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Commission on Local Government reviews fiscal analysis, flags Local Composite Index concerns
Summary
DHCD staff presented updated fiscal analysis showing links between fiscal stress and local spending on state mandates; staff said the Local Composite Index (LCI) may disadvantage about 27% of localities, a point one stakeholder disputed. The commission split into subcommittees to study structures and fiscal topics further.
DHCD staff presented an updated fiscal analysis at the Commission on Local Government’s June 7, 2017 stakeholder meeting, showing relationships between fiscal stress, local shares of spending for state-mandated services and the Local Composite Index (LCI).
J. David Conmy, the department’s Local Government Policy Administrator, and Senior Public Finance Analyst Ali Akbor presented scatter plots intended to illustrate how fiscal stress correlates with local revenue effort and mandated-cost burdens. Akbor said the LCI "appeared to not be working in favor of at least 27 percent of the localities," noting that some localities may face a disproportionate share of state-mandated service costs.
Stakeholder Jim Regimbal responded that the majority of localities benefit from the current LCI calculation and pointed to the scatter plots as showing a robust relationship between revenue effort, expenditures and fiscal stress. The meeting record does not show a formal resolution of the differing assessments.
Contributors also reviewed prior analyses and literature on annexation, inter-local agreements and transition options. Stakeholders agreed to split into two subcommittees for further work: one focused on local structures and collaboration tools; the other on fiscal issues including approaches to alleviate fiscal stress and examine state funding formulas.
The commission did not take formal action on policy changes at the meeting. Staff will continue analysis and reconvene stakeholders at a meeting planned for September to review follow-up work.
