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The Dynamics of Federalism in National and Supranational Political Systems

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The Dynamics of Federalism in National and Supranational Political Systems The Dynamics of Federalism in National and Supranational Political Systems Edited by Michael A. Pagano and Robert Leonardi The Dynamics of Federalism in National and Supranational Political Systems Also by Michael A. Pagano CITIES AND FISCAL CHOICES: A New Model of Urban Public Investment (co-author with Richard J. Moore) CITYSCAPES AND CAPITAL: The Politics of Urban Development (co-author with Ann O’M. Bowman) TERRA INCOGNITA: Vacant Land and Urban Strategies (co-author with Ann O’M. Bowman) Also by Robert Leonardi COHESION POLICY IN THE EUROPEAN UNION CONVERGENCE, COHESION AND INTEGRATION IN THE EUROPEAN UNION ITALY: Politics and Policy, Volume 1 (co-editor with Raffaella Nanetti) ITALY: Politics and Policy, Volume 2 (co-editor with Marcello Fedele) The Dynamics of Federalism in National and Supranational Political Systems Edited by Michael A. Pagano Professor and Director of the Graduate Program in Public Administration University of Illinois at Chicago, USA and Robert Leonardi Director of the Economic Cohesion Laboratory London School of Economics, UK Editorial matter and selection © Michael A. Pagano and Robert Leonardi 2007 All remaining chapters © respective authors 2007 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2007 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN-13: 978–0–230–01959–1 hardback ISBN-10: 0–230–01959–5 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data The dynamics of federalism in national and supranational political systems / edited by Michael A. Pagano and Robert Leonardi. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-230-01959-1 (cloth) ISBN-10: 0-230-01959-5 (cloth) 1. Federal government. 2. Decentralization in government. 3. Comparative government. 4. World politics–1989- I. Pagano, Michael A. II. Leonardi, Robert, 1945- JC355.D96 2007 320.4′049–dc22 2006050816 10987654321 16 15 14 13 12 11 10 09 08 07 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham and Eastbourne For Francesco Boccia scholar, friend, colleague This page intentionally left blank Contents List of Figures ix List of Tables xi Preface xii Notes on the Contributors xv 1 In the Eye of the Beholder: The Dynamics of Federalism in National and Supranational Political Systems 3 Michael A. Pagano Part I Constitutional and Political Framework 19 Overview and Introduction 21 Celina Souza 2 Types of Federalism: Achieving Self-Governing Capabilities in Societies with Federal Potentials 27 Filippo Sabetti 3 “Thinking Federally” from a Governance Perspective 55 Susan E. Clarke 4 Social Forces, Space and Boundaries 86 Ann O’M. Bowman Part II The Fiscal Framework 101 Overview and Introduction 103 Michael A. Pagano 5 Wealth and Tax Systems 107 Jeffrey I. Chapman 6 Local Government Own-source Revenues and Debt Financing: Structure and Stress 136 W. Bartley Hildreth 7 Fiscal Federalism and Intergovernmental Revenues in the US 167 Christopher W. Hoene vii viii Contents Part III The Policy Framework 199 Overview and Introduction 201 Sarah F. Liebschutz 8 Dividing the Job Revisited: Learning from the United States Case 1789–2006 205 Carol S. Weissert 9 Efficient and Equitable Service Delivery in a Federal System 223 Daphne A. Kenyon 10 Intergovernmental Policy Management: Cooperative Practices in Federal Systems 248 Robert Agranoff Part IV Conclusion 285 Conclusion 287 11 Thinking About Federal Systems in the 21st Century in Light of the European Experience with “Operational” Federalism 288 Robert Leonardi and Raffaella Y. Nanetti Bibliography 305 Index 333 List of Figures 4.1 The territory of Texas as it entered the union, 1845 87 4.2 Proposals for dividing Texas 88 4.3 Local government territories: 1 county, 5 cities, 2 school districts, 2 towns 91 6.1 State and local government current receipts, NIPA basis, 1959–2004 141 6.2 Local government current receipts and expenditures, year over year change, NIPA basis, 1959–2004 142 6.3 Local government current receipts as percentage of GDP, NIPA basis, 1959–2004 143 6.4 Local government sources of funds as percentage of total, NIPA basis, 1959–2004 144 6.5 Property tax structure index 149 6.6 Sales tax structure index 154 7.1 Total government expenditures, 1902–2001 179 7.2 Federal outlays to state and local governments, 1913–2007 180 7.3 Federal outlays to state and local governments as a % of total federal outlays, 1902–2001 181 7.4 Federal general revenue sharing, 1974–88 182 7.5 Federal outlays to state-local governments: payments for individuals and state-local grants, 1940–2007 182 7.6 State and local government expenditures, 1913–2000 183 7.7 State and local intergovernmental revenues, 1913–2000 184 7.8 Intergovernmental revenues as a % of total and general state-local revenues, 1902–2000 184 7.9 Intergovernmental revenue as a % of state revenue, 1902–2000 186 7.10 Intergovernmental revenue as a % of local revenues, 1902–2000 187 7.11 Local intergovernmental revenue: state and federal shares, 1902–2000 188 7.12 Intergovernmental revenue as a % of total local revenue, 1902–2000 188 7.13 Local and municipal revenues from intergovernmental sources, 1932–97 189 7.14 Intergovernmental revenue as a % of municipal general revenue 190 7.15 Intergovernmental shares of municipal general revenue, 1972–97 191 ix x List of Figures 10.1 Twenty-seven instruments of intergovernmental relations 262 10.2 Intergovernmental management practices 272 10.3 Sixty-three economic development policy/program tools 273 10.4 Sequence of cooperative actions in a tax increment financing project 275 11.1 Theoretical approaches to institution building and policy-making in the EU 296 List of Tables 1.1 Elazar’s typology of federal political systems 3 3.1 Governance strategies and governance tasks: issues 61 3.2 Networks at different scales: advantages and issues 66 5.1 Examples of variation of revenue sources in the United States 115 5.2 Requirements for a successful hard-budget constraint 124 6.1 Relative importance of local taxes in OECD countries, 2003 139 6.2 Property tax in local government finance by type of government unit, 2002 145 6.3 Property tax structure index by state 150 6.4 Sales tax structure index by state 154 7.1 Periods in the development of American federalism 175 9.1 Alternative service delivery options for common municipal services 229 9.2 Municipal use of contracts with private firms for selected services, 1988–97 230 9.3 States “privatizing” programs of services, 1997 232 9.4 Variations in state contracting out after welfare reform 234 9.5 Ownership patterns and trends, by health care domain 242 9.6 Approximate percentage state ownership of business, late 1970s 244 10.1 Allocation of welfare state powers in federal countries 251 10.2 Salem, Indiana’s industrial park expansion project 277 xi Preface The rallying cry for political change is more often than not a primordial rage against the ancien règime than it is a consensual agreement on the direction of change. From this perspective, almost anything is preferable to the status quo, which solidifies the opposition around a unifying theme of the “anti-” party. Once the “change train” leaves the station, it’s no telling where it will end up – in large part because no one has really clearly articu- lated the destination even as they have thoroughly analyzed the diseases of the corrupt and dying state. The American comedian, Henny Youngman, had a wonderfully sick sense of humor. One of his jokes went like this: The patient says “Doctor, it hurts when I do this.” “Then don’t do that!” That’s the nature of advice given to polities that do not like what they are feeling at the moment. The lesson: stop doing whatever it is they dislike. The advice not frequently provided would encourage guidance in designing polities, policies, and institutions that would move them away from the corruption of the tired political system. Usually then, the cries for “liberty” and “freedom” and “self-rule” sound as if everyone is in agreement. But once one defines the terms, fissures in the once-solid block of “anti-’s” emerge. And so it is with “federalism”, the late-20th Century antidote to all things corrupt, to the centralized political powers that democratic peoples reach toward, especially for the purpose to end oppression of the center or of the military or of a family or of a tribe. This book is about that antidote, and how it has changed and adapted to circumstances. Federal polities today span the globe and include the older systems in Switzerland, the United States, and Germany to the newer ones in Russia, South Africa and Belgium.
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