennedy School Government, Harvard University. ***Joint Committee Taxation, Legislature. ****Tufts *****Visiting Professor, University Michigan. dictions relative communities inhabited income, mobile households. primary purpose use economic analysis develop improved ways designing disadvantages. does not argue case equity, but rather develops new grant formulas used achieve any degree equalization chosen In formal sense, exist when must levy different rates provide same level services. Disparities reflect differences both abilities raise revenues providing measurement revenue capacity now fairly well understood, existing intergovernmental disparities. Differences services, however, are less understood often basis equalizing programs. Consequently, focused indexes Much research reported context recent debates Massachusetts, explicit goal influencing outcome debates. As discussed Section IV paper, enacted distribution formula embodies ideas paper. rest organized follows: I surveys need measures II shows how measure applies procedure cities towns. III incorporates into in-