Equitable Fiscal Regionalism
Volume 85, No. 1, Fall 2012
By Matthew J. Parlow [PDF]

Due to suburbanization and white flight, metropolitan regions suffer from great fiscal inequality. Wealthier, and oftentimes white, suburbs are able to keep their tax burdens low and receive high quality government services. In contrast, central cities, with many poorer and ethnic minority communities, face eroding tax bases and increased demand for social services. In response to this fiscal dilemma, central cities spend money to construct and operate assets, such as a sports stadium or music hall, in the hopes of spurring economic development that can create job opportunities for residents and increased tax revenues for the city. While such assets are desired and used by residents of the entire region, our current system of local government allows wealthier localities to enjoy these benefits without helping to pay for their costs.

This dismal state of affairs is largely the product of localism, a descriptive and normative theory of a system of decentralized, independent local governments that fosters self-interest and unilateral decision making. Recently, a powerful critique of localism has emerged in the form of regionalism, a competing theory that recognizes the complexity and interdependence of cities. Regionalism argues that interlocal collaboration is necessary to address the ills of the modern metropolis, including the problem of fiscal inequality. Unfortunately, regionalism has failed to be adopted on a meaningful scale because it is politically or practically infeasible. Moreover, the regional governments that have been successfully formed have tended to reinforce inequality and free riding. In this Article, I propose a new, more viable theory of regionalism—“equitable fiscal regionalism.” This theory envisions a regional government that better distributes the cost of regional benefits throughout the metropolitan area. In doing so, equitable fiscal regionalism seeks to address the free riding by wealthier localities and help reverse the fiscal inequalities that exist in most regions. By using the example of sports stadium districts, this Article demonstrates how equitable fiscal regionalism can help find theoretical common ground for localism and regionalism and move toward bridging the gap between scholarship and practice in this important area.

Read Article…