Assignment:
1. "The state-local government sector stopped growing relative to the size of the economy in the late 1970s because of a decline in the amount of federalaid to states and localities." Do you think this is correct and why?
2. The recent growth (since 1999) in state and local spending relative to income, population, and prices is still not as fast as growth that occurred in the 1952 to 1975 period. Discuss the reasons why state-local spending increased so fast in the earlier period and consider what might be different in the recent period of growth.
3. Although the diversity of subnational governments means that the notion of "typical" behavior is often not meaningful, it is still common in presentations of data, news reports, and political debate to compare a state or locality to the "national average." How does the state-local sector in your state compare to that average in terms of (1) the structure of localities, (2) the level of expenditure, (3) the pattern of services provided, and (4) the mix of revenue sources? Do you know of any reasons why your case might differ from the national average?
4. Some surveys show that citizens usually are aware of services provided by local governments, but often not certain of the services provided by state governments. Make a list of five services provided by your city/township and five provided by your state that directly benefit you. After thinking about how you directly pay for those services, do you believe you get your money's worth?
Readings:
MICROECONOMIC ANALYSIS: MARKET EFFICIENCY AND MARKET FAILURE
By ROY BAHL