ERIC Number: ED394187
Record Type: RIE
Publication Date: 1995-Dec
The Effects of Economic and Demographic Changes on States and Local Budgets.
As policymakers consider whether and how to fill the expected revenue gap, they will need to be aware of the fiscal, legal, and political challenges ahead. The changing trends in the economy and population and their prospective impacts on state and local government budgets are the focus of this paper. Its goal is to help policymakers at all levels of government understand the potential impact of these economic and demographic changes on the ability of state and local government to finance public goods, in particular, to finance goods associated with children's welfare. Trends in the growth and composition of income, consumption, employment, and population, and forecasts of these economic and demographic indicators are described in the final section of this report. In the second section, the net impacts of these changes and forecasts of these variables are used to indicate the potential growth or decline in state and local revenue bases. In the final section, changes in state and local revenue structures are suggested that may capitalize on the changing economy. Data were derived primarily from the U.S. Department of Commerce, Bureau of Economic Analysis (BEA), and the Census Bureau. State and local governments will be faced with slower growing revenue sources, while public-service demand shifts toward the elderly. Without some fundamental changes to the major revenue instruments (income, sales, and property taxes), these trends will cause trouble for governments. However, preventing further erosion of these revenue bases and supporting expansion of the bases will put state and local governments on a higher revenue growth path without raising tax rates. State and local governments should also be encouraged to investigate further use of user fees and charges, as well as privatization of services. Appendices contain information about the Finance Project, available resources from the project's working-paper series, the BEA and Bureau of Census classifications of states, and an example of erosion of the U.S. income tax base. (Contains 48 references.) (LMI)
Descriptors: Budgets, Economic Factors, Economic Impact, Educational Finance, Elementary Secondary Education, Employment Patterns, Income, Local Government, Property Taxes, Socioeconomic Influences, State Government, Tax Effort
The Finance Project, 1341 G Street, N.W., Washington, DC 20005 ($5).
Publication Type: Numerical/Quantitative Data; Reports - Evaluative
Education Level: N/A
Authoring Institution: Finance Project, Washington, DC.
Note: For related studies of systemic revenue generation issues for education and other children's services, see EA 027 511, EA 027 513, and EA 027 515.