The Search for Effective Rural Policy: An Endless Quest or An Achievable Goal

To date, the United States has failed to articulate a coherent and effective national rural development policy. The federal government, with a few exceptions, has focused primarily on a sector based policy that has only indirect, and at times weak, impact on rural America. State governments, once championed as the key to effective rural policy, have also failed to move beyond their traditional areas of focus in, education, corrections, Medicaid and other state services. No obvious forum or arena in which federal or state governments can carry out a national rural development policy other than as an afterthought of other policies and programs has developed, nor is one visible on the horizon. We believe national development can only come about through the aggregation of successful local development initiatives. The sheer diversity of rural America, from agricultural communities to manufacturing intensive places or retirement destinations, makes it difficult for states or the federal government to create and manage a coherent set of rural development policies. At the same time, many parts of rural America continue to suffer from economic and social disparities with the rest of the nation and have become increasingly dependent on federal and state transfer payment programs. National rural development policy has been unable to adequately take these and many other factors into account. Federal and state governments must rethink their role in rural development policy. These levels of government, rather than creating and managing large government programs, can provide support through block grants, fiscal and regulatory flexibility and technical assistance. A new rural development policy must accept that the progress is incremental and that change must be based on a broad coalition of support. This means that we have to move from top-down to bottom-up approaches. Local governments represent an important piece of the rural policy puzzle and the revival of rural America. Rural cities and counties are best positioned to address the needs of rural America, but have been hampered in the past due to state restrictions on revenue raising capacity and expenditure limitations. Many analysts now believe that rural development policy can be carried out more effectively by local governments enacting positive changes in their community to revive economies and reduce disparities. The large number of local governments and overlapping jurisdictions implies that rural city-county partnerships must be the foundation of nationally-based rural development policy.Community/Rural/Urban Development,

A Review of Municipal Bond Issues in Michigan

Municipal bonds have recently been of national interest and Michigan’s strained economy over the past decade has made bond issuance in the state of particular interest to a variety of stakeholders. Given the close connection between municipal bonds and property taxes, the fall-off in the housing market has placed significant strain on bonds within the state. This paper reviews the Michigan municipal bond condition and develops a new debt assessment indicator system. This system was tested using over 700 Michigan local governments. Based on this indicator system, a number of communities are experiencing significant fiscal stress. However, further examination reveals that at least some of these communities have in place short term plans to address such stress. Most importantly, the report notes that data deficiencies make it difficult to assess the true level of stress and risk in the Michigan municipal bond market.Municipal bonds, Public finance, Regional economics, Community/Rural/Urban Development, Public Economics, R5, R51,

Proposed Alterations to the Local Government Fiscal Stress Indicator System for the State of Michigan

Monitoring the fiscal stress levels of local governments at the state level is a critical strategy for predicting and preventing fiscal crises. The State of Michigan currently monitors the fiscal stress levels of its local governments using a set of indicators created in 2002. These indicators, however, are not capturing all types of fiscal stress and are not being utilized to their fullest. In this report, we outline proposed changes to the current system, calculate the proposed indicators, and then compare them to the current system. The new fiscal stress indicator system proposed here builds upon the current system in five ways. First, it better captures different types of fiscal stress that are being missed in the current system, including those caused by transfers of money from one fund to another and unfunded long term liabilities. Second, it utilizes a mixture of scoring methods that help to determine both relative stress and absolute stress. Third, it measures both current stress levels and changes in stress levels in order to predict future stress in localities that are currently healthy and those that are worsening. Fourth, it captures the magnitude of stress within each indicator rather than assigning a point of either zero or one based on a single threshold. And fifth, it differentiates between different types of fiscal stress which allows it to be better linked with possible solutions based on the specific type of fiscal stress faced by each locality. Two key points are proposed in this paper. First, fiscal stress involves not only financial distress, but service level distress. If a locality is not providing an adequate level of services to its citizens, it is in stress. A city that has balanced books but a high level of unemployment or crime is not a healthy city. Second, not all types of fiscal stress will be solved through the use of short term strategies such as emergency financial managers and emergency loans. Some stress is chronic and requires solutions that are more structural in nature. Short term solutions may work well in situations where the stress is short term and perhaps internally controlled. They may not be successful, however, in situations where stress is chronic and external in nature. The new indicator system helps to distinguish between these different types of fiscal stress. However, fiscal stress indicator systems do not work in isolation. Results must be analyzed and acted upon and indicators must be published in a timely manner. Cities that fall within the distressed range should be further examined and solutions should be sought. The new system will facilitate this action by helping the state to not only acknowledge and predict fiscal stress, but to better link it with strategies that are suited for the specific type of fiscal stress in each locality. This will help the state to not only alleviate fiscal stress, but to prevent it before it occurs.Fiscal Stress Indicators, Local Government, Public Economics, H72,

Encouraging Entrepreneurship in Rural Communities: The University of Kentucky Entrepreneurship Initiative Program

Entrepreneurship is a critical tool in rural economic development. The University of Kentucky Cooperative Extension Service is developing a new program designed to stimulate community support for existing and potential entrepreneurs in rural communities. This program is designed to interact and learn from existing entrepreneurs in order to meet their needs to create profitable and sustainable businesses. At the same time, the long-term objective is to use existing business information to develop programs to encourage potential entrepreneurs to start new businesses

Economic Implications of the Transfer of Functions Legislation

Recent introduction of HB 4780 and its companion pieces of legislation (HB 4781-4788) has raised a number of questions about the appropriate level of government to deliver services to Michigan residents. Essentially, under provisions contained in the bill, elections, tax collections, and assessment functions would be transferred from "rural" townships to the county where the township is located. The bill defines a rural township as a township or charter township unit with population less than 10 thousand, or population between 10 and 20 thousand but does not provide police and fire on a 24-hour basis and sewer and water services to more than 50% of its residents. The Michigan Township Association (MTA) expects that 95% of Michigan townships would be subject to this legislation.Public Economics,

The Distributional Consequences of Interlocal Agreement Cost Allocation Strategies

In an era of fiscal stress for many local governments in the United States, intergovernmental cooperation has become a focus for cost savings. Cooperation and consolidation is a recognition that existing boundaries and service delivery mechanism simply are too inefficient and burdensome for a community to maintain. City and county officials face a basic tradeoff in assessing the merits of cooperation involving the desire of many citizens for sovereignty and local decision making authority versus the potential cost savings associated with the economies of scale of larger government units. As intergovernmental agreements are negotiated, the issue of cost allocation among various parties often becomes a major issue. Some cost allocation formulas emphasize ease of implementation, while potentially shifting the burden onto one or another party. Complicated cost allocation formulas may reduce burden sharing or donor situations, but at greater cost of implementation and maintenance. A simple economic model is presented in this analysis to highlight the distributional consequences of various cost allocation strategies among parties to intergovernmental agreements

Defining Government Performance Expectations: Insights from the US and UK Financial Bailout Proposals. Performance in the Public Sector

The economic and financial crisis of 2008 has raised some particularly challenging issues regarding assessing the performance of proposed financial institution bailout solutions. The need for quick action to avoid financial disaster often precluded a full airing of the possible advantages and disadvantages associated with the accountability and performance indicator mechanisms put in place. Now, a vigorous debate is occurring over performance indicators related to the effectiveness, efficiency and equity aspects of the solutions that have been implemented both in the U.S. and Europe. The United States major bailout proposal was the Troubled Assets Relief Program (TARP) overseen by the Office of Financial Stability in the US Department of Treasury which has taken major ownership positions in US banks. The British bailout plan called the Bank Recapitalisation Scheme (BRS) is being directed by HM Treasury and the United Kingdom Financial institutions, Corp. which has also taken equity positions in major UK banks. These similarities and differences form the backdrop for the empirical case studies. The particular nature of these government programs make them ideal candidates for an extreme type case analysis in the characterizing the fight over defining performance. Not surprisingly, a host of academics, private financial institutions, government agencies and even intergovernmental governing bodies such as the IMF are airing their respective performance definitions. The competition between these bodies will serve as the empirical basis for assessing the arguments and motivations over how to define performance in the context of the bank bailouts. These case studies will be analyzed in the performance regime and competing values conceptual frameworks as initially brought together in Talbot (2008). . The performance regime frame will help assess the institutional forces who are attempting to exert influence over indicators. The competing values frame advances the notion that there are four major types of models by which social relationships are constructed and the form through the regime influences impact indicators and performance definitions. The major new contribution presented here will be in using these case studies to define the types of variables and factors that drive different types of private and public agents in constructing the definition of performance as well as advancing this combination of the performance regime and competing values framework. It is felt that these financial bailouts provide a rich set of data upon which new insights and the advancement of knowledge can be constructed. The United States and United Kingdom models represent important cases where large scale financial bailouts have occurred in two countries that have similar business cultures and yet there remain important differences in their approaches

Prospects of Agricultural Entrepreneurship Among Resource Limited Farmers In the Central Appalachian Tobacco Belt

Agricultural entrepreneurship is receiving heightened attention as a potential means for economic revitalization of communities adversely affected by changes in the agricultural sector. In particular, resource limited farmers in the Appalachian region of the United States have been hit by major changes in the tobacco industry. Very little is known about resource limited farmers respond to changing industry conditions and policy attempts to remedy structural change. Recently, the Commonwealth of Kentucky has attempted to assist farmers in adopting new farmbased enterprises to expand their income base. However, it is unclear about the factors that drive entrepreneurial or diversification activities among resource limited farmers. In general, it is expected that resource limited farmers, most of whom work off-farm for a significant portion of their income, face a tradeoff between off-farm work constraints and potential new sources of income on-farm. This paper uses a survey of 765 farmers in Northeast Kentucky to explore factors correlating with agricultural entrepreneurship and understanding this tradeoff

Democracia vs. eficiência: como alcançar equilíbrio em tempo de crise financeira

Resumo A administração pública é forçada a encontrar um equilíbrio entre eficiência e democracia na definição da sua agenda e curso de ação. Uma das características da administração pública é que todas as decisões devem refletir valores democráticos, para além de serem eficientes. No entanto, a reforma administrativa, motivada por dificuldades financeiras, tende a destacar a importância do desempenho financeiro, em detrimento dos aspetos democráticos nas políticas de gestão pública. Esta pesquisa visa analisar a relação e tensão entre a eficiência e a democracia à luz da mais recente crise financeira global. O trabalho utiliza uma abordagem quantitativa e recolhe dados de governos locais portugueses para testar o argumento de uma relação linear inversa de desempenho financeiro e procedimentos democráticos. Os resultados confirmam o argumento de uma relação inversa, definida por Waldo (1948). Adicionalmente, os resultados também permitem concluir que a crise financeira evidenciou o efeito negativo dos procedimentos democráticos no desempenho financeiro