Category: Tax Policy (page 1 of 3)

Municipalities and the Great Recession

Much has been written about the impact of the Great Recession on state governments and larger cities, but we have yet to see deep analysis on how smaller municipalities weathered the recession. To get the ball rolling my students and I have analyzed the impact of the recession on smaller cities in Georgia and Florida and are currently adding an additional eleven states to the analysis. To begin we selected two states that have somewhat different revenue structures:

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State Collection of County Financial Data Sources

By Zach Mohr and Madison Esterle

One of the fundamental problems for local government public budget and finance research in the United States is the availability of audited financial data in a format that is easy to collect and analyze. This is a problem for both researchers that are trying to assemble large data sets and for practitioners that live in states that do not have centralized collection of this data. It is also a problem for cross state data collection, which is quite common for local jurisdictions that live on the borders of states. Undoubtedly, there is much duplication of effort and a great need for local government financial information that is comparable for research and practice.

This blog post presents some basic information that we have collected on the availability of county financial data sources that are collected by states (see table 1 at the end of the blog). This information is provided to supplement other efforts and to make practitioners aware of other data sources outside of their state. It answers a few basic questions. Which states require counties to produce GAAP financial statements? Which states provide centralized collection of county financial data? And what format is the financial data collected by states reported in? We map the answers to these questions and provide some contextual description of the data, which were greatly facilitated by the excellent maps provided by NACO. We are interested in posting this data to have practitioners and others researchers look at the data, use it, and tell us where we might find other such data.

Which states require counties to produce GAAP financial statements?

GAAP financial statements are often required to produce audited financial data that is sufficiently comparable for research purposes. Interestingly, most states (29) currently do not require counties to produce GAAP based financial reports.  However, a significant number (17) do not have consistent reporting requirements or reporting requirements that differ from GAAP.

Three states are listed as N/A. This is because this information was substantially based on the NACO financial reporting maps. Also, our map differs from NACO in that we do not recognize Alaska as having consistent financial reporting requirements.

Which states provide centralized collection of county financial data?

For research purposes, we are often interested in states that collect local government financial data as it greatly facilitates the research process. It also greatly facilitates financial transparency as citizens, elected and appointed officials, and other interested parties can compare the spending and financing activities of governments as North Carolina does with its fiscal benchmarking and data collection tools.

Centralized collection happens in seventeen states and of these states (13) collect data on greater than 90% of the counties. Most of these states do not collect county information for the unique counties that have been merged with cities i.e. Denver or San Francisco or entities that are somewhat unique like the boroughs of New York City that function somewhat like counties but are also part of the city. For these purposes, in the spreadsheet at the end of this article, we have broken out the states that collect greater than 90% of their counties and those states that have a centralized collection presence on the web but collect less than 90% of their counties.

What format is the financial data collected by states reported in?

Finally, the format of the centralized financial data is important because it provides easier access to the data and should also provide better transparency and context for the financial comparability of the counties. We find that only five states have centralized collection that allows for easy exporting of the financial data to Excel or csv file formats and of these five only three have a requirement that the counties report GAAP financial statements. Most of the seventeen states provide links to pdfs (12 states).  We would like to encourage state and local governments to provide their financial information in formats that assist in data collection and analysis as this can greatly increase financial transparency of local governments.

Conclusion

Researchers and practitioners have great need of financial data. Audited GAAP financial data is the gold standard for comparability purposes.  Centralized collection of local government financial statements that are collected in ways that allow analysis like exportable .csv files are also excellent ways to facilitate transparency and analysis.

One of our main reasons for doing this blog post is to increase awareness of county financial data sources. If you know of other sources (like state associations of counties that have historical financial data that are readily and/or freely available), we would like to know about it. If these sources are available on the web, we will update this file in a future blog post. Also, please let us know if we have misclassified a state that you are aware. States can change their reporting requirements and are increasingly trying to provide greater access to local government financial data. The local government budget and finance community of researchers and practitioners can be made significantly stronger by knowledge of comparable financial data sources.

 

 

 

Table 1: County Financial Reporting by States
Centralized Collection Collection Format
State GAAP >90% <90% PDF CSV Website
AL 0 0 0 0 0
AK 0 0 0 0 0
AZ 1 1 0 1 0 https://www.azauditor.gov/reports-publications/counties
AR 0 0 0 0 0
CA 1 1 0 0 1 https://bythenumbers.sco.ca.gov/Counties-Get-Started/All-County-Data/npha-h8hu
CO 1 1 0 1 0 https://dola.colorado.gov/lgis/counties.jsf
CT n/a 0 0 0 0
DE 0 0 0 0 0
FL 1 1 0 1 0 https://flauditor.gov/pages/counties_efile.htm
GA 1 1 0 1 0 https://ted.cviog.uga.edu/financial-documents/financial-reports
HI 1 0 0 0 0
ID 1 0 0 0 0
IL 0 0 0 0 0
IN 0 0 0 0 0
IA 1 1 0 1 0 https://www.iowaonline.state.ia.us/localbudgets/default.aspx?cmd=gotopublicsite
KS 0 0 0 0 0
KY 0 0 0 0 0
LA 1 0 0 0 0
ME 1 0 0 0 0
MD 1 0 0 0 0
MA n/a 0 0 0 0
MI 1 0 1 0 1 https://f65.mitreasury.msu.edu/Reports/DataSummaryReport.aspx
MN 1 0 0 0 0
MS 1 0 1 1 0 http://www.osa.state.ms.us/reports/local/
MO 0 0 0 0 0
MT 1 0 0 0 0
NE 0 1 0 1 0 http://www.nebraska.gov/auditor/reports/index.cgi?audit=1
NV 1 0 0 0 0
NH 1 0 0 0 0
NJ 0 0 0 0 0
NM 1 0 0 0 0
NY 0 1 0 0 1 http://wwe2.osc.state.ny.us/transparency/LocalGov/LocalGovIntro.cfm
NC 1 1 0 0 1 https://www.nctreasurer.com/slg/lfm/financial-analysis/Pages/Analysis-by-Population.aspx
ND 1 0 0 0 0
OH 1 1 0 1 0 https://ohioauditor.gov/auditsearch/Search.aspx
OK 0 0 0 0 0
OR 1 1 0 1 0 http://sos.oregon.gov/audits/Pages/muniaudits.aspx
PA 1 1 0 1 0 http://munstats.pa.gov/Reports/ReportInformation2.aspx?report=cAfrForm
RI n/a 0 0 0 0
SC 0 0 1 1 0 http://www.sccounties.org/budgets-and-cafrs
SD 0 0 0 0 0
TN 1 0 1 1 0 http://www.comptroller.tn.gov/la/CountySelect.asp
TX 1 0 0 0 0
UT 1 0 0 0 0
VT 0 0 0 0 0
VA 1 0 0 0 0
WA 0 1 0 0 1 http://portal.sao.wa.gov/LGCS/Reports/ReportMain.aspx
WV 1 0 0 0 0
WI 1 0 0 0 0
WY 1 0 0 0 0
Total 30 13 4 12 5

 

*Note this research is funded by the MIT Election Data and Science Lab and its funder, the Madison Initiative of the William and Flora Hewlett Foundation.  We also would like to thank Robert Austin for his help in creating the maps.

 

 

Running a Successful PUV Auditing Program

“Don’t mess with the farmers!” I’ve heard these words of wisdom a few times in my career, always from well-meaning individuals who had come out on the wrong side of a PUV auditing program. They had come to the conclusion that it wasn’t politically feasible to conduct stringent audits of their farms in the present use program, and that the county was better off letting everyone but the most egregious non-qualifiers go through.

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Transparency with your Business Personal Property Audit Program

Possibly the most well-known method of delivering the mission of the School of Government is through teaching. But to me personally, another very important delivery method is through advising. Last year, 45 faculty and other professionals at the School of Government reported 13,105 advising events. I hope my individual advising can become an increasingly valuable resource for you. I believe I can be more valuable to everyone when you individually ask me to be involved. A couple of weeks ago, I had the opportunity to provide advice on a presentation. The Randolph County commissioners requested the assessor’s office to do something that makes government better in my opinion. The request was to be more transparent and informative for their taxpayers, but more specifically regarding the county’s business personal property (BPP) tax audit program. The assessor’s office was asked to put together a presentation on their program and they asked for my ideas. I want to share some of those ideas so you will hopefully share your thoughts in the comments section and we can grow this resource for everyone’s use. Maybe this post can be a tool for collaboration. Continue reading

Autonomous Vehicles are coming, is your city ready?

Do you want your bonds to kill your city’s bond ratings?

Do you want your bonds to go into default?

Do you want to be responsible for a backlash against the mayor/council for not planning for a future you should have known was coming?

Do you want your city to become even more clogged with traffic, but this time the cars are empty and slowing everyone down?

Ignoring autonomous vehicles (AVs) may be possible today, but just know, they are coming soon–and by soon I mean this year (2017). While AVs may not yet be mainstream transportation today, do not count on it just being something your grandkids use. Cities have to start planning now, or their leaders will be saying YES (begrudgingly) to those questions above. A new report out from the folks at the Sustainable Cities Initiative at the University of Oregon is looking to help you deal with these questions. You can read our report here.

AVs will be on the roads in substantial numbers in the next 10 years, and taking on a substantial share of transportation needs in 20 (or less). Uber wasn’t a ‘thing’ that we did until March 2009—and not a lot of us were using it then. Today people are selling off one or more of their cars because they just use Uber/Lyft instead. And while we like the idea of having the freedom to go whenever, wherever we want in our cars, they are not used all that often—sitting idle 95, yet costing us ten percent of our budgets.

E-commerce is here and growing larger each year. When Amazon started in the 1990s no one could have imagined that this online bookstore would transform into one of the world’s largest companies. Brick and mortar stores nationwide are closing, transforming our Main Streets and shopping malls. In some cities, you can make your order and receive the goods the same day—this trend will certainly extend to more and more people globally as the reach of e-commerce extends further and further into our shopping habits.

The combination of e-commerce and AVs will (and may already be) reshape our cities.  Regardless of your desire to use an AV or not or shop on Amazon, they transformations will have an effect on our cities. Many cities have huge investments in on-street parking and parking garages to allow us to park near where we are going. Yet if an AV is driving us and dropping us off at our destination, cities won’t get to collect that revenue anymore and have a hard time paying off those revenue bonds. Think this is a problem for the future? Think again! Cities are already feeling the heat because so many people are using shared vehicle services like Lyft. Airports have seen substantial drop offs in parking revenue, taxi revenues, and rental car revenues. This is without accounting for what AVs will do, just what shared vehicles services are ALREADY doing—and they are just getting started.

This report takes you through a city’s budget—both revenues and expenditures—and starts to think about what could happen as AVs become common place and e-commerce takes on an even larger role in retail. City leaders have to start planning for this future now if they want to have a voice in what AVs/e-commerce will do to their cities. AVs create a “potential rat’s nest of a budgeting challenge” (Fung 2016). This paper seeks to begin the process of untangling that rat’s nest, and provide the foundation for future phases of the project that will consider potential additional revenue sources to fund the infrastructure changes that may come from the integration of AVs and more widespread e-commerce.

Benjamin Y. Clark is an assistant professor of public administration in the School of Planning, Public Policy and Management at the University of Oregon. His research focuses on autonomous vehicles, public sector crowdsourcing, 311 systems, coproduction, local government management, and budgetary/financial management.  He teaches public management, public policy, and the applied research Capstone course. He has been an Executive Committee member of the Association for Budgeting and Financial Management (ABFM) since 2013. Prior to his career in academia, he worked for nearly a decade as a public servant at the local, federal, and international levels.

 

Citizen Engagement in the Budgeting Process

There has been a lot of interest in how to tighten up the relationships between citizens and their local governments.  At the local level there is a lot more opportunity to work with and get feedback from citizens. This is accomplished by many communities and in various ways.  I believe, and I know this will be shocking, that the budget is the single best place to engage citizens.  The budget is the encyclopedia of government.  The budget reflects what government does and reflects priorities based on spending decisions, as well as changes in the community as reflected in changes in the budget from year to year.

***I love this quote from a VP debate in 2012. 1) It is true. 2) It is hilarious because we are living in a time of continuing resolutions rather than budgets at the federal level, so I guess we prioritize not making hard decisions and not working together.***

I also believe that some of you are groaning because citizens can make the process more difficult and complicated, the concern for the squeaky wheel gets the grease comes to mind, and that the citizen input we get may not be well informed, representative, or even reasonable.  I get all that, but still… there are ways we can engage with citizens in a meaningful way.

In North Carolina, for example, not only will we post our budgets online we also are legally required to have a budget hearing.  Of course, the budget is often adopted immediately (or shortly) after that hearing.  This suggests that the citizen input may not have shaped the budget too much. While this sounds like I am coming after you all I want to be clear, your concerns are fair and often the reality.  It is true that at town halls and budget hearings we may get primarily the citizens that are upset about one thing like a pothole or property taxes and they may not understand the scope of government and may not be well informed—and almost always they are mostly concerned with things that directly affect them and may not be thinking of the entire community.  Does that mean we abandon the the notion of citizen input?  Are there ways beyond the typical budget hearing and town hall that we can engage with citizens that may lead to better results?

Well let’s back up and get on the same page.  What even is citizen engagement?  I think a reasonable way to think about it is to say that citizens and communities are engaged when there are a series of connections between citizens and their governments on policies, programs, and service issues and decisions.  These connections can be in the form of information sharing, consultation, and in some cases active roles in decision-making.  Of course, it also depends who you ask.  There is evidence that on one end of the spectrum elected officials consider their election and lack of complaining as a sign engagement and satisfaction in contrast to the other end of the spectrum to citizens who view engagement to be a two-way communication where they can be involved in the process.  Right in the middle are practitioners who often see educating citizens about government so that they can be community advocates and help explain to their fellow citizens the tough choices government has to make.

All of these are reasonable definitions and reflect that citizen engagement can mean many different things.  I am going to tackle citizen engagement and present it from a framework of three different phases: information, consultation, and active participation.  I will give examples of all of these from here in North Carolina and around the country in some cases.

However, before we get into the fun stuff (or at least the meat of the issue) I want to offer some words of wisdom about citizen engagement.

First, you need to be thoughtful about your community and the diversity in your community.  Most governments that are interested in citizen engagement will implement multiple strategies because not all citizens are the same.  So for example, if you are doing town halls you need to think about transportation issues.  Do you the majority of your residents have a way to attend the meeting?  How about the timing of the meeting, are you excluding a large population because they have family responsibilities or second jobs perhaps?

Oh, so maybe an internet or phone survey is a better way to go! Well… do you live in a community with a large non-English speaking population?  If you are thinking about a survey, you will need to copies available in other languages.  What population of people has landlines these days?  Not the younger population for sure, so that will skew your results.  On the flipside, what about the people without computers at home or who are uncomfortable with the technology?

This is why it is advisable to have multiple outlets for engagement and feedback.  Also, try and be aware if you are not hearing from certain parts of your community.  One strategy could be to reach out to community leaders and ask them how to better reach them or see if there is a meeting or function, you could attend to better integrate those populations.  Sounds like a lot of work doesn’t it… it can be.

This is why you want to make sure that you are being thoughtful about where and how you engage.  You NEVER want to get feedback from citizens that you do not plan on using.  It is a waste of your time and of their time.  Instead of building bridges and strengthening your community it will leave people more frustrated and distrustful.  This is going to be an especially important lesson for the second two phases: consultation and active participation.  Providing information and helping citizens better understand government, the budget, and taxes is not as challenging in this regard (and it can help prevent fiscal illusion!).

Citizen engagement may seem like an uphill battle but there are many great resources out there about how to do it, so do not loose heart!  Ultimately, it is about strengthening your community and as public servants, that is a pretty great ambition!

Come back soon for the next installment on citizen engagement!

Do cities and counties circumvent state policy? One potential mechanism.

Cities and counties are constructs of their respective states. Counties are almost always created by state constitutional decree. Cities are municipal corporations created by state legislative action. Regardless of the method of creation, states exercise significant control over what cities and counties can and cannot do. From the taxes levied to debt issuances to services that can or cannot be provided, the state determines the role of local governments within its borders. States have been pre-empting local policies at an increasing rate. The National League of Cities has documented a number of these actions. Popular targets are restrictions locally imposed minimum wages (24 states), paid leave (18 states), and public provision of broadband internet (17 states). Of these three, North Carolina is included in all. There are many other areas where states have been pre-empting local actions. This top-down view suggests that local governments have little ability to chart their own course. However, this isn’t quite right. There are many ways that cities and counties push back against state policy. In the news now, Sanctuary Cities in Texas are pushing back against new laws restricting their actions. This is a highly visible example; however, cities and counties often have other options that are less visible.

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IAAO Course Prerequesites

Let’s go over them.

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It was an (im)perfect illusion: Fiscal Illusion and You

Fiscal illusion, sounds catchy doesn’t it?  Does it sound more like something you would read about on an ophthalmology website than a blog on taxes?  Well, that is where you are wrong.  Fiscal illusion is a hypothesis surrounding the notion that citizens systematically misunderstand their true tax burdens and the benefits they receive from government-provided services. In other words, they do not understand how much they pay in taxes or the value of the services that government provides.

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Communicating and Sharing Information

As this year’s North Carolina Association of Assessing Officers (NCAAO) President, I’ve tried to make good communication one of my priorities. Across North Carolina, we have received appeals from common taxpayers. There are a lot of them. We can call them multi-jurisdiction taxpayers and define them as individual taxpayers with real and personal property in more than one jurisdiction. It only makes sense for that taxpayer to keep track of how each of us responds to appeals. Which of us concede easily? Which of us have accurate data and can defend our values? Are there any counties that do not have the financial or other resources available to defend values?

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