Changes in Federal Aid and City Finances: A Case Study of Oregon Cities

Abstract

Federal aid was not found to stimulate spending for cities in Oregon during 1984-1989. Oregon cities relied primarily on their own-source revenues to finance spending increases. The exception was capital spending, where receipt offederal aid in 1989positively influenced the rate ofspending change. This most likely reflected lower spending by those cities that did not receive competitivefederal grants. The amount offederal aid received is greatly influenced by the grants skill available to the community. Growth in total direct current spending was significantly associated with increases in user fees and charges. A closer look at specific spending categories revealed a hierarchy of reliance on cities' ownsource revenues. Cities increased user fees and other benefit charges where possible, and seemingly only resorted to property-tax increases when these other revenues were inappropriate.