Question

This is urgent Please !

• During the 2005 gubernatorial administration, significant reductions in funding
  were made to the “municipal revenue sharing program” that provides aid to local governments. Some cutbacks were lessened by Legislative action, but it tended to be a difficult battle to restore funding to this program.
• Your response will be written as an opinion editorial to a newspaper.
• In your own words, define the term “fiscal disparity.”
• explain why fiscal disparities occur initially and how changes in fiscal circumstances are affected by location choices of households. Describe how service production conditions may increase fiscal disparities.
• Finally, describe why intergovernmental aid is an important tool for mitigating disparities in revenue capacity and helping to balance spending pressures and financing ability.
• Your response must demonstrate knowledge of the fiscal environment including service and production characteristics.

Answer 1

Respected Editor,

With reference to the situation of Muncipal Revenue Sharing Program of 2005, I wish to present the detailed explaination about Revenue Sharing Program in which I clearly stated, analzed and derived the fine solution below for your Kind review.  

In US, The Concept - Muncipal Revenue refers to the Unrestricted Aid to Local Governments. The Local Governments was nothing but the Muncipal Governance. In 1989, the Revenue Sharing accounted to 3% in the State budget but the percentge declined to 1% accounted to Revenue Sharing in 2005. The Decline in the sharing are discussed below with the relevant points.

Generally, the Fiscal Policy refers to the system of using the Taxing and Spending methods to optimiz the Economic Development in order to frame the Budget Surplus which paves the way for Useful spending in the Nation Building Activities.

The US Fiscal Policy only use two policies - Restricting the Tax and Spending of Govt. Spending on State Welfare policies keeps the Deficit-less Budget throughout the year. But when those two polcies fails to do achieve the State Welare Target, then the Government has to face the problem of Fiscal Disparity.

Fiscal Disparity refers to the adopting the Innovation of Tax-base sharing between Metropolitan Cities. It supports the Industrial and the Commercial Growth of the Industries in the Cities which nurtures the Economic Competitiveness and Efficient Growth of Industries in the Cities.

The Two parametes namely Accessing Revenue System (ARS) and Representative Expenditure System (RES) helps to calculate the choice preference of the Households. The ARS analyze how the revenue wil be obtained from the maximum source by way of Optimal way of collecting Income Tax, Sales Tax, Interest Income, etc. On the Other side RES analyze how the Govt should able to spend those collected revenue and sourced in the form of proper channel of utilizing it in the fields of Education, Infrastructure, Health, Food Security, Etc.

So The Government's Fiscal Capacity is calculated on the basis of ARS and RES. If Revenue Exceeds Spending Rate, then the Gap between the Fiscal Disparity will shrink to the great extent. But if the Spending Rate Exceeds Revenue then Fiscal Disparity will wide its distance thus showing its effect on Service Sector - Industries.

There will be the situation occurs when the need of injecting the Fiscal Disparity effect in Production Service Units like Industries. Then huge source of Money need to spend on the Infrastructure facilites in order to create the Profit-boon returns of Revenue from the Service Sectors.

InterGovernmental Aid plays a vital role in balancing the Fiscal Disparities prevailing in the Common Society in the US. The Government need to critically analyze the needs of All households as well as all types of Economic Centers. It is in the position to adopt Neutral Policy in which Fiscal Capacity should not spend more than its Power of utilization of Funding.

The Funding should channelize the proper way, The State with lower Capacity will have low revenue than the State with the higher revenue. At the same time Aid should take inflation rate into consideration while allocation of funds towards all the States in the US. The State which lesser revenue needs to be concentrated and should be grant more than the state with the higher funds. So This can be avoided by concentrating on high Fiscal Disparity within the State.

The above points which i discussed revealed the exact nature of Fiscal Environment and its Production Characteristics.

Thanks