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Roy Bahl:

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The fiscal problem of large cities was as prominent a policy issue in the 1960s and 1970s as it was a forgotten issue in the 1980s. Is this because the problems were solved, because other problems have become more pressing, because the problems have become "hidden," or simply because cities are weakly represented in congress and in state legislatures? Many thought that the fiscal problems of central cities and the celebrated city-suburban disparities were due to, or at least exacerbated by, state government fiscal policies. Have state governments assumed more of the financing responsibility for cities in the 1980s, or have they passed along the reduction in federal subsidy to their local governments? These are the two questions to be addressed in this paper: What is the financial condition of cities, and whether state governments have used their new, more powerful role in the federal system to strengthen the financial hand of cities. A third section of the paper speculates about the policy options in the 1990s and the factors that will put some bounds on these options.


Originally published in Bahl, Roy W. “States and the Financial Condition of Cities.” Proceedings of the Annual Conference on Taxation Held under the Auspices of the National Tax Association-Tax Institute of America 82 (1989): 81–85.

Posted with the permission of the National Tax Association.

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