Community Planning, Taxation, and Fiscal Stress in Government

Understanding Comprehensive Community Planning

Comprehensive planning involves the identification of community goals, the development of plans to implement these goals, and the use of governmental tools to influence and shape private and public decision-making to serve these goals. While the formal role of planners is advisory, they can have a substantial influence on community policy. In smaller cities, planners may be primarily tasked with the day-to-day administration of the zoning and subdivision control ordinances.

Limitations on Planners and the Role of Zoning

There are some limitations on the influence of planners. First, many important decisions in community development are made by private enterprise rather than by government. Real estate interests, developers, builders, and property owners make many of the key decisions that shape the development of the community. Zoning refers to local government ordinances that divide communities into various residential, commercial, and industrial zones, and that require landowners to use their land in conformity with the regulations for the zone in which it is located.

Federal Highway Policy and Speed Limits

Congress authorized a national system of interstate and defense highways in 1956. The Interstate System is the most important feature of federal highway policy. Costs are allocated on the basis of 90% federal and 10% state. The Federal Highway Act authorized 46,000 miles of highway designed to connect principal metropolitan areas and industrial centers, thereby shifting the emphasis of federal highway activity from rural to urban needs. An example of the controversies generated by federal highway policy was the long battle over speed limits. A national speed limit of 55 mph was enacted by Congress as a means of saving gasoline. Congress mandated that a state be denied 10% of its federal highway aid if it failed to enact and enforce a 55 mph speed limit.

State Responsibilities: Auto Insurance and Licensing

All states currently require drivers to have automobile liability insurance. Minimum amounts of coverage vary across the states. States have the responsibility for licensing drivers and vehicles and enforcing traffic laws.

State and Local Government Taxation Systems

State and local governments in the United States derive revenue from a variety of sources. The politics of taxation often center on the question of who actually bears the greatest tax burden—that is, which income groups must devote the largest proportion of their income to taxes. Taxes that require high-income groups to pay a larger percentage of their incomes in taxes than low-income groups are said to be progressive, while taxes that take a larger share of the income of low-income groups are said to be regressive. Taxation at equal percentage rates is said to be proportional. Tax burdens are taxes expressed as a percent of a person's income: the larger the portion of income paid in taxes, the larger the tax burden. It is difficult to evaluate the overall progressivity and regressivity of state tax systems. It is generally believed that overall state and local government taxes are regressive. This regressivity is largely attributed to state and local government reliance on sales and property taxation, rather than progressive income taxation.

Defining Fiscal Stress in Government

Fiscal stress refers to a financial condition so unfavorable as to impair borrowing ability, require reduction of services, pose a threat to public health and safety, and thus diminish the quality and satisfaction of life.

Impact of Economic Slowdowns on Fiscal Stress

When the economy slows down, it triggers high levels of fiscal stress in many states. Fiscal stress has widespread impact at the local level as well. As a state tries to solve its budget problems, it raises taxes, imposes fees, and postpones capital construction projects. These measures further hurt the local economy.