Abstract
This chapter integrates complexity theory, dynamic capabilities, and the budget in the overall governance framework of the facilitative state. The facilitative state not only is responsible for service provision but also as an active participant in determining service expenditures and revenues. In this section, the goal of the facilitative state is to increase the welfare level of its inhabitants. The chapter then gives examples of this logic of the complex system involving interactions between revenue’s and expenditure’s economic development and expenditures, and dynamic capabilities and debt. The chapter finally identifies three outcomes of this complex system: bankruptcy, static budget sustainability, and improvements in the welfare of the residents of the jurisdiction.
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Notes
- 1.
A Certificate of Participation is a type of debt that is structured as a lease and is not classified as debt for purposes of debt limits and voter approval. It is very arcane.
- 2.
The city must be cautious in calculating the value of these benefits. For example, the new jobs might be given to people in the city who do not live around the redevelopment area so these benefits may be inequitable distributed.
- 3.
In application, since next year’s budget is usually only a marginal change from the current budget, long-run sustainability should be achievable.
- 4.
Community welfare is a phrase that represents the aggregate well being of the residents of the jurisdiction.
- 5.
Another, more prosaic example is changing the pension system (or OPEBs system) in order to attract more city workers.
- 6.
Local government bankruptcy almost never happens. However, what often saves cities from going bankrupt is exogenous state or federal aid. In this monograph, in a diversion from reality, bankruptcy is defined as realizing that fiscal sustainability can never be reached and so the jurisdiction shrinks away to nothing.
- 7.
All appropriately discounted.
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Chapman, J. (2022). The Interrelationships of Dynamic Complexity in Budgeting. In: The Local Budget as a Complex System. Palgrave Studies in Public Debt, Spending, and Revenue. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-94903-7_7
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DOI: https://doi.org/10.1007/978-3-030-94903-7_7
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