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September 12, 2013

A better way to compare city finances

Fisc thumbnailAs Detroit faces bankruptcy and many other cities across the U.S. address an ongoing crisis in municipal finance, the Lincoln Institute has created a new interactive database that for the first time allows meaningful comparisons of city finances – from spending on schools, police, and public works to revenues from the property tax and other sources.
     The Fiscally Standardized Cities (FiSC) database allows users to compare local government finances for 112 large U.S. central cities across more than 120 categories of revenues, expenditures, debt, and assets. Based on data collected by the U.S. Census Bureau, the FiSC database provides 34 years of data (1977-2010), with additional years to be added as the data become available.
    Until now, it has been virtually impossible to make meaningful fiscal comparisons among the nation’s central cities because of major differences in how cities deliver public services, with some city governments providing a full array of public services while others share the responsibility with a variety of overlying independent governments.
     The unique methodology of the Fiscally Standardized Cities (FiSC) database accounts for these differences in local government structure by adding together revenues and expenditures for each city municipal government and an appropriate share for overlying governments, including counties, independent school districts, and special districts. Thus FiSCs provides a full picture of revenues raised from city residents and businesses and spending on their behalf, whether done by the city government or a separate overlying government.
     The FiSC database allows for apples-to-apples comparisons of local government finances at the city level, whereas comparing the finances of city governments alone is like comparing apples and oranges and thus is completely misleading. Using city government data, Baltimore spends three times more per capita than Columbus, Ohio. The FiSC estimates, however, show that per capita spending in the two cities is nearly identical. This contrast exists because in Baltimore nearly all public services are provided by the city government, while in Columbus many public services are provided by the overlying county government and independent school districts.
     As another example, city government data suggest that the most important source of tax revenue in Tucson is the sales tax. In Buffalo, almost all of the city government’s tax revenue comes from the property tax. The FiSC estimates for these two cities tell a very different story. Because the county government in Tucson relies mainly on property taxes, Tucson residents actually pay more in property taxes than residents of Buffalo, where the county government relies on sales taxes.
     The recent bankruptcy of Detroit and several California cities highlight the importance of studying the fiscal conditions of America’s central cities. The FiSC database makes it easy to gather information about public finances in our largest cities.  Some discoveries:

  • Spending per capita in Detroit fell 28 percent from its 2003 peak to 2010 after accounting for inflation, more than any other central city (FiSC) over that period.
  • Between 2007 and 2010, inflation-adjusted per capita federal and state aid to Miami and other Florida cities fell by about 25 percent. During the same period, aid to Houston and Dallas increased by over 20 percent.
  • Property taxes per capita in 2010 were higher than in Atlanta ($2,618) than in any other Southern city. They were lowest in Montgomery ($395).
     The FiSC database was designed for anyone exploring government finance in large cities, including researchers, policymakers, and journalists. It is the latest addition to the Resources & Tools section of the Lincoln Institute website, reflecting an ongoing commitment to provide data free of charge for analysis and research. The Fiscally Standardized Cities database joins other databases in this section of the website including Significant Features of the Property Tax, Land and Property Values in the U.S., University and Real Estate Development, and the Atlas of Urban Expansion.


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