Briefs, Research Reports & White Papers



Uncertainty, Risks, and Budgets In The Age Of Coronavirus Government Finance Review (June 2020), pp. 21-27.

Michael A. Pagano, director of GFRC, and Christiana McFarland, director of research at the National League of Cities, present data on the state and local fiscal implications of the COVID-19 pandemic. Although they find that cities and states had been building up their reserves for the proverbial rainy day, the magnitude of the economic crisis will overwhelm those funds, requiring them to seek other options. They argue that the time for proposing policies at the margins is over, that non-incremental policies must be considered to address the current crisis and anticipate future challenges.

The 34th Annual City Fiscal Condition Report (2019)

The 34th annual City Fiscal Condition Report co-authored by GFRC Director and CUPPA Dean Michael Pagano for the National League of Cities is released today. The report documents the analysis of fiscal trends and survey results from over 500 cities, towns and villages. For the first time in seven years, those cities, towns and villages anticipate a decline in revenue as they close the books on fiscal year 2019. Pagano has author/coauthored this annual report since 1991.

Good for your Fiscal Health? The Effect of the Affordable Care Act on Healthcare Borrowing Costs (2019)

UIC associate professor of finance Dermot Murphy studies the impact of the Affordable Care Act (ACA) on municipal healthcare borrowing costs. The ACA expanded the insured customer base for hospitals, although exposed them to greater regulatory risk. Following a favorable 2012 ACA Supreme Court ruling, healthcare yields decreased by 39 basis points, for per-issue and economy-wide interest savings of $3.0 million and $1.74 billion. The effect was larger for urban and private hospitals. Yields decreased by another 17 basis points in states that voted to expand Medicaid. However, the ACA effect on long-term yields was weak, suggesting that repeal risk remains an obstacle to long-term financing and growth in the healthcare sector. Pengjie Gao, professor of finance at the University of Notre Dame, and Chang Lee, assistant professor of finance at the Korea Advanced Institute of Science and Technology, are also co-authors on the study. The study was supported by a research grant from UIC’s Government Finance Research Center. Click here to read the full report.

Life Preservers or Anchors? An Examination of State Intervention in Municipal Pension Funding in Illinois (2019)

In 2016 a new provision in state law went into effect that allows local police and fire pension boards to request the Illinois Comptroller’s office to intercept funds and redirect those monies to the pension systems if municipalities’ pension payments fall short of what their contributions are supposed to be under state law. A premise of the pension intercept is that state intervention can help ensure the fiscal sustainability of local governments and their retirement funds. But does that law work as intended?

Life Preservers or Anchors? An Examination of State Intervention in Municipal Pension Funding in Illinois provides an overview of the law, context about why governments’ pension contributions are a policy concern, and discusses how the law has been working thus far.

Thinking Differently About IL Retirement Systems, A “Pension Crisis” Mentality Won’t Help (2019)

Robert Bruno, Amanda Kass, and David Merriman rethink the conversation about pensions and the state’s finances. The near ubiquitous claim that Illinois is facing a “pension crisis” has rarely been challenged. The failure to examine this customary framing of the fiscal condition of Illinois’ five state pension systems limits how policymakers conceptualize their funding strategy. This white paper, jointly authored by researchers from the Project for Middle Class Renewal at the School of Labor and Employment Relations, the Government Finance Research Center and the Institute of Government and Public Affairs (all at the University of Illinois), argues that the “pension crisis” framework negatively influences discussions of policy options.

Estimated Impact of the Cap on SALT Deductions at the Zip Code Level in Illinois (February, 22 2019)

Dr. Yonghong Wu examines data from Illinois’ 2015 federal income tax filings to estimate the impact of the new $10,000 cap on federal income tax deductions for certain state and local taxes (SALT), which was approved as part of a massive federal tax reform program called the Tax Cuts and Jobs Act of 2017 (TCJA). Preliminary findings in this draft report, are: (1) approximately 15% of all Illinois tax filers (or 896,790 filers) would have been affected in 2015; (2) the estimated average reduction due to the new cap would have been 1.8% (or $2.6 billion) for filers with adjusted gross incomes (AGI) above $200,000 in 2015; and (3) tax filers who would likely see their federal income tax liability increase due to the new cap are likely to be concentrated in the AGI brackets above $100,000 and in municipalities with high property values and high local tax rates. This is a draft report, and should not be cited without express permission from Dr. Wu.

City Fiscal Conditions (2018) 

Michael Pagano and Christy McFarland present the findings from the 35th annual report on city fiscal conditions as part of the National League of Cities’ research on city finances.  The report finds that the national economy today is strong but faces headwinds from lagging wage growth and a slowing housing market. These complexities are evident at the local level. City finances, which have yet to fully recover from the Great Recession, are showing signs of decelerating growth.

The People’s Money: 2018 UIC Urban Forum (2018/2019)

These briefs are abbreviated versions of the white papers authored for the 2018 UIC Urban Forum. The longer versions of the papers are available here.

How the 2018 Elections Reshaped State and Local Governments’ Fiscal Policy Space  (2018, Published by Brookings)

This paper by CUPPA’s Dean Michael Pagano and Nathan Arnosti published by Brookings focuses on the ways in which the 2018 midterm elections reshaped state and local governments’ “fiscal policy space” to innovate and govern. Pagano studied the results of state and city ballot measures in an effort to understand the contexts in which voters sought to expand or restrict public services and government spending.

City Budgets  in an Era of Increased Uncertainty (2018, Published by Brookings)

This paper, by CUPPA’s Dean Michael Pagano and the California Budget and Policy’s Christopher W. Hoene, examines the extent to which cities can take on greater fiscal responsibilities based on their “fiscal policy space,” a framework for understanding cities’ fiscal capacity and adaptability. The paper includes a typology that assesses 100 large cities on their fiscal capacities, especially in relation to constraints imposed by states or cities’ own tax misalignment with their economic bases. It closes with implications for local and state actions.