finance

Arguing over Transportation Sales Taxes: An Analysis of Equity Debates in Transportation Ballot Measures

Jaimee Lederman (UCLA), Anne Brown (University of Oregon), Brian D. Taylor (UCLA), and Martin Wachs (UCLA) | Voter-approved local option sales tax (LOST) measures for transportation increasingly fill gaps between falling fuel tax revenues and growing transportation investment needs. There are concerns, however, over whether LOSTs are an equitable transportation finance mechanism. Equity is a critical concept in public policy and finance, and debates over resource distribution on fairness grounds are often contentious. Sales taxes are typically regressive—disproportionately burdening low-income residents—and disconnected from transportation system usage. Read More

February 12, 2020 // 0 Comments

Financial Engineering by City Governments: Factors Associated with the Use of Debt-related Derivatives

Akheil Singla and Martin J. Luby| The use of financial derivatives, such as interest rate swaps, by city governments has been covered in the news media with some frequency over the past few years. The preponderance of these stories focus on the negative outcomes associated with these financial instruments, particularly in terms of increased interest payments, termination payments or other financial losses. While reporting on the issue often stops with simply stating the losses, some media accounts call into question the use of these instruments by governments at all, suggesting that governments 1) lack the financial sophistication to engage in these deals, 2) use the instruments out of desperation because of a declining financial health, 3) are increasingly staffed with finance professionals either at the administrative or board level that have experience with more complex financial instruments in their previous professional careers which leads to greater use and/or 4) are being influenced by financial sector firms that will benefit from the use of these financial instruments. Read More

May 8, 2019 // 0 Comments

Fiscal Secession (or How Local Special Assessments are Exacerbating Service Inequality)

Mathew D. McCubbins and Ellen C. Seljan | Local governments across the United States often find themselves needing to seek out new revenue sources, particularly in the face of state limitations on taxation. Our research examines the usage of special assessments, a particularly popular, but understudied source of local revenues, in the state of California. Today, special assessments are commonly used to back local infrastructure projects and provide growing number of public services, from local fire and police protection to street maintenance and repair. Read More

July 3, 2018 // 0 Comments

Taking a Risk: Explaining the Use of Complex Debt Finance by the Chicago Public Schools

Amanda Kass, Martin J. Luby, and Rachel Weber | For most of the 20th century, the municipal securities market was a sleepy backwater where governments went to raise money for roads, bridges, and wastewater systems. Most cities financed their infrastructure with debt that relied on conservative or well-seasoned market structures. At the end of the century, however, local governments entered a period of “entrepreneurial” finance as federal support for urban development declined. In the years leading up to the global financial crisis, many US governments began utilizing new bond structures and riskier financial instruments to, potentially, lower borrowing costs. Read More

March 21, 2018 // 0 Comments

Cashing In On Distress: The Expansion of Fringe Financial Institutions during the Great Recession

The finance industry plays an important role in shaping inequality. Private financial institutions determine, often in partnership with government, where to invest in housing, economic development, and infrastructure. These investments are often drastically uneven, fostering job growth and housing value appreciation in some areas and economic decline in others. One manifestation of this disparity is dramatic differences in access to services. While the affluent are able to build home equity and retirement accounts via access to “mainstream” financial services, the poor are disproportionately reliant on “alternative” or “fringe” services, such as check cashing outlets (CCOs), payday lending, and subprime mortgages.

August 30, 2017 // 0 Comments