As Detroit faces bankruptcy and other U.S. cities address an ongoing crisis in municipal finance, a new interactive database allows for the first time meaningful comparisons of city finances — from spending on schools, police, and public works to revenues from the property tax and other sources.
For example, Madison, Wis., relies on the property tax for a larger share of its general revenue than all other cities in the 112-city Fiscally Standardized Cities database, says Andrew Reschovsky, professor emeritus of public affairs and applied economics at UW-Madison. Forty-six percent of 2010 general revenues in Madison came from the property tax. The only other cities relying on the property tax for more than 40 percent of general revenues are Austin, Texas, and Boston.
With a few exceptions, the database includes all the nation’s largest central cities. It 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 U.S. Census data, the database provides 34 years of data (1977-2010), with more years to be added as data become available.
“Until now, making meaningful fiscal comparisons among the nation’s central cities has been virtually impossible 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,” says Reschovsky, who created the methodology behind the database with Howard Chernick, Hunter College and City University of New York, and Adam H. Langley, Lincoln Institute of Land Policy, where Reschovsky is a visiting fellow.
The unique methodology of the Fiscally Standardized Cities 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, Reschovsky says. “The concept of the fiscally standardized city 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 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 misleading, Reschovsky says.
Compared to Madison, Milwaukee relies less on the property tax to finance government services. In 2010, Milwaukee’s property tax accounted for 26 percent of general revenue in Milwaukee, somewhat higher than the average among all 112 fiscally standardized cities. Milwaukee ranked 51st in its reliance on the property tax.
“The reason for Madison’s heavy reliance on the property tax is not because government spending is particularly high in Madison,” Reschovsky says. “The fiscally standardized data indicate that in 2010 Madison spent $4,204 per capita, $792 less than median spending among all 112 central cities. Per-capita spending in Milwaukee was $5,173. Although that amount is above median spending, per-capita spending was higher in 45 central cities.”
Madison relies so heavily on the property tax because local governments in Wisconsin (including school districts and county governments) have few other local (excluding state or federal aid) revenue sources, Reschovsky notes. “The property tax accounted for 70.4 percent of Madison’s locally raised revenues. Only three cities (Boston, Worcester, and Springfield, Mass.) put more reliance on the property tax as a local source of revenue than Madison.”
Milwaukee raised 53 percent of its locally raised revenues (excluding all federal and state grants) from the property tax 2010. Milwaukee ranks 15th among all 112 fiscally standardized cities in its reliance on the property tax as a local revenue source (the national average is 43.7 percent).