Robert M. La Follette School of Public Affairs
Thursday, November 14, 2013

$450,000 grant funds exploration of housing crisis, cities fiscal health

Andrew Reschovsky

Policies that have best helped central cities maintain public services in the wake of the housing market collapse and the Great Recession will become clearer thanks to a $450,000 two-year grant won by La Follette School economist Andrew Reschovsky.

The MacArthur Foundation gave the award to Reschovsky and fellow principal investigators Howard Chernick of Hunter College and Sandra Newman of Johns Hopkins University.

"The collapse of the housing market, combined with the Great Recession of 2007-2009 and the sluggish recovery, have had substantial consequences for the fiscal health of the nation's largest central cities," Reschovsky says. "We will explore the linkages between changes in housing prices, foreclosures and other developments in the housing market, as well as the fiscal problems facing 112 large central cities. We anticipate we will identify which fiscal and housing policies enabled these central cities to recover most quickly."

They also will investigate how fiscal decisions of cities in response to the pressures engendered by the housing market collapse affected their ability to promote safe and attractive neighborhoods and well-functioning housing markets.

The research will build on the concept of fiscally standardized cities that Reschovsky and Chernick developed with Adam H. Langley of the Lincoln Institute of Land Policy. FiSCs are a comprehensive accounting of all revenues and expenditures of each central city municipal government and of the portion of independent school districts, county governments and special districts that overlay municipal boundaries. The La Follette Policy Report highlighted the FiSCs database in its Fall 2012 issue.

With the new grant, Reschovsky, Chernick and Newman will construct a database that adds detailed housing, economic and demographic data to the fiscal data for 112 of the nation's largest central cities.

"We will use these data to explore relationships between changes in the housing market and changes in property tax revenues, and between housing market developments and the pattern of government expenditures in FiSCs," Reschovsky says. "We expect the results to be of great interest to local, state and federal government officials, as well as non-profit and private-sector organizations interested in the wellbeing of city residents and the vitality of central city housing markets."