Judicial Approaches to Local Public-Sector Equity: An Economic Analysis
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Description
During the past decade a vast number of legal actions have been taken against state and local governments in an attempt to bring about greater equality in the distribution of public services and taxes. From the point of view of an urban economist, the cases are relevant because they have important consequences for the analysis of expenditure, taxation, and land-use policies. This paper will analyze the likely economic impact of court originated or court ordered policies with income distribution implications. This analysis is relevant for economists (and lawyers) for two reasons: it suggests the kinds of institutional constraints that local public decision-makers are likely to face, and thus, which ought to be incorporated into models of urban fiscal behavior; and it suggests specific empirical policy questions that remain largely unanswered and that may provide fruitful grounds for future research. The history of legal attempts to attain equity through the local public sector is a complex one. However, one might summarize the recent history by arguing that reformers have focused on the following four objectives: (1) equal provision of education and other public services within jurisdictions; (2) equal (effective) tax rates for all households within jurisdictions; (3) equal capacity (tax bases) among jurisdictions to finance education; and (4) the removal of minimum lot zoning and other land-use controls to open all jurisdictions to low-income housing. To some extent these objectives are consistent with a broad view of horizontal equity (equal treatment of equals) and are thus an end in themselves. What is of direct concern here, however, is that whether intended or not, the objectives can and will lead to a more vertically equitable distribution of income. Much of the economic underpinning of my analysis lies in the recent (i.e., the past decade) literature of the urban and public economics disciplines. Part 1 of the paper describes some aspects of this literature that are pertinent to my discussion of the impact of the recent court decisions. Parts 2 and 3 consider the economic and legal issues surrounding the four equity objectives. In Part 2 the vertical equity and efficiency consequences associated with each of the two intrajurisdictional equity objectives are considered. I describe the existing case law and ask whether the courts are likely to be successful in bringing about either tax-rate or expenditure equality, whether the imposition of such constraints upon local governments is likely to increase or decrease efficiency, and whether there will be any improvement in the distribution of income. Part 2 is concerned with the interjurisdictional equity objectives. I consider the legal history relating to the distribution of tax burdens and expenditures among jurisdictions within the metropolitan area, asking whether the courts have been or are likely to be successful in bringing about jurisdictional tax base equality or in removing zoning and other constraints that limit the supply of low-income suburban housing and the access of low-income households to suburban public services. In addition, I consider the efficiency and vertical equity implications of tax base equality and equal access. The final section contains a brief summary of the chapter and some tentative conclusions concerning the legal approach to local public-sector equity. I have attempted neither to survey all substantive areas relevant to the equity issue nor to exhaust the case law in the subject areas mentioned. Specifically, recent developments in the area of environmental law have been omitted, in part because the policy consequences apply more to state and regional than to local government. School desegregation cases are relevant; but, although school desegregation can help to achieve intrajurisdictional expenditure equity and improvements in access to public services among jurisdictions, the topic has been omitted, largely because of Clotfelter’s treatment of school desegregation in chapter 11.
Source Publication
Current Issues in Urban Economics
Source Editors/Authors
Peter Mieszkowski, Mahlon R. Straszheim
Publication Date
1979
Recommended Citation
Rubinfeld, Daniel L., "Judicial Approaches to Local Public-Sector Equity: An Economic Analysis" (1979). Faculty Chapters. 1874.
https://gretchen.law.nyu.edu/fac-chapt/1874
