Monday, June 25, 2007
Local Government Finance – Question 7
Question for Matt B and Xavier D. Review the reasons why state government provides state aid to local governments. In your review, make sure you include what I call the “my brother’s keeper” justification -– that we have some responsibility to South Carolina citizens in poor areas that cannot raise much money on their own. This argument is a major factor in public school finance, as we shall see.
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3 comments:
When state aid as a revenue source is considered to be gernal aid. Most likely to push local governments to inforce standards or state laws into the area. The example of the school districts is an great example because state standards require that schools operate at a certain level to compete with other states. State aid is also important in the maintain public services (like highways). Without the use of state aid, many of the services we take for granted may be underfunded.
Xavier de Jesus
Another fact is that special purpose districts do not get state aid and are fully funded by the local government. Local governments however receive aid from different areas (besides state aid) like property tax.
Despite having different sources to get aid, local governments can't get enough revenue from local sources. Its up to the state to allow the local government to expand into other areas to find new sources for revenue. So any step that the local government takes to find new revenue sources is in the desision of the state.
Xaiver de Jesus
(PS. sorry for the 3 posts, it was suppose to be on the first one but had trouble with the net, I emailed the message also.)
Xavier has it essentially correct in his two stabs at it. If the state feels that some service needs to exist statewide but wants to use local government to deliver that service, it often provides some aid.
If it feels that local taxes are too high, often the property tax, it provides state aid to allow and often force local governments to lower that tax.
Finally, if the state has an interest in making sure that some service is of equal quality across the state, like schools because good schools attract industry that has some indirect benefits to all citizens in the state, or if the state feels that we have a moral obligation to provide equal opportunity to all school children, regardless of where they live, then it uses state taxes to in effect take money from wealthier areas and redistribute it to the poorer areas. That is the "my brother's keeper" argument.
Bob B
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