What’s Michigan’s Fiscal Capacity?
Fiscal capacity and approaches vary across the country. As you look at the various states, you see different philosophies, capability, and results.
The Urban Institute has prepared a comprehensive look at this issue and their report can be found here. The report was prepared by Tracy Gordon, Richard C. Auxier, and John Iselin. The report does a great job explaining the issue.
According to the report, “States vary in how much governments collect in revenue and spend on goods and services. To understand the sources of these differences, we examined what states could raise (revenue capacity) and would spend (expenditure need) if they followed national averages, taking into account their own demographics and economic conditions. We found wide variation in both measures and the differences between them—that is, fiscal gaps at capacity. Federal funds closed these gaps in some states, but not all, raising questions about how to design effective federal grant programs as well as state and local tax and spending policies.”
As we approach the future, part of our vision will be framed by learning from others that do it better. This is a great resource to help understand the bigger picture.
Anthony Minghine is associate executive director and COO of the Michigan Municipal League. He can be reached at aminghine@mml.org.