Magazine article Government Finance Review

Fiscal Regionalism: Metropolitan Reform without Boundary Changes

Magazine article Government Finance Review

Fiscal Regionalism: Metropolitan Reform without Boundary Changes

Article excerpt

This article details the history of regional governance in the United States; It highlights the different structures of regional cooperation currently in existence and explains, in depth, a relatively new theory known as "fiscal regionalism."

Metropolitan regions across the United States are faced with the need to design governance systems that preserve and protect their constituent communities while maintaining or developing a more competitive economic climate. In the face of a globalizing world economy, most regions are seeking to rationalize their local government structure, but effectively adapting to the changing nature of the global economy has proven elusive.

Regionalist Neil Peirce, who popularized the term "citistates," has identified two overarching issues. The first is physical sprawl, defined by Peirce as "the alarming environmental and social consequences of America's inability or unwillingness to contain urban growth within reasonably compact geographic areas." Indeed, the social and environmental impact of sprawl has resurfaced as an important regional and national issue. Traffic congestion and crowded schools are leading to a renewed call for more rational strategies that do not lead to growth occurring in areas unable or unprepared to deal with its consequences. The second issue, Pierce argues, is "America's hesitation, one might say their paralysis, in creating effective systems of coordinated governance for citistates." America has one of the most diffuse, or decentralized, systems of government in the world. This article will focus on this second issue of decentralization.

American Governance

Governance in metropolitan areas is, fundamentally, built around local governments. Although many reformers would argue such an assumption is invalid and leads to inappropriate outcomes, the monopoly position of local governments in two key policy areas makes the assumption a practical reality. The first is local governments' exclusive ability to locally raise public funds through taxation. Although regulated by state governments, this power helps organize how public funds are allocated. The second factor is local governments' exclusive ability to make land-use decisions through the exercise of, primarily, zoning powers. As with taxation power, this monopoly position is tempered by state regulatory responsibility.

Efforts to improve governance in metropolitan regions, therefore, must deal with one or both of these issues and recognize that local government participation in designing improvements is essential for any change.

The Missing Link

More than 40 years ago, Arthur Maas defined the structure of local governance in the United States as an "areal" division of power. By that, he meant that the territorial-bounded local governments were, by culture and practice, an integral part of a system of organization that divided power between the federal, state, and local governments. The "missing link" in this division of power, Maas argued, was a general process to address governmental issues at the metropolitan level. Such a missing link required the development of four separate processes. They were:

* a last resort way to settle inter-jurisdictional disputes and questions of jurisdiction;

* a process of inter-jurisdictional cooperation;

* a process by which the governments in a region can act separately and independently; and

* a process of change that cannot be dictated or stopped by a minority of the jurisdictions.

The need to work together in a cooperative fashion in this "areal" environment has never been greater. The Metropolitan Initiative, a partnership between national foundations and the Center for Neighborhood Technology, conducted a series of workshops with key leaders in 12 regions across the United States. The purpose of the workshops was to identify public policy problems associated with growth and regional competitiveness. …

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