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Inside the Gift Horse’s Mouth: City Spending, Political Institutions, and the Community Development Block Grant Program |
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Abstract:
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Since 1975, the Community Development Block Grant (CDBG) has transferred funds from the federal government to cities, with the goal of improving low- and moderate income urban areas. Though this program is the U.S. federal government’s single largest source of aid to cities, scholars and policymakers know relatively little about the program’s effectiveness. Do cities treat these grants as an addition to total revenues? Or do they, as theory predicts, return most of the grant as a tax refund? Moreover, can political institutions cause cities to differ in the extent to which they use grant funds to supplement or supplant total revenues? We use the formula nature of the CDBG program to identify the effect of grant changes which are exogenous to city characteristics. Using budgetary, demographic, and grant allocation data on cities from 1975 to 2004, we find that, for each additional dollar of CDBG funds, cities collect an average of an additional dollar of revenue. Of this additional dollar, almost fifty cents go toward spending categories targeted by the program. Furthermore, we show that the tendency to use grant funds as a supplement to total revenues increases in the number of elected municipal officials, consistent with political economy theory that posits a common pool problem in the provision of local public goods. |
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citi (232), grant (159), 1 (154), cdbg (126), fund (79), total (76), ect (67), entitl (65), revenu (65), alloc (64), program (62), e (62), number (62), popul (60), o (56), use (56), counti (54), spend (53), 2 (52), census (50), cial (47), |
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cities, redistributive policy, grants, block grants, urban, political institutions, community development, CDBG |
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Association:
Name: American Political Science Association URL: http://www.apsanet.org
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Citation:
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MLA Citation:
| Phillips, Justin. and Brooks, Leah. "Inside the Gift Horse’s Mouth: City Spending, Political Institutions, and the Community Development Block Grant Program" Paper presented at the annual meeting of the American Political Science Association, Hyatt Regency Chicago and the Sheraton Chicago Hotel and Towers, Chicago, IL, Aug 30, 2007 <Not Available>. 2009-05-27 <http://www.allacademic.com/meta/p211034_index.html> |
APA Citation:
| Phillips, J. and Brooks, L. , 2007-08-30 "Inside the Gift Horse’s Mouth: City Spending, Political Institutions, and the Community Development Block Grant Program" Paper presented at the annual meeting of the American Political Science Association, Hyatt Regency Chicago and the Sheraton Chicago Hotel and Towers, Chicago, IL Online <APPLICATION/PDF>. 2009-05-27 from http://www.allacademic.com/meta/p211034_index.html |
Publication Type: Conference Paper/Unpublished Manuscript Abstract: Since 1975, the Community Development Block Grant (CDBG) has transferred funds from the federal government to cities, with the goal of improving low- and moderate income urban areas. Though this program is the U.S. federal government’s single largest source of aid to cities, scholars and policymakers know relatively little about the program’s effectiveness. Do cities treat these grants as an addition to total revenues? Or do they, as theory predicts, return most of the grant as a tax refund? Moreover, can political institutions cause cities to differ in the extent to which they use grant funds to supplement or supplant total revenues? We use the formula nature of the CDBG program to identify the effect of grant changes which are exogenous to city characteristics. Using budgetary, demographic, and grant allocation data on cities from 1975 to 2004, we find that, for each additional dollar of CDBG funds, cities collect an average of an additional dollar of revenue. Of this additional dollar, almost fifty cents go toward spending categories targeted by the program. Furthermore, we show that the tendency to use grant funds as a supplement to total revenues increases in the number of elected municipal officials, consistent with political economy theory that posits a common pool problem in the provision of local public goods. |
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| Document Type: |
application/pdf |
| Page count: |
43 |
| Word count: |
12826 |
| Text sample: |
| McGill University Working Paper Inside the Gift Horse’s Mouth: City Spending Political Institutions and the Community Development Block Grant Program Leah Brooks Department of Economics McGill University Justin Phillips Department of Political Science Columbia University August 2007 We are extremely grateful to Housing and Urban Development staffers Todd Richardson for sending us the historical CDBG allocation data that made this project possible and to Sue Miller for exceedingly useful background information and speedy replies. For help assembling the data |
| (0.212) (0.064) 75th Percentile 0.185 1.350*** 0.935 0.486 0.288** 0.259** 0.826 (0.318) (0.528) (0.091) (0.091) *** Significant at the 0.1% level. ** Significant at the 1% level. * Significant at the 5% level. Standard errors in parentheses. Notes: The dependent variable in panel A is total revenues; dependent variable in panel B is housing and community development expenditures. All regressions use 21 531 observations and standard errors are clustered at the city level. Sources: See Table 2 and Appendix |
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