Metropolitan Tax-Base-Sharing: Its Potential and Limitations

Abstract

Governmental fragmentation in metropolitan areas is integrally linked to the problem of fiscal disparities among localities relative to their needs. The tax-base-sharing scheme adopted by the Minnesota Legislature was applied to the mature, slow-growing, metropolitan Allegheny County, Pennsylvania (Pittsburgh). Actual distribution of tax bases/revenue resources among county jurisdictions for a three-year time period were compared to results that would have occurred had base-sharing been in operation. The results of this simulation suggest a need for refinement and study of both the base-sharing concept and the formula utilized for general applicability to the more mature and/or slow-growth metropolitan areas of the United States. Base-sharing is not the “panacea” to all the ills of the metropolitan area. It does have potential, when used in concert with other complementary efforts, to better equalize fiscal resources and establish the basis for closer convergence among local needs, available tax resources, and operational responsibility for service provision among governmental levels.

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