"A World-wide Analysis of the Evolution of Municipal Government Finance During and After the Great Recession"

Public finances of cities in the U.S. (including sales and income taxes) plummeted as a share of total revenue during the Great Recession. The slide in state and local government revenue in the U.S. has been well documented... [ view full abstract ]

Public finances of cities in the U.S. (including sales and income taxes) plummeted as a share of total revenue during the Great Recession. The slide in state and local government revenue in the U.S. has been well documented (Fisher, 2010, Gordon, 2012, Cleveland, 2013, Jonas, 2013, Chernick et al 2011). What cities in particular did about this slide has not been the subject of the intense research needed to understand the ability of cities to finance their future growth. In some countries, sub-central level governments suffered declines as a share of GDP to a greater extent than in other countries. In this paper, we explore the impact of the GR on a small sample of important cities in Hong Kong, South Africa and the United States in the hope to identify the main reasons for differential impacts of the GR on different cities. The research is focused on an analysis of municipal revenue and expenditures over the period from 1990 to the present.
This research project is the first that we are aware of that takes advantage of an unfortunate “natural experiment” in public finance—the adaptability of city finances to the Great Recession. We propose to address the following research questions:

1. What impact did the Great Recession have on the composition and elasticity of public revenues in Johannesburg, Hong Kong, New York, Atlanta, Dallas, and L.A.?
2. What changes did these governments make to the structure of the finances from 2007 to present?
3. Using forecasts for population, income, age distribution, and GDP growth, did changes in the structures increase the probability for long term revenue stability or decrease it?
4. How do these experiences differ over the cities and can we identify a “best practice”?