Bell Bottoms and Base Sharing: What the 1970s Tax Base Sharing Program Sought to Teach About Leveling Metropolitan Fiscal Inequality

The well-known revenue sharing program implemented in 1970 in the metropolitan area of Minneapolis - St. Paul is critically analyzed to determine if it is achieving its goals of leveling fiscal inequalities between municipalities and stimulating sustainable urban growth. Additionally, the paper will consider the factors that indicate the need for a revenue sharing program and what form that takes in a municipality. Then, the paper investigates the factors that affect the ability of municipalities in the Cleveland metropolitan area to meet their needs and generate revenue. Lastly, an evaluation is included on the potential for a revenue sharing program to be implemented in Cleveland, Ohio. The methodology utilized to investigate the hypotheses is a regression analysis. Two sets of models are run to determine if there are discrepancies among the fiscal abilities of municipalities and, therefore, a need for a revenue sharing program. The first set of models looks at how well municipalities provide for their residents by testing the probability of the metropolitan area of Cleveland, Ohio having fiscal disparities and, consequently, the need for a tax base sharing program. The second set of models looks at the gross tax rates of municipalities to determine what factors affect the communities use of the tax base. The results from both sets of models indicate that commercial and industrial property values are sought after and crucial sources of revenue for municipalities to bolster their tax base and shift the tax burden away from residents. Specifically, the model that measures the variables that have an effect on fiscal stress identify poverty and people over the age of 65 as putting a strain on the expenditure side of the municipal budget without contributing substantially to the revenue side of the budget. A comparison between two east side suburbs highlights the vast differences in fiscal health in the Cleveland metropolitan area and the importance of commercial and industrial property taxes to sustain a municipal tax base