The Jobs Are Back, but Where? Implications for How Best to Pay for Local Government Services

• Published date: 01 December 2014
• DOI: 10.1177/0160323X14564778
• Date: 01 December 2014
• Author: David Swindell,Mark S. Rosentraub,Stephanie Gerretsen
• Subject Matter: Articles

Article

The Jobs Are Back, but

Where? Implications for How

Best to Pay for Local

Government Services

David Swindell

1

, Stephanie Gerretsen

2

,

and Mark S. Rosentraub

2

Abstract

Decentralization and economic restructuring challenged local governments before the recession.

Warned that property tax receipts would also recede as real estate markets collapsed and unem-

ployment levels soared, many wondered if new levels of fiscal stress would result. With declining

state aid, central cities were advised to prepare for cutbacks. Our research illustrates jobs are where

they were before the financial crisis. Fears that central cities were about to experience regional job

shifts with adverse effects on property taxes can subside. There is however other alarming issues

that need attention, given reduced intergovernmental transfers.

Keywords

economic development, state and local finance, economic recovery, employment patterns, local tax

policy

Perlman (2010) challenged state and local lead-

ers to be flexible in responding to the substan-

tial contraction of the U.S. economy. The

lynchpin of the Great Recession was the col-

lapse of real estate markets, a large number of

foreclosures, and ‘‘short sales’’ of off-loaded

buildings and homes. Each was a harbinger of

declining property values and the loss of prop-

erty tax revenues for local governments. Perl-

man’s admonition could have foretold a

second shock to cities already grappling with

the geographic decentralization of economic

activity. Norton and Rees (2007, 141, 143)

warned: ‘‘The United States is in the midst of

a major industrial change, one heralding a strik-

ingly new relationship between regions. Manu-

facturing job losses by the core states have not

been compensated by rapid growth in the

services center.’’ Larger communities could

more easily provide suburban locations for

businesses and people, while geographically

compact central cities suffered more when jobs

moved away from central business districts. In

more expansive central cities, the movements

of businesses and people had little effect

(Kneebone 2013). If jobs were moving away

from central cities, property tax revenues could

1

Arizona State University, Phoenix, AZ, USA

2

University of Michigan, Ann Arbor, MI, USA

Corresponding Author:

Mark S. Rosentraub, University of Michigan, Observatory

Lodge 3120, 1420 Washington Heights, Ann Arbor, MI

48109, USA.

Email: msrosen@umich.edu

State and Local GovernmentReview

2014, Vol. 46(4) 260-271

ªThe Author(s) 2014

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DOI: 10.1177/0160323X14564778

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