Separate, Unequal, and Ignored? Interjurisdictional Competition and the Budgetary Choices of Poor and Affluent Municipalities

Date01 March 2014
AuthorBenedict S. Jimenez
Published date01 March 2014
Benedict S. Jimenez is assistant
professor at Northeastern University in
Boston. His research focuses on urban pub-
lic f‌i nance and management. He received
the 2013 Paul A. Volcker Junior Scholar
Research Award from the American Political
Science Association for his research on
municipal f‌i scal retrenchment and recovery.
His studies on the roles of citizens and
strategic management in city f‌i scal retrench-
ment have been published in the Journal
of Public Administration Research
and Theory and American Review of
Public Administration.
246 Public Administration Review • March | April 2014
Public Administration Review,
Vol. 74, Iss. 2, pp. 246–257. © 2014 by
The American Society for Public Administration.
DOI: 10.1111/puar.12186.
Benedict S. Jimenez
Northeastern University
e fundamental value underlying the design of a
fragmented system of local governance is consumer
sovereignty.  is system functions as a market-like
arrangement providing citizen-consumers a choice of
jurisdictions that of‌f er dif‌f erent bundles of public services
and taxes. However, the same choice also can facilitate
class-based population sorting, creating regions where f‌i s-
cally wealthy jurisdictions coexist with impoverished ones.
Some argue that the public market enhances the power of
all consumers, whether poor or rich. Even if the poor are
concentrated in some jurisdictions, they can exercise their
voice to ensure that their government responds to their
service needs. But does the voice of the poor matter as
much as the voice of the rich in determining service levels
in the local public market? Comparing the budgetary
choices in poor and af‌f‌l uent municipalities, this article
shows that in highly fragmented regions, some municipal
services are provided the least in communities where they
are needed the most.
No other country in the world—not even
those with bigger populations—has as many
f‌i scally and administratively autonomous
local governments as the United States. According to
the Census of Governments, there were 89,004 local
governments in the country in 2012.  ese govern-
ments—counties, municipalities, townships, special
authorities, and school districts—play an important
role in promoting the quality of life of citizens by pro-
viding critical public services such as infrastructure,
education, health, and public welfare, among many.
e literature on local public f‌i nance suggests two
contrasting outcomes of this highly fragmented
system of local governance.1 On the one hand, the
local public market model suggests that a fragmented
system approximates a market-like arrangement that
provides citizens a choice of jurisdictions that satisfy
their specif‌i c tax and ser vice preferences (Tiebout
1956).  e ability of citizens to compare and choose
among numerous local government-producers spurs
competition among jurisdictions to attract f‌i scally
desirable residents, forcing those governments to
produce public services at the lowest possible cost
in order to reduce local tax burdens (Bestley and
Case 1995; Brennan and Buchanan 1980; Schneider
1989). Competition generated by fragmentation, in
this strand of the literature, is a positive-sum game
in which groups of citizens benef‌i t without making
someone else worse of‌f .
On the other hand, the choice available in the local
public market can lead to the sorting of population by
economic class, creating spatially segregated commu-
nities with dif‌f ering f‌i scal wealth and unequal capacity
to deliver local public services (Hill 1974; Lowery
2000; Schneider and Logan 1981, 1982). Some
communities are able to control taxable resources in a
region (DeHoog, Lowery, and Lyons 1991), enabling
their rich residents to enjoy higher levels of services
relative to the tax costs (Schneider 1987). In other
communities, limited local f‌i scal wealth can lead to
the suboptimal provision of public services in the
absence of aid from higher-level governments or access
to debt markets (Schneider and Logan 1981). In this
literature, competition is a zero-sum game that creates
winners and losers among suburban communities.
Not all agree with the conclusion that only some
communities—the af‌f‌l uent ones—benef‌i t from frag-
mented local governance. Even if the poor are highly
concentrated in some jurisdictions, the argument
goes, they can still exercise their voice to ensure that
their local government spends more for services that
they need the most (see Ostrom 1983).  e mar-
ket, whether public or private, enhances consumer
sovereignty.  e poor and the rich may be spatially
separated, and the f‌i scal wealth of their communi-
ties may be unequal, but the public market af‌f ords
residents a voice in local policy making, limiting the
ability of local of‌f‌i cials to act independently of the
wishes of citizen-consumers. But does the voice of the
poor matter as much as the voice of the rich in deter-
mining the level of services in the local public market?
Or are the poor not only separate and unequal but
also ignored?
Separate, Unequal, and Ignored? Interjurisdictional
Competition and the Budgetary Choices of Poor
and Af‌f‌l uent Municipalities

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