Financing Central Cities: The Economics Underlying Fiscal Strategy Options

A consortium of Syracuse City and Onondaga County governments along with a number of local area non-profit organizations have recently organized a commission on Local Government Modernization for the Syracuse area. The Report makes three major recommendation to strengthen the local public sector in the Syracuse region: seek opportunities to share public services across local jurisdictions to reduce costs, adopt the Minneapolis region model for sharing revenues from new commercial and industrial development across localities, and work toward merging Syracuse City government with Onondaga County government. At the same time, current non-city residents would not have responsibility for the city or school district’s legacy debts or post-employment benefit obligations. The working paper reviews the urban economics and local public finance literature in the context of fiscal viability of central cities. Central cities form the heart of knowledge-based economies and those benefits redound to the entire region in the form of higher property values and incomes. In addition, suburban enclaves have developed in part through discriminatory policies and practices at the federal and local levels and they have weakened the fiscal viabilities of central cities. It also reviews the relevant local public finance literature on city annexation and government mergers, optimally sized jurisdictions, non-profit entities’ payments in lieu of taxes in cities, efficient local government taxes, and related topics. Based on the review, the economic development of a region depends on the economic and fiscal sustainability of its central city. Suburban resident benefit in tangible ways from the economic activities in their respective cities and suburban areas could reasonably devote a portion of their tax base to enhance the resources available to the city to service the city’s legacy debts and other obligations. The working paper concludes with fiscal implications for Syracuse City and its metropolitan area

Benefit incidence analysis in developing countries

As interesting and difficult as it is to allocate tax burdens to individuals, the profession knows even less about allocating benefits. The authors survey the literature on benefit incidence since DeWulf's (1975) review, focusing on the methodology and results of benefit incidence analysis in developing countries. Research in this area faces all the general-equilibrium difficulties faced by tax incidence analysis as well as the difficult task of measuring benefits from publicly provided goods and services. Despite the inherent pitfalls of this methodology, the authors believe that benefit incidence analysis can provide an important perspective on the budget by combining data on household use with data on project costs. In particular, benefit incidence analyses can help illuminate the distributional impacts of proposed reallocations of government resources among projects. The value of such research is especially high considering the scarcity of recent research in this area. The authors review the existing methodology, survey the available results, and point out areas in which further research might have large payoffs. They also make specific methodological suggestions that might help ensure that future research is as useful for policymakers as possible. For example: Aggregate results based on the zero-government counterfactual rely on strong assumptions about fixed relative prices and incomes, government efficiency, and the relationship between marginal and total benefits. And those studies are often not designed to identify which types of public services benefit the poor. Researchers should focus more on providing benefit incidence studies on specific government functions or programs that can help policymakers reach conclusions about proposed reallocations of resources among government programs. Benefit incidence should be assigned to households based on household survey information on usage rather than on ad hoc assumptions that assign benefits based on income or the number of members in the household. Improved annual cost measures for services need to be developed, particulary for capital inputs. Researchers should group households by deciles and whenever possible should consider other groupings based on household income adjusted for household composition, age, location, and other relevant socioeconomic variables. Careful attention to life-cycle benefits, benefit shifting, rent-seeking, out-of-pocket costs, displacement of private sector efforts, average versus marginal incidence, and several other issues can significantly increase the value of benefit incidence analysis to policymakers.Economic Theory&Research,Environmental Economics&Policies,Poverty Assessment,Health Economics&Finance,Banks&Banking Reform

Metabolomic and 13C-metabolic flux analysis of a xylose-consuming Saccharomyces cerevisiae strain expressing xylose isomerase

Over the past two decades, significant progress has been made in the engineering of xylose-consuming Saccharomyces cerevisiae strains for production of lignocellulosic biofuels. However, the ethanol productivities achieved on xylose are still significantly lower than those observed on glucose for reasons that are not well understood. We have undertaken an analysis of central carbon metabolite pool sizes and metabolic fluxes on glucose and on xylose under aerobic and anaerobic conditions in a strain capable of rapid xylose assimilation via xylose isomerase in order to investigate factors that may limit the rate of xylose fermentation. We find that during xylose utilization the flux through the non-oxidative Pentose Phosphate Pathway (PPP) is high but the flux through the oxidative PPP is low, highlighting an advantage of the strain employed in this study. Furthermore, xylose fails to elicit the full carbon catabolite repression response that is characteristic of glucose fermentation in S. cerevisiae. We present indirect evidence that the incomplete activation of the fermentation program on xylose results in a bottleneck in lower glycolysis, leading to inefficient re-oxidation of NADH produced in glycolysis.Shell Oil CompanyNational Institute of General Medical Sciences (U.S.) Biotechnology Training Progra

Foreign Direct Investment in the United States: Issues, Magnitudes, and Location Choice of New Manufacturing Plants

What effect does foreign direct investment (FDI) have on job creation, wages, and productivity in the U.S.? How does FDI impact the budget deficit? How do changes in states\u27 fiscal policy affect plant location choices? Ondrych and Wasylenko address these and other politically-charged questions concerning FDI. Provided is empirical evidence drawn from a pooled cross-section and time-series data set that identifies the criteria foreigners use to make location decisions. The authors also develop a model, against which they compare their findings, and review policy options available at the state and federal levels. Information provided will help states shape, focus, and refine their recruitment strategies for attracting foreign plants.https://research.upjohn.org/up_press/1082/thumbnail.jp

Conceptual Issues and an Alternative Approach to the Determination of Pubic Expenditure Levels

For over two decades researchers have attempted to econo­metrically estimate the variables that determine public expendi­ture levels. Most of these studies employ linear regression to estimate the relationship between per capita expenditure on a particular public function and socio-demographic and economic variables. Since the purpose of many of these studies is to determine statistically significant relationships between per capita public spending and the socio-demographic variables, these studies are often, and appropriately, criticized for their lack of an under­lying economic theory. However, the lack of adequate measures of either public sector output or the price of public output makes conventional empirical analysis of the demand and supply of public output difficult, if not impossible. This paper will examine the implications of the lack of adequate measures of public sector output or prices on the anal­ysis of demand for public output, and suggest an alternative approach to determining public expenditure levels. The con­clusion is that the alternative approach suggested in this paper, i.e., the determination of public sector inputs and input price levels, is both operational and more useful in terms of ex­plaining public expenditure patterns

Urban Finance in Seoul

Seoul , the capital of South Korea , has a population approaching six million , and is one of the largest cities in the world . The composition of employment in metropolitan Seoul shows that its economic base is dominated by trade, services, and government - only approximately two of every ten employed persons work in the manufacturing sector. The level of income was $390 per capita in 1970. The rate of population in-migration to Seoul has been substantial, as evidenced by the differential between the average annual population growth rate of the nation as a whole (2.3 percent) and that of Seoul (10.2 percent) . This rapid growth in population places a strain on existing infrastructure, adds to capital expenditure needs, and creates pressures on the level of current expenditures . When in-migrants are relatively lower income families, the growth of tax base due to in- migration may not be adequate to cover the increased expenditure demands. The level of public infrastructure in Seoul is still inadequate and in need of expansion. Nevertheless, the city has made considerable progress in mobilizing its financial resources, and meeting the needs of its fast growing population. (Note : the government of Seoul Special City, abbreviated here to SSC, covers a large metropolitan area

Taxation and economic development: the state of the economic literature

What conclusions, if any, can be drawn about the impact of state and local tax policy on economic development relative to other factors? What tax characteristics appear to be the most significant determinants? Are certain industries more sensitive to tax policy than others? Are business taxes more important than personal taxes