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Economic Development: Targeting Fiscal Assistance To Reduce Fiscal Disparities

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Report Type Reports and Testimonies
Report Date July 24, 1986
Report No. 130519
Subject
Summary:

Testimony was given on how targeting fiscal assistance could reduce fiscal disparities among local governments. Fiscal disparities are defined as differences in the levels of taxable resources available to communities, and differences in public service needs among communities. Given the same tax rate, communities with lower economic resource bases receive fewer tax dollars per resident and must either accept lower levels of public services or tax themselves more heavily to provide the same level of services as the higher income communities. Targeting funds to lower income communities would reduce these disparities. Since rural counties tend to have lower incomes compared to more urban counties, increased targeting would allocate more funds to rural areas than the General Revenue Sharing program. While targeted fiscal assistance shifts funding to rural communities, it also targets more aid to low-income inner cities in the large metropolitan areas. Therefore, the lowest income cities would all receive increased funding, while the highest income cities would get less.

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