California State University, Sacramento s7

CALIFORNIA STATE UNIVERSITY, SACRAMENTO Prof. Terri Sexton Department of Economics [email protected] Fall 2014 3018 Tahoe Hall (916) 278-6484 Hours: TTh 10:00-11:00 & T 3:30-4:30

Economics 132 State and Local Government Finance

Most government services that affect everyday life are provided and largely financed by state and local governments. These include police and fire protection, public education, sanitation and refuse removal, street and road maintenance, water supply, parks and recreation, and environmental protection. In this course, we will explore how state and local governments make decisions about what services to provide and how to finance them. Particular attention will be paid to the fiscal challenges facing the state of California and its local governments. We will explore the ways in which the state government influences the behavior of local governments, and how local governments respond to the financial incentives and mandates imposed by the state. The course is designed to introduce students to the major fiscal institutions that characterize the U.S. federal system, and to develop analytical tools, primarily drawn from microeconomics, that enable us to evaluate the fiscal behavior of voters, businesses, and public officials. This course will provide students with a framework for analyzing a number of issues currently facing state and local governments throughout the United States.

Prerequisites

Econ 1A and 1B, or Econ 104.

Textbook

State and Local Public Finance (3rd Edition) by Ronald C. Fisher, Thomson South- Western, 2007. (Fisher) Unfortunately this textbook is out of print and the new addition is not due out until January. You can find used copies from various online vendors including Amazon ($73.99) who also offers the option to rent the book for $67.48.

Class Format

Class meetings will consist of a mix of lectures and class discussion. Attendance is necessary, though not sufficient, for successful completion of this course. Please arrive to class on time with cell phones turned off.

I will use SacCT to communicate with you and provide course handouts, lecture notes, and practice questions.

1 Course Requirements and Assignments

Students are expected to adhere to the University Student Code of Conduct outlined in the CSUS University Policy Manual (http://www.csus.edu/umanual/student/UMS16150.HTM).

Reading Assignments

In addition to the assigned chapters from the text, as indicated in the attached outline, I will post various popular press articles as well as reports issued by organizations and agencies such as the Public Policy Institute of California and the Legislative Analysts Office that will provide background for class discussions of current events.

Practice Questions

I will post practice questions designed to reinforce the material covered in class and help you prepare for exams. While these questions will NOT be graded, I will post answers on SacCT and we will go over them during review sessions prior to exams.

Course Grade

Your grade for the course will be based on two midterm exams (30% each) and a comprehensive final exam (40%). If your percentage score on the final exam is greater than your lowest midterm score, that midterm will be dropped and the weight on your final exam will increase to 70%. THERE WILL BE NO MAKE-UP EXAMS. If you miss a midterm exam for any reason, the weight of the final exam will be increased to 70%. If you miss both midterm exams your course grade will be an F.

2 TENTATIVE COURSE SCHEDULE

DATE TOPIC Reading Assignment T Sept. 2 Introduction Fisher, Chapt. 1 Th Sept 4 Rationale for Government: Market Failures Fisher, Chapt. 2 T Sept. 9 " " Th Sept. 11 " " T Sept. 16 Public Choice: Voting Fisher, Chapt. 3 Th Sept. 18 Voting With Your Feet Fisher, Chapt. 5 T Sept. 23 Fiscal Federalism Fisher, Chapt. 6 Th Sept. 25 Propositions and Ballot Initiatives T Sept. 30 Review Th Oct. 2 Midterm 1 T Oct. 7 Pricing: User Charges Fisher, Chapt. 8 Th Oct. 9 Intergovernmental Grants Fisher, Chapt. 9 T Oct. 14 " " Th Oct. 16 Borrowing and Debt Fisher, Chapt. 10 T Oct. 21 Principles of Tax Analysis Fisher, Chapt. 12 Th Oct. 23 " " T Oct. 28 Review Th Oct. 30 Midterm 2 T Nov. 4 Property Tax Fisher, Chapts. 13 & 14 Th Nov. 6 " " Th Nov. 13 Sales and Excise Taxes Fisher, Chapt. 15 T Nov. 18 " " Th Nov. 20 Income Taxes Fisher, Chapt. 16 T Dec. 2 " " Th Dec. 4 Other Revenue Sources Fisher, Chapt. 18 T Dec. 9 " " Th Dec. 11 Review T Dec. 16 Final Exam (12:45-2:45)