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UIC Urban Forum

2018 Forum White Papers

White Papers for the 2018 Urban Forum are posted below:

“The contemporary fiscal situation of cities”

Author: Yonghong Wu (UIC), Shu Wang (Michigan State), Michael Pagano (UIC)

Municipal governments are general-purpose governments, meaning they provide an array of services to residents and non-residents alike. The fiscal portfolio of municipalities varies across the nation and is constrained by state constitutions and statutes. This paper focuses on the diversity of revenue portfolios, exploring the constraints and opportunities that affect fiscal policy behavior. The paper includes a discussion of how cities’ fiscal architectures are nested within the intergovernmental fiscal system, with particular attention on the prospective impact of the recently-approved Tax Reform bill that limits the deductibility of state and local taxes.

“Exploring urban governments’ fiscal challenges: what, who, when, where, why?”

Author: David Merriman, professor, public administration (UIC)

I argue that city fiscal health can be related to cities’ net assets just as a for-profit (or non-profit) corporations’ economic health can be related to the value of their assets. Using an extensive but previously under exploited data set about city net assets I provide basic descriptive information about this measure of cities’ fiscal condition and reach the generally optimistic conclusion that most cities are doing well and that their fiscal conditions are expected to improve over time.

“Long-term liabilities: Pensions, OPEBs and infrastructure”

Author: Martin Luby, assistant professor, LBJ School of Public Affairs, University of Texas at Austin

Local governments can create short-term savings by underfunding long-term liabilities, such as pensions, post-retirement health care, and repair and maintenance of fixed assets and infrastructure. This paper explores the following questions related to this issue: 1) How pervasive is it across the municipal landscape nationally and what lessons can be learned? 2) What are the causes and consequences of such fiscal behavior? 3) How can officials today be held accountable for decisions that affect the future fiscal position of their city?

“Linking Resources To Government Services: Is There A Future For Benefit-Based Financing?”

Author: Rebecca Hendrick, professor of public administration (UIC)

This essay examines local governments’ use of charges and other benefit-based methods of financing and providing public goods and services relative to other methods that are based on general taxation or ability to pay. It discusses the characteristics and limitations of benefit-based methods from both a theoretical and practical perspective, and it examines local governments’ use of charges relative to other sources of revenue over different time periods. The essay concludes with an assessment of opportunities for and issues with using benefit-based financing to deliver more public goods and services in the future.

“Beyond competition and consolidation in urban America: Prospects for effective local governance through collaborative networks”

Author: Jered Carr and Michael Siciliano, professors of public administration (UIC)

Political authority in America’s major metropolitan areas is highly fragmented, often divided among dozens of cities, counties, and special districts. Political fragmentation is expected to encourage local governments to compete for residents and capital investment. Competition along these lines is widely criticized as inefficient, producing unnecessary duplication of services and reducing opportunities for effective regional planning and achieving economies of scale in the production of local public services. For decades, political consolidation has been advanced as a solution to intergovernmental competition. However, this policy has rarely been adopted and the political fragmentation of American metropolitan areas has instead expanded over this time. However, local governments have taken steps to move beyond competition and consolidation by engaging one another in complex forms of collaboration through networks. This paper explores evolving models of regional governance through networks and discusses four main topics. One, rationales for choosing networks as a form of organizing local government activities. Two, factors that influence the selection and establishment of network partners. Three, the formal and informal mechanisms used to reduce the risks associated with collaborating within networks. Four, strategies for measuring and promoting success in networks.

“When Needed Public Pension Reforms Fail or Appear to Be Legally Impossible, What Then? Are Unbalanced Budgets, Deficits and Government Collapse the Only Answer?”

Author: James Spiotto, Managing Director, Chapman Strategic Advisors, LLC

This paper will provide a review of some legal and practical obstacles that have caused needed pension reform and balancing the budget difficult, if not impossible, and will suggest possible new approaches to the problem that have not yet been tried. The reality of public pension reform is that the problem has been percolating for so long there are situations where voluntary reform is not possible, any actual reforms on a prospective basis or on what appears to be within the restrictions of state laws are not sufficient to be sustainable or affordable, and even the higher public purpose argument (calling for reduction of pension benefits that crowd out funding for essential services and needed infrastructure) may not be successful or practically possible due to a lack of a mechanism to effectuate the needed modifications. In such situations, new approaches to modifying unaffordable pension benefits on a prospective basis should be considered as a last resort to prevent government service meltdown. This paper proposes four possible alternatives to public employers who face this serious problem. These alternatives assume that all traditional pension reform efforts have been explored including raising taxes and reducing expenditures to the extent possible and more needed plan adjustments and modifications appear to be impossible legally or not possible on a consensual basis. The four alternatives to be considered by the state or local government employers are:

  • (A) Prepackaged Chapter 9 plan of debt adjustment,
  • (B) Creation of a special federal bankruptcy court for insolvent public pension funds,
  • (C) Government Oversight, Refinance and Debt Adjustment Commission (“GORDAC”) to assist where public pension reform is otherwise legally or practically impossible, and
  • (D) Model Guidelines for a state constitutional amendment or legislative public pension funding policy for a higher public good: the necessity of pension benefits adjustment for the public safety and welfare in those situations where state constitutions, statutes or case law appear to prohibit any impairment or reduction of pension benefits.