A Redistributive Role for Local Government

Abstract

With the welfare reforms of 1996, the federal government transferred to the states substantial authority over the structure, scope, and generosity of the nation's largest redistributive program, now known as Temporary Assistance for Needy Families. As many have shown, however, states suffer from a structural handicap - the inability to dissuade new entrants who would be a net drain on the state fisc - that prevents them from matching the redistributive desires of their residents.

This paper argues that local governments, given their unique organizational characteristics, should receive a larger share of redistributive responsibility in the U.S. Unlike the federal government, local governments can respond to local preferences for redistribution and, unlike states, which are subject to the Supreme Court's right to travel doctrine, they have sufficient ability through zoning and property taxation to limit the influx of new recipients.

This paper also articulates in a general way what such a role might look like. In short, local governments should play a larger role in the Temporary Assistance for Needy Families program. Also, states should reinforce the powers that enable localities to be such effective mechanisms of redistribution in the first place so they can redistribute effectively to their own residents and those of neighboring local governments.

Keywords: Local government, zoning, property taxation, migration, welfare magnet, welfare, PRWORA, redistribution, tiebout, public finance, organizational law, fiscal zoning, federalism

JEL Classification: L38