Urban Fiscal Crisis: Fact or Fantasy. A Reply to the Touche/Ross First National Bank Study, 'Urban Fiscal Stress.'

摘要

The study 'Urban Fiscal Stress,' is characterized in this report as an inadequate assessment of either the worth of city credit or city fiscal distress. According to the report under analysis, only 4 of the 66 cities studied suffered signs of serious fiscal stress, a fundamentally incorrect finding. The following conceptual and methodological weaknesses make the study findings highly unreliable: (1) the sample is badly constructed -- therefore, the findings cannot be generalized; (2) the narrow definition of fiscal stress produces questionable results; (3) the study ignores both the quantity and the quality of the services a city delivers to its residents; and (4) the study uses only 1975 data. The future of our cities still demands the priority attention of government at all levels; despite the improved financial position of many major central cities since 1977, their fiscal stability has deteriorated signficantly in recent years. They have not only become increasingly dependent on outside aid for balancing their budgets, but they are also vulnerable to cyclical swings in the national economy. The measures commonly used to assess the health and long - term prospects of urban areas are population, income, and employment. The following population trends illustrate the situation: (1) the population of central cities as a group declined by 4.6 percent from 1970 to 1977, while the suburban population increased by 12 percent; (2) a number of large central cities, which grew between 1960 and 1970, have lost population since 1970; (3) the loss of central city population between 1970 and 1977 is symptomatic of the long - term trend in the loss of central city dominance over Standard Metropolitan Statistical Areas (SMSA's), which had extended as far back as 1900 in a number of urban areas; and (4) within the same SMSA, from March 1975 to March 1978, more than twice as many people moved from the central city to the suburbs as from the suburbs to the central city. Trends in central city income also indicate a city's fiscal condition, as shown by the drop in real dollar median income of families living in central cities, the decline in income per capita of central city residents and the large fraction of the national poverty population living in the central cities. A final indicator of fiscal pressure is city employment; trends are indicated. The facts presented in this critique clearly demonstrate the fragile nature of the fiscal health of the cities. Intergovernmental Fiscal Assistance Amendments of 1979 are now being considered by Congress to provide fiscal assistance to those urban areas suffering the most severe effects of long - term decline. Graphs and tables are included.