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					 SpecialReport/ Viewpoint

The Incomeand Household
Compositionof City-CountyMigrants
In the 1990s
         by Robert P. StraussandTomohiro Nakamura
                                                                                               posrCold Warera diminishedwith the demiseof the Advisory
    Robert P. Straussis professor of economicsand public                                       Commissionon Intergovernmental                 To
                                                                                                                                    Relations. older genera-
 policy andTbmohiro Nakamurais a graduate assistantwith                                        tionsof public financescholars, federalgovernment'saban-
                                                                                                                                the
 the H. John Heinz III School of Public Policy and Manage-                                     donmentof a forum for discourse    with the statesand localities
 ment, Carnegie-Mellon University, Pittsbur{l4 PA 15213-                                       abouthow to devisea new form offederalism to address     public
 3890. E-mail: RS9F@Andrew.CMU.Edu;Home Page:                                                  serviceneeds   whoseeconomicandcultural assumptions      would
 http :/r7vww.heitu cmu.edu/- r s9f/.                                                          be relevantto the 2 I st centurywas disappointing.rPerhapsthe
     This was prepared as a paper for the National Tax                                         election of a former governor to the presidency explains why
 Association's 9lst Conference, held in Austin, Texas,                                         this has come to pass.2 be sure, rational outcomes need not
                                                                                                                         To
 November I0 to 13. For coverage of the conference,see                                         be preceded by rational discussion and analysis; however, it
 State Tax Notes,'Nay 16, 1998,pages 1255and ,1256,,and                                        seems likely that on reflection, many will agree that we cur-
           p.
 Nov23,1998, 1349.                                , j .
                                                          r :,i
                                                             , a
                                                                          ,,,..i :. . l
                                                                   r ! : ! : . 1 .
                                                                                     , . . .   rently are short of new ways to think about the U.S. federal
     The authors benefited from the commentil'of.'Robl                                         systemin a world that is increasinglyinterdependent.
 Wassmerand Dick Netzer and the participants at.thiNTA
 Session on Cities and Policy Advice. Financial suppiortfor
 this proje ctfrom the U.S. Department of Housing and:,Urban
 D,evelopment under Grant H-21156CA is :gratefqlly                                             Several central cities, most recently the
 aclanwledged. The authors wish to.thankM* Emily.Gross                                         Distrfutof Columbia,havegone to thefiscal
 and M* Beth KiIs of the Statistics Income Division of the
                                   of
 Internal RevenueService prcviding a variety of summary                                        brink, and experiencedthe embarrassment
                            for
 information about county migration pqtterns, .Respon-                                         of substituting someform of externalfiscal
 sibilityforthe researchfindingsand any errors inthis pape4
 however are the sole responsibility of the authors.
                                                                                               control for the fiscal excesses permitted
                                                                                               under extremeJ effersonian democracy.
                       1. Introduction
   It is now almost a decadesince the prospectof the end of
                                                                                                  Currently, there seemsto be awarenessthat the state-local
the Cold War led optimists to predict a domesticpolicy renais-
                                                                                               sector is facing new fiscal challenges, as evidenced by
sancein the United States that would resultfrom redirectingsome
                                                                                               widespreadworry over how electronic conunerce may be erod-
federal defense spending to a wide range of domestic public
                                                                                               ing the stateand local salestax basesin many jurisdictions.
serviceneeds.In retrospect seems
                            this       naive,especiallyin light of
                                                                                               Still, there has been far less worry about the fiscal health of
the increasedskepticism that the voting public has expressed
                                                                                               centralcity budgets,  and evenlessworry aboutthe fiscal health
conceming traditional federal intergovernmental     solutionsto
                                                                                               of centralcity schooldistricts.3 Yet,severalcentralcities, most
public problems in the statesand their localities.Some realized
                                                                                               recentlythe District of Columbia,havegoneto the fiscal brink,
that persistence tight federal budgets,even with defense
                 of
                                                                                                                 the
                                                                                               and experienced embarrassment substitutingsome form
                                                                                                                                    of
savings,would mean that the states    would be left to their own
devices to address,for example,welfare and education issues.
JohnShannon   described likely turn ofeventsas "do-it-your-
                         this
                                                                                                   I It is remarkable recall that in the depthsof World War II, the Secretary
                                                                                                                     to
self federalism,"
                and wondered loud how govemors,
                                 out                     viewing
                                                                                               ofthe Treasury began focusing on new ways to structure federal-state relations.
eachother frorn their statecapitols, might resolvepublic service
                                                                                               and askedProfessor   Harold Grovesof the University of Wisconsin to createa
demandswith the new political culture that demandsboth lower                                   nationalcommissionto precipitatedebateon American federalism.
taxesand higherservicelevels.                                                                      z One might thus summarize the 1992+o-dateperiod in the U.S. as
   Inside the Beltway, the prospects a rational debateabout
                                      for                                                      "one-of-the-boys  federalism."
                                                                                                   I See,however,Chemik ( 1998),Chemik and Reschovsky( 1997),and Ladd
how the U.S. federal system should be reengineered the      in
                                                                                               and Yinger ( 1990)for analyses municipal financial problems.
                                                                                                                               of


Stata Tax Notes. Fe hruun, l. 1999                                                                                                                                      327
Special Report / Viewpoint

                                                 Table 1: City-County Governments in Study
 City-County Government                1970Population               1994 Population                               Change                                        VoChange
Baltimore, Maryland                      904,585                       703.090                               -201,495                                           -22Vo

Denver, Colorado                         515,561                       493.205                                 -22.356                                             -4Vo

District of Columbia                     755,087                       568.022                              -187,065                                            -257o

Indianapolis,Indiana                     193990                        816,619                                  22.629                                              3Vo
Jacksonville, Florida                    529,538                       703,rs2                                t'73.614                                            33Vo
Nashville,Tennessee                      4 4 8 , 1l5                   528,292                                 80,141                                             lSVo
New Orleans, Louisiana                   592.714                       485,582                               -107,132                                             18Vo
New York. New York                     7.600,r02                     6,967,323                              -632,179                                               -8Vo

Philadelphia,Pennsylvania              t,946,646                     r522380                                 424,266                                            -22Vo

St.Louis.Missouri                        619,269                       367,647                              -251,622                                            4lVo
San Francisco, Califomia                 712,874                       729,193                                        I
                                                                                                                1 6 . 39                                            2Vo
                    (
               Bureau 986,1996)
      U.S.Census
Source:



                                                permitted under
ofexternal fiscal control for the fiscal excesses                            time indicatedthat thosewhich had growth in crime were also
extreme Jeffersonian democracy.                                                                        net
                                                                             thosewhich experienced out-migrations.
   The subject matter of this paper is one piece of the continu-                                                                We
                                                                                The paperis frankly empiricaland exploratory. examine
ing municipal finance puzzle in the U.S., and entails a close                below the circumstances most of the major U.S. city-county
                                                                                                       of
study of those who move into and those who move out of                       governments    through the useof the IRS's Statisticsof Income
central cities. It is well known that major municipalities have              series on county migration patterns to see if earlier patterns
continued to lose population; however, the pattern of popula-                observedin the District of Columbia persist.The issueof the
tion movements over time and the composition of those who                    income composition of migrants is important, for it relatesto
leave, and how they compare to those who move in, are                                                                to
                                                                             policies that some argue are necessary retain middle- and
less-well-understood. Understanding these facts can inform                   upper-incomehouseholds,who otherwise will leave central
municipal decisionmaking, for it surely mattersthat migration                cities for the suburbs.6
is occurring because: (1) people are following their jobs as                     The paper is organizedas follows. Section 2 describesthe
employers are looking for vacantland and lessexpensiveoffice                 tax return data and researchmethodology to be usedto examine
space;(2) migrants are seeking more attractivehousing oppor-                 migration. Section3 presents characteristics central city
                                                                                                            the               of
tunities; (3) and/or migrants are seeking more attractive                    migrants.Section4 discusses implicationsof thesefindings
                                                                                                           the
bundlesof municipal and educational              in
                                        services comparison                  for several dimensionsof central city municipal and school
with local tax costs.a                                                       services,  and identifiesoutstandingresearch questions.
   Here, we begin an examination of several major cities
through the analysis of tax return information. The researchis                                            2. Data and Methodology
a replication of an analysis performed by one of the authors,5
which found that the income of migrantsinto the District of                  2.1 The City-County Areas
Columbia is not that dissimilar to the income of migrantsout                      Analysis of annual migration at the small geographicarea
of the District of Columbia to the Maryland and Virginia                     (e.g.municipality level) is hampered the relative paucity of
                                                                                                                                    by
suburbs.What was striking about the District of Columbia                     data. Federal demographicand fiscal measurement                                 does not
metropolitan area's migration patterns was the difference in                 occur at the subcountylevel on an annualbasis,and the states
family size of immigrants (measuringfamily size in terms of                  typically are unable to measurelocal migration. Local health
the numberof personalexemptions       claimedon the federaltax               records,maintainedpursuantto statelaw, typically deal with
retum) to the District compared to those leaving, and the                    locationof binhs and deaths.Most availableannual migration
decline in the number of low- and moderate-income                            data is federally collected,and at the county geographicarea
households   which were capturedby D.C. and federal tax sys-                 level.T    Given that major municipalitiesand school districtsare
tems.Tax returnsleaving D.C. were largerthan thosemoving                     frequently subareas counties,it is difficult to draw direct
                                                                                                            of
into the District; compare1.7exemptions/retum    with about1.5               i n f e r e n c e so f i n t e r c o u n t y m i g r a t i o n t h a t c o u l d i n f o r m
exemptions/return.   Moreover,abouthalf of thosemoving to the                municipalfiscal decisionmaking.                   Fortunately,        thereare, how-
District filed as single taxpayers.Examinationof movement                    ever, a number of county areasthat function as stand-alone
into and out of zip codeswithin the District of Columbia over

                                                                                  o S e aK a s a r d ae t a l - ( 1 9 9 7 )f o r t h e a n a l y s i s f t h e s ei s s u e s h r o u g ht h e u s e
                                                                                                              ,                                      o                      t
                              (
   " SeeNechybaand Strauss I 998) for an analysis ofhow housingandpublic     of the Current PopulationSurvey.
                                                                                  7 The Cu.ent Population Survey does periodically measure migralion;
servicelevels affect locationdecisions.
   5SeeStrauss 1998b)for an analysis
                 (                    ofthe DistrictofColumbia's migration   however, the sample is not large enough to inform migration researchat thc
pattems.                                                                     r n u n i c i p a l i t ye v e l .
                                                                                                     l


328                                                                                                                              State Tax Notes, Februarl' l, 1999
                                                                                                                         Special Report / Viewpoint

municipalities, and they are the focus of this paper.Table I lists                                              Results
                                                                                                     3. Empirical
the cities under study.
                                                                                3.1 AnnualPopulationLevelsof City-County
   It is immediately evident that someof the cities under study
                                                                                              and
                                                                                    Governments Suburban    Counties:1969-95
lost significant numbersof residentsduring the period 1970-94.
Note that Baltimore, the District of Columbia, Philadelphia,                        A graphical analysis of the city-county governments that
and St. Louis each lost more than 20 percent of their 1970                      lost significant population during 1969-95 (see Table I on
population,and New Orleanslost l8 percent its 1970popula-                       previous page) did not reveal any particular subperiod of
                                               of
                                                                                populationgain that was subsequently    offset by more substan-
tion. Only Jacksonvilleand Nashville'spopulations     grew sub-
stantially.                                                                     tial populationloss. Cities such as Baltimore, the District of
                                                                                Columbia,Philadelphia,   andSt. Louis show a continualdecline
2.2 BEA Earnings
               and Population
                            Data                                                in number of inhabitants. New York City's populationrr
    The Bureau of EconomicAnalysis of the U.S. Department                       declined to a minimum, according to the Census Bureau, in
of Commerce routinely collects annualeamings information                        1981,and then grew moderatelyuntil the early 1990swhen it
by county-area,and reports it in conjunction with Census                        has stabilized at about 92 percent of its 1969 level. San Fran-
Bureau annual populationestimates county areas.s
                                      for               These                   cisco showed a similar pattern of decline between 1969 and
annual cross-sections permit us to examinethe total population                  1979,recoupmentand net growth to 1986, and then a stabi-
of thesecity-county governments,and the earningsof residents                    lization from 1989to 1995.(SeeFigure l, p.332, and Figure
and nonresidents.The latter are of interestas they indicate the                 2, p. 333). Every city-county in this study was surrounded by
value of daily cornrnuterflows, and presumednonresidentuses                     at least one suburbancounty that had a spectacularpercentage
of local services that residentstypically at least partially                    growth in population(at least 150 percentor more).r2
finance.
2.3 IRS Migration Data
    Most of what we know statisticallyabotrtU.S. population
                                                                                In five cities, the resident's share of
movements at the small-area level between the decades(and                       earningsdeclinedon the order of 5 to 10
thus between each decennial census)is ultimately due to the
CensusBureau'sanalysisof the IRS Individual IncomeMaster
                                                                                percentto a minimum in the early I980s,
file. The master file has been annually provided by the IRS to                                      in
                                                                                and then rebounded the late 1980s  and
Census for some time.e By utilizing the mailing addressof                       early 1990s.
individual income taxpayers(what is on the mailing label),
Census can track by social security number migrants and
nonmigrantseach year.Censusannuallyprovidesback to the                          3.2 ResidentEarnings a Percentage
                                                                                                     as
IRS Statisticsof Income Division tabulations the numberof
                                                 of                                 Of TotalEarningsPaidin the Cities:1969-95
retums, exemptions and, since 1991, the total and median
                                                                                    Among the city-county governmentsunder study, the Dis-
money income levels of tax returns showing county changesin
                                                                                trict of Columbia and St. Louis had the most dramatic com-
mailing address.  The StatisticsDivision of the IRS publishes
                                                                                muter flows implied by the calculated resident earnings per-
state-level tables showing interstateand metropolitan area
                                                                                centage. While the District of Columbia residents earned
movements,and maintains the county level data on an un-
                                                                                initially only on the order of half of total earnings paid in the
publishedbasis.r0 should be remembered
                    It                         that taxpayers  are
                                                                                Disrict of Columbia, and St. Louis residents earned initially
not obligated to report to the IRS their residence    address.  A
                                                                                only 47 percent of total earnings paid in St. Louis, resident
small (unknown)portion useeithertheirplace-of-workaddress
                                                                                earnings as a percentage of total earnings in the other cities
to receive their paper tax return, or the place at which their tax
                                                                                understudy were on the order of 62 to 95 percent.In 1969,the
preparer receives their paper tax return. However, it is
                                                                                District of Columbia residentsearnedonly 46 percent of total
reasonable assume
            to         thatchanges mailing address,
                                    in                  especial-
                                                                                earnings paid in the District of Columbia, and by 1995, their
ly across county boundaries,reflect changes in residential
                                                                                portion of total eamings had fallen to 36 percent. (See Figure
location decisions.
                                                                                3, p. 333). All the other city-county goverrunents     displayed
                                                                                similar long-term declinesin the resident'sshareof earnings
                                                                                paid,with the exceptions Denver(seeFigure4, p. 334); New
                                                                                                           of
                                                                                York (seeFigure 5, p. 334); Philadelphia   (seeFigure 6, p. 335);
                                                                                San Francisco(seeFigure 7, p. 335); and St. Louis. In these
                                                                                five cities,the resident'sshareofearningsdeclinedon the order
                                                                                of 5 to 10 percentto a minimum in the early 1980s,and then
                                                                                reboundedin the late 1980sand early 1990s.Whether or not
                                                                                this significant improvement in residentearningswas due to
    o The dataarenow convenientlyavailable CD asthe RegionalEconomic
                                           on
Information System (REIS) in August ofeach year. Data reportedbelow are
derived from the REIS 1969-95CD.
    9 The universeof IRS individual income tax returnswas first provided to         ll New York City's populationis perhapsmore difficult to measurethan
Censusunder the State and Local AssistanceAct,of 1972 (GeneralRevenue           most other cities under study because illegal aliensand under-enumeration
                                                                                                                     of
Sharing) which also obligated Census to make small-areapopulation and           of African Americans.
                                                                                    t2 Over 26 years, a 50 percent increase in population would occur if it
income estimatesto be usedby Treasuryin its administration the revenue-
                                                             of
sharinglegislation.                                                             compounded 1.5?percentper year.Nationally,the U.S. populationincreased
                                                                                             at
    l0 SOI cunently sells the county level tables via its electronic bulletin   29 percentduring this period, which implies compoundingat about I perccnt
board.                                                                          per year.



State Tax Notes,February I, 1999                                                                                                                     129
. Special Report / Viewpoint

                     Table 2: Ratio of Out-Migrant Median Income to Immigrant Median lncome (7o)
          City County Government              l99 l-92 Out-MigranVlmmigranl       199 -96Out-M igranUlmmigrant
                                                                                    S
                                                        MedianY (7o)                      MedianY(7o)
 Baltimore, Maryland                                               I l4Vc                                                                            ll4va
 Denver, Colorado                                                  I lTVc                                                                            ll4o/o

 District of Columbia                                              l3OVc                                                                             ll1Va
 Indianapolis,Indiana                                              l22Vc                                                                             l26Va
 Jacksonville, Florida                                             t04%                                                                              I02o/o
 Nashville, Tennessee                                              | | 5c/c                                                                          1227o
 New Orleans.Louisiana                                             ll6Va                                                                             ll2Vo
 New York, New York                                                ll9o/c                                                                            ll6Vo
 Philadelphia,
             Pennsylvania                                          l39o/o                                                                            l30Vo
 St.[,ouis.Missouri                                                ll9Vc                                                                             llTVo
              Califomia
 San Francisco-                                                    l27Vc                                                                             ll1Vo



 conscious public policy changes in these cities or simply the            two averages was about0.15 to 0.25 exemptions return.rl
                                                                                                                         per
 improved economic circumstances residentsis something
                                     of                                   Also, the numberof exemptionsperfederaltax returngenerally
 we shall be investigating.                                               declinedin the early 1990s.
    With regard to the fiscal implications of such resident
                                                                          3.5 Total Exemption Flows: 1991-95
 earning patterns,it should be recalledthat while New York
 and Philadelphiaaggressivelytax commuters,the District of                   If we add up each year the total number of exemptions
 Columbia does not, with the result that the District of Colum-           migrating into and out of each of the cities under study, we
 bia residentsmust finance servicesusedby nonresidents.      As           come close to measuringthe numberof personsso migrating.
 the federal payment to the District of Columbia disappears,              Nonfilersare,oIcourse,not accounted by suchcalculations.
                                                                                                              for
                                                                          Using this tax-based measureof migration, we find that onlv

                                                                                                                                                                                                        o
 this issuewill becomemore pronounced.
                                                                          Jacksonville amongthe citiesunderstudydisplayed positiv:
                                                                                                                             a
                                                                          net inflow in the numbero[ migrating.  This is not surprising
In every one of the citiesunderstudy,the                                  becauseJacksonville experienced,according to the Census
                                                                          Bureau,the largest(33 percent)population increaseover the
 average number of exemptionsper federal                                  1969-95 period. Thus, while Denver had more federal tax
 tax return that left the city was Inrger than                            returns moving into than departing Denver each year, the
                                                                          number of exemptions on those departing tax retunrs was
 the avera,genumber of exemptionsper                                      sufficientlylarger average therewasa netout-migration
                                                                                            on        that
federal tax return that moved into the city.                              of about 3,000 exemptions 1995-96.
                                                                                                     in           Nashville lost about
                                                                          2,000net exemptions well.
                                                                                               as

 3.3 Migration of Households as Measured                                  3.6 Median and Average Incomes
       By Location of Federal Tax Returns: 1991-95                            Of In- and Out-Migrants: 1992-95
    Among the cities understudy,four (Denver,   Jacksonville,                Of immediate           to
                                                                                             interest municipaltax administrators theis
 Nashville, and San Francisco) displayed more households                  ability to pay ol' those migrating into their jurisdiction com-
 (defined as a federal tax return) moving into the cities than            pared with those departing. In all cities under study, those
 moving out by 1995,   compared with 1994. Baltimore,
                                          In            about             migratingout had higher median total incomesthan those
 4,000 more tax returns moved out than moved in. In the                              in
                                                                          migrating did, andtheaverage     totalincomera out-migrants
                                                                                                                          of
 District of Columbiaand New Orleansabout5,000more tax                    was higherthanthetotal incomeof thosemoving in eachyear.
 returnsmoved out than moved in by 1995,while in Philadel-                In the District of Columbia, New York, Ptriladelphia,        San
 phia, about 7,000 more tax returns migrated out than in. ln              Francisco,  and St. Louis, the differences median inconres
                                                                                                                     in
 New York City, about 35,000more tax returnsmigratedout of                were on the order of $5,000,while in the other cities the
 than into the city in 1995.                                              differences  were much smaller,on the order of $2,000.Table 2
                                                                          (above)           the
                                                                                   displays ratioof out-migrating     medianincoures    Lo
 3.4 Average Number of Exemptions on FederalTax
      Returns:1991-95
    In every one of the cities under study,the averagenumber                    '' Only Jacksonvi had more than 2 exernptions return (2.04 in I 995
                                                                                                             lle                                                 per                                )
 of exemptionsper federaltax retum that left the city was larger          o f o u t - m i g r a t r n gf e d c r a lt a x r e t u r n s . h e o t h e r c i t i e s w e r e i n t h e 1 . 6 t o 1 . 8
                                                                                                                                        T
 than the averagenumber of exemptionsper federaltax retum                 exernptions/return              range. Tlris no doubt reflects the large number of sing['
 that moved into thecity. Generallythedifference between   these          taxpayers       who migrate.
                                                                                l1 The total inconrcconceptis duc to the
                                                                                                                                                   CensusBureau and nor the IRS
                                                                          Statistics lncome Division. althoughit is derived liorn income reponed on
                                                                                          of
                                                                          fcdelal tax re(ulns.


 330                                                                                                                           StuteTax Notes,Februar\) l, 1999
                                                                                                            Special Report / Viewpoint

in-migrating median incomesat the beginningand end of the             .   the median income of those migrating out was al-
study period. Severalpoints emerge:for all but Nashville and              ways larger than the median income of those migrat-
Indianapolis,the relative difference in migrants' median in-              ing in. The differential generally narrowed in the
comes declined, and only in Jacksonville,which grew most                        to
                                                                          1990s 2 percentforJacksonville,andto 30 percent
dramaticallyamong the cities understudy,was the differential              for Philadelphia;and
lessthan 5 percentbetweenthe medianincome of immigrants               .   the average total income of thosemigrating out was
and the median income of out-migrants.In cities that lost                 always larger than the averagetotal median income
population, the median total income of out-migrants was                   of thosemigrating in; the differential generally nar-
anywherefrom l2 percentlarger(New Orleans)to 30 percent                   rowed during the 1990s.
larger (Philadelphia) than the median total income of im-
migrants.                                                                           for        Finance
                                                                 4.2 Somelmplications Government
                                                                     Given that stateand local governments     have a constitutional
   The average incomes of migrants were generally much
                                                                 obligation to balancetheir budgets,one may ask at the outset
higher than the mediansfor the samecities,indicatingthat the
                                                                 whether the above facts are meaningful sourcesof concern for
distribution of income for those moving in and thosemoving
                                                                 local officials. Certainly with regard to the composition of
out were both skewed to the right. Total averageincome was
                                                                 servicesand their levels, the changinghouseholdcomposition
highestfor New York City migrants;the initial differencewas
                                                                 of thosedepartingraisesquestionsabout what central cities and
over $8,000 in 1992-93 and narrowed to about $5,000 in
                                                                 central city school districtswill be askedto accomplishin the
1995-96.  The averagetotal incomeof thosemigratinginto New
                                                                 coming decade.rs    Another possibleimplication of thesedatais
York City was about $10,000 higher than the median total
                                                                 that those moving in are systematicallyyounger than those
averageincomeof thosemigratingin; the average   total income
                                                                 moving oul Again, differential age and household sizes of
of those migrating out of New York City was about $14,000
                                                                 migrants raises questions of the composition and level of
higher than the median total incomeof thosemigratingout of,
                                                                 servicesthat municipal and school officials seek to provide.
New York City (seeFigure 9, p.336, and Figure 10,p. 337).
                                                                     The differing ability to pay observedbetween those leaving
                                                                 and thosemoving to city-countygovernments         doesraiseques-
                      4. Discussion                              tions about the viability of income-basedrevenue sources
                                                                 compared with the traditional local property [ax.'u The growth
4.1 SomeStylizedFacts                                            in nonresident   shareof earnings  paid in most of the city-county
   Our analysisof populationand income dataand tax retum         governments implies that the service burdens of commuters
information over time for major city-countygovernments    sug-   must be growing while the revenuebaseto support their cost
gestsseveralstylized facts:                                      is narrowing.This trend raisesquestionsnot only at the local
     . population decline in the majority of U.S. city-          and regional level, but also questions about state inter-
                                                                 governmential   fiscal policy. There are rationalesto support state
       county governmentswas generallysmooth over
       the past quartercentury;                                  defraying some of local municipal costs, because the higher
     . over the period 1992-95,  only Jacksonville, Florida      level of governmentcan more readily adjudicatethe spillovers
       and Nashville, Tennessee      displayed significant       of the costs imposed by commuters. Whether states, now
       population  growth;                                       fiscally flush, will addressthis issue along with the related
     . every city-county governmentstudied was sur-              problems of tax-exempt property in central cities compared
       roundedby at leastone suburbancounty with very            with suburbsis difficult to predict.
       high growth rates;
     . city-countygovernments    with decliningpopulation
       remained   centers employment;
                         of               however, resident      What accounts for the differential
       earnings as a proportion of total earnings paid           migration rates,and what accounts the
                                                                                                 for
       generallydeclined.The Districtof Columbiahadthe
                                     in
       most extremecircumstance that by 1995,resi-               resurgence resi"dent
                                                                            of        earningsin several
       dents earnedonly 36 percentof total earningspaid          of the cities under study?
       to thoseworking in the Districtof Columbia;
     . five city-countygovernments               a
                                     experiencedreversal
                                  of
       in the early-to mid-1980s theirresidents'    declin-          Beyond the immediate questionsraised by the observed
       ing shareoftotal earnings  paid;                          populations and migration patterns are a series of research
     . in all city-countygovernments    studied, average
                                               the               questionsyet to be answered.   First, what has been happening
                              per
       numberof exemptions federaltax returnof those             recently to the migration patternsat the low and high ends ol-
       migratingout waslargerthantheaverage     number   of      the distribution income?
                                                                                 of          Second,   what has beenhappening
       exemptionsper federaltax returnof thosemigrating          to the typesof tax-filingunitsthataremigratingin and migrat-
       in. Overtime,theaverages bothgroups
                                  for            generally
       declined;
     . only Jacksonville,  Fla.,displayed excess ex-
                                           an        of              'r While it appearsthat larger households are departing than are moving
       emptions migrating in comparedto the numbers              into the cities understudy, it shouldbe rememberedthat this stylizedfact holds
       migrating out. However, the number of net im-             f<rrthosefiling tax returns.Furtheranalysisis necessary ascertainifthis is
                                                                                                                          to
       migrants was modest, and needsto be compared              true for the nontaxable (poor) population,which moves as well.
                                                                     l6 SeeRodgers | 987) for an extensivediscussion local nonpropertytxx
                                                                                     (                               of
       carefullywith Census   estimated   population counts
                                                                 revcnuesources.
       in the 1990s;

StuteTa,rNotes,Februun, I, 1999                                                                                                          33t
Special Report / Viewpoint

ing out? Third, are there long-term differences in the rates of         Patterns: Is A Turnaround on the Horizon?" Housing Policy
in- and out-migration among the major U.S. central cities?              Debate,8,2, 307-58.
Fourth, what accounts for the differential migration rates, and             Ladd, Helen F. and John Yinger (1989), America's Ailing
what accountsfor the resurgence    ofresident earningsin several        Cities: Fiscal Health and the Design of Urban Policy (The
of the cities under study? Fifth, are the patternsobserved for          JohnsHopkins Press).
city-county govemments observablein cities of comparable                    Nechyba, Thomas and Robert P. Strauss (1998), "Com-
size that are also surrounded by suburbs (some also with                munity Choice and Local Public Services:A Discrete Choice
significant vacant land) and parts of metropolitan areas?               Approach," Regional Science and Urban Economics, 39, I
   As this is essentiallya work-in-progress     report, many of         (January 998).51-79.
                                                                                    1
thesequestions will be answeredwithin the parametersof our                  O'Cleiracain,Carol (1997),The OrphanedCapital: Adopt-
planned research. Pending is the annual analysis of
                                                                        ing the Right Revenuesfor the District of Columbia (The
Pennsylvania's    personalincome tax filen by municipalityand
                                                                        BrookingsInstitution).
school district from year to year in conjunction with federal tax
                                                                            Rodgen,JamesD. ( 1987),"SalesTaxes,Income Taxes,and
return information matched to them. Hopefully this more
                                                                        Other NonpropertyThx Revenues,"in Aaronson, J. Richard
detailed, annual examination of the individual characteristics
                                                                        and Eli Schwartz (editors), Management Policies in Local
of movers and nonmovers within one state can answer these
                                                                        GovernmentFinance (Intemational City Managers Associa-
important policy questions and lead to a deeperunderstanding
                                                                        tion).
of why so many choose to move each year.
                                                                            Strauss,Robert P. (1997), "Why Homeowners Hate the
                      5. References                                     Local PropertyTax," StateTax Nofes,Jun 16, 1997,p. 1802.
   Brunori, David (1998), "Metropolitan Taxationin the 2lst                 Strauss,   Robert P. (1998a), The District of Columbia's In-
Century,"National TaxJournal, LI, 3 (September 1998),541-               dividual Income Tax: Structure, Chracteristics, and Policy
551.                                                                    Alternatives (Washington: the District of Columbia Tax
   Chernik, Howard (1998), "Fiscal Capacity in New York:                RevisionCommission,Jan 6, 1998).Also seeState TizxNotes,
The City Versus the Region," National Tax Journal, LI,3                 J u n8 , 1 9 9 8 p . 1 8 5 3 .
                                                                                         ,
(September1998),531-540.                                                    Strauss,   RobertP.(1998b),"The Incomeof CentralCity and
   Chernik, Howard and Andrew Reschovsky(1997), "Urban                  Suburban Migrants: A Case Study of Washington, D.C.
Fiscal Problems: Coordinating Actions Among Governments,"               Metropolitan Area," National Thx Joumal, LI, 3 (September
in Burton A. Weisbrod and James C. Worth (editors), ?nfte               1998),   493-516.
Urban Crisis: Linking Research to Action (Northwestern                      U.S. Bureauof the Census( I 986), Statistica I A bst ract of tlrc
University Press).                                                      United States: 1986.
   Kasarda, JohnD., Stephen Appold, StuartH. Sweeny,
                            J.                         and                  U.S. Bureauof the Census(1996),StatisticalAbstract of the
Elaine Sieff (1997), "Central-City and Suburban Migration               United States: 1996.




                 FigureI

                                                               Population
                                          NewYorkCityandSuburban
                                                    in         (1    00%)
                                            1969-1995 Percentage 969=1

                          170.0%
                          160.0%                                                                                           4
                                                                                                              .f   t
                                                                                                      t   I
                          150.0%                                                         -f   l
                                                                                    l-
                    (l)   140.0%                                    f


                    o,                                      ,+z                                                    * *
                                                                                                                       +   H
                          130.0%
                    o)
                    ()                           ,                                                                         )c-x
                          120.O%
                   o
                   o_ 110.O%               u                r4
                                      -
                          100.0% t
                                                     + +-
                          90.0%
                          80.0%
                                   69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
                                                                            Year

                                     f$*       "-"rl"'V@                                                 -t!g'"!tE
                                                                                                  Bgi!'e"o
                             City : Bronx Kings+ NewYork QueensCounties
                 Nole: NewYork          +               +

332                                                                                                       State Tax Notes,February I , 1999
                                                                                                                                     Special Report / Viewpoittt


          Figure2

                                                   and      Population
                                       San Francisco Suburban
                                                              (1
                                           1969-1 in Percentage 969=100%)
                                                995

                      160.0%
                                                                                                                                          t-
                                                                                                                                     iF
                      150.0%
                                                                                                                       t
                      140.Oo/o                                                                                     t
                q)
                cT)                                                                                            r
                                                                                             '1
                (5                                                                                         I
                      130.0%
                o)                                                                      t
                                                                                                                                     4         *

                                                                                                                                     +
                C)                                                                 I                                           ,1'
                      120.0%
                o                                                            J                                     * * t
                                                                                                                   a
                                                                                                               * * * * *



                                                                                                                                     +
               (L                                                    I                                                                         t
                      110.0%                                                                         *
                                                             -
                      100.0% -l   *            *
                                                    t   il       *                 * T
                                                                                             I     .x )+       tC tC   i(   :r+,(
                      90.0%
                                  'C   i+ t(   'C
                                                                             t(-
                                                                                        +f
                                                                                             I
                               69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 BB 89 90 91 92 93 94 95
                                                                                       Year

                                  l+Rlameda             +Contra      Costa+-Marin                            +San_ya!99_.1
                                                                                              +(-San Francisco

                            :           County
          Nofe: SonFroncisco SonFroncisco




          Figure
               3

                                               BEA Estimates Resident
                                                           of          Earnings
                                                                     in
                                                  As% of TotalEarnings DC

                        48.0%

                        46.0%
              br
              9 t x 44.OYo
              E;
                        42.0o/o
               >O

              c n P 40.0%
               CO

               E0a
               (IJ
                        38.0%
              tl-l
                        36.0%

                        u.0%
                                  69 70 71 72 73 74 75 76 77 78 79 B0 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
          l
                                                                                            Year

                                                                                         Eaminosr
                                                                         i---c-oh Resident   - j
          I                                                              !




State Tax Notes,February I, 1999                                                                                                                              333
Special Report / Viewpoint




                                                       of       Earnings
                                            BEAEstimates Resident
                                                                          in
                                                      As % of TotalEarnings Denver

                        u.0%
                                       ,\
                        62.0o/o   1'         I                                 f--                   il
             o!
                        60.0%                     \         a                                        ii
             8b                                        )t
                                                                \                                    i:
            6=                                                                                       ii
                                                                                                     ii
            Io-         58.0%
             >()                                                                                                  .J
            .oc                                                                              I
             ss 56.0%
            'c o
             =o
                                                                    \                        L_-.
                                                                                             I
                        54.0o/o                                                              L        {
             Ec
            lrJ                                                                                           I
                        52.0o/o

                        50.0olo
                                                                                                     tl
                                  69 70 71 7273 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
                                                                                 Year
                                                                        '1-+-o/o Resident
                                                                                        EamingsI
                                                                        ::-:=:L.-
          Nofe: Denver: Denver
                             County




                                                 BEAEstimates Resident
                                                               of        Earnings
                                                 As% of TotalEarnings NewYorkCity
                                                                    in
                           77.0o/o
                           76.0o/o
                           75.0o/o
                   H5
                  o- o-
                           74.0%

                  !k       73.0%
                   o*
                   gE 72.0%
                   Etr
                  [!
                           71.0o/o
                           7O.Oo/o
                           69.0%
                                       69 70 71




                           City : Bronx+ Kings+ NewYork+ QueensCounties
              Nofe; New York


334                                                                                                 State Ta.rNotes, Februarv I, 1999
                                                                                                                                                   Special Report / Viev,poirtt




                                             BEAEstimates Resident
                                                        of       Earnings
                                                 As % of Total Earnings Philadelphia
                                                                      in

                      73.0o/o
                                    A |.a.
                      72.0%                  l     a.
             o:.                                        \
             8b       71.0%     J                                                                                                   ;
            s=
            o-b       70.0o/o
                                                            \        a
                                                                                                                                          a.
             >\(J
                                                                                                                                                                .t
            -oc
            o9     69.0%
                                                                \         \                                         .r'                                              I
            o) .:l                                                            \
            ' C OD
              F(                                                                                           /
                     68.0%
             80.
            tIl
                      67.0%

                     66.0%
                                69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95
                                                                                              Year

                                                                    L=i" *":iq:!!I3rr9:i
                           :
          Nofe; Philodelphio Philodelphio
                                        County




                  Figure7

                                                  BEAEstimates Resident
                                                               of        Earnings
                                                             Earnings SanFrancisco
                                                  As% of Total     in


                   .=
                         ilffi
                         .i.r;r"
                              l--]
                                                                                                                                  lltli
                                                                                                                                               I


                                                                                                                                               +f4
                                    -l-r;-r-r /Ii|1-i tl
                     ilEu,onptwf-lj         IfilmiA
                                                                                                                                                            l




                      :lr
                   I E ffi               F; +  fu,1):tt
                                             tr

                                    j  / t_                                       --i--
                                                                                          I
                                                                                          I
                                                                                              i
                                                                                              l
                                                                                                                                                      __l
                                                                                                                                                            I




                                                     Ir I1l
                                                                                                     I                                                      I


                   s;:::::1.1+Hl--l-l-tF$i
                     P::*Itflr-ir+tl\ )',)4J 't-lr-1
                                                                     q.                              'j-



                   s ','"IIIjf-iJ-l-]-j "ai l1l- ,ti                          \                                                                             I
                                                                                                                                                            I




                                                                          Ii\j/                                           Il-i t l l i Ij,I rl
                                                                                                                          I


                                    6s 70 71 72 73 747576 77                  ^ t*;:att                  -                    t BB e0 e1e2e3 e4 (
                                                                                                                                  8s        nu]



                        : Son Froncisco= Son Froncisco
                                                     Counfu
                                                                     :
                                                                    _L- g:..,9"i!.11,i,
                                                                                      l
                                                                                   1g'.
                                                                                                               :l
                                                                                                                                                                         l
StateTax Notes,Februarv I, 1999                                                                                                                                              -t.t5
Special Report / ViewPoint




                                        TotalFederal Returns
                                                   Tax
                                   MigratingIntoand Out of New York City

                          170
                          165
                          160
                    o     155
                    58150
                      ,ou
                    EP-
                    Egtao
                    F     135
                          130
                          125
                          120
                                                              93/94
                                                              Year

                                               --+- Migrating
                                                            In T     MigotingOrt_l
                                           l
                  Nofe.'New York' = Bronx+ Kings+ New York+ QueensCounties
                                Crty




                                                                                                                          o

                                  MedianFederal Total Income Movers
                                                            of
                                    Migrating and
                                            ln   Outof NewYorkCity

                        $26,000
                   E $25,ooo
                  p sze,ooo
                  E sze,ooo
                   o
                   c $22,000
                  '$ szt,ooo
                                                                   I
                  E $zo,ooo                                        l_--_-,....-,.
                                                                   I


                        $19.000




                                                                                     State Tax Notes, FebruarY I , 1999
  336
                                                                                   Special Report / Viev'point


               t
          Figure0

                               AverageFederalTotal Income Movers
                                                         of
                                         Into
                                 Migrating andOutof NewYorkCity

                  $40,000                                                          -1
                                   t-
             c
             L
                  $39,000
             o)
                  $38,000
             E.   $37,000
             (D
             E    $36,000
             o
             ()
             c
                  $35,000
                                                                              _-----a
             o    $34,000
             o)
             (U   $33,000
             o
                  $32,000
                  $31,000
                  $30,000



                                          --t- Migrating --r- Migrating
                                                        In            Out
                     :
          No/e:NewYork Bronx Kings NewYork Queens
                           +     +       +      Counties

                                                                                                             ,Y




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