Rural and Urban Government Fiscal Trends, 1977-82 / Richard J. Reeder.

This report examines trends in local government revenues, expenditures and debt from 1977-82. During the period, local governments were subject to cuts in federal aid, severe economic recession and restrictions on revenues and spending, necessitating a fiscal response. Spending reductions were common, especially in big cities. Rural governments were characterized more by tax and spending increases. While most urban and rural areas were able to reduce property tax burdens by offsetting increases in non-tax revenues, only big cities were able to reduce significantly the overall fiscal burdens for their residents. Real spending reductions were mostly in education. While student enrollment declined 10% during the period, the number of teachers dropped only 1%. Reduced school construction and lower real teachers' salaries were factors, especially in big cities. In rural areas, local governments rapidly increased their real current spending, apparently to meet higher costs for utilities and health services. Because incomes did not grow as fast as spending, more revenue efforts were required, increasing fiscal stress on taxpayers. Governments in totally rural areas benefited from fiscal capacity growth and increased state aid, allowing them to reduce local government fiscal pressure on taxpayers. Revenue efforts have been rising in rural areas relative to urban areas and revenue efforts in totally rural areas now exceed those of large central cities. If these trends continue, the economic development potential of rural areas may be threatened. (Numerous tables and figures and 28 references are included.) (TES)

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