Rural Governments : Raising Revenues and Feeling the Pressure. Rural Development Research Report. No. 51 / Richard J. Reeder.

Some local governments in nonmetro areas--especially those in the rural West and in very rural areas--experienced high levels of fiscal stress in the mid-seventies that were associated with high and rising local taxes. These local governments may be forced to cut back their rural development activities in the eighties. Fiscal pressures on local governments were assessed by looking at locally raised revenues as a percentage of local income from 1972-1977. Areas with both high and rising revenue effort experienced the most fiscal pressure. Over 33% of the totally rural areas not adjacent to metro areas had both high and rising local government revenue effort, in contrast to only 16% of the less rural nonmetro areas. Efforts to raise revenues increased in about half of the totally rural areas during the mid-seventies. The high cost of providing essential government services in isolated areas may explain why these areas experienced the greatest fiscal pressure. The varying fiscal condition of local governments is an important issue to Federal and State policymakers in the design and implementation of rural development policies. An appendix presents a multiple regression analysis designed to identify and separate imperfections in the measure of revenue effort. (Author/PM)

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